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2018 (7) TMI 1537 - AT - Service TaxClub and Association Services - principles of mutuality - appellant is a Trust engaged in the activities of teaching Yoga and for research on Vedic traditions of Yoga and are registering the interested people in these activities as their members - appellant has neither paid tax nor taken registration - demand of Service Tax - Held that - The amount of consideration ranging from ₹ 11,000/- to 11,00,000/- has been received by the appellant for extending life time membership is an amount, which is received where the person paying it is becoming the member as a shareholder of the Trust and the element of mutuality comes into existence between the Trust and the said members - the issue is squarely covered by the decision in the case of Sports Club of Gujarat Ltd. vs. Union of India 2013 (7) TMI 510 - GUJARAT HIGH COURT , where Club and Association Services have already been held ultra vires - demand set aside. Donations received by the appellant under one of its Scheme called Vanprastha Ashram Scheme - Held that - By making such payments, such person does not become the member of the Trust as such, but become the lease-holder for a particular accommodation respective to the price paid by him under the Scheme. This observation is sufficient to hold that such person become the shareholders of the appellant s Scheme but not the members of the Trust. Such members cannot be cloth with the status as that of founder members of the Trust and the element of mutuality therefore, is missing in such a relationship - The Trust and the member of Vanprastha Ashram Scheme become two different legal entities. Any services of club and association being provided by the appellant to such members are therefore, taxable services under Section 65 (25a) - demand upheld. As far as the plea of the appellant being charitable in nature, we draw our support from the case of FICCI vs. CST, Delhi 2014 (5) TMI 183 - CESTAT NEW DELHI , wherein it was held that for any association to be called as the one of charitable nature discharging the public service it is essential and necessary that the activity qua which the demand has been raised must be essential and necessary for the proper functioning of the organisation and must be incidental to carrying out all the purposes for which it is constituted - In the present case, the members of Vanprastha Ashram Scheme are not member of the Patanjali Trust, the appellant herein, but are the members under particular scheme of the said Trust for the only purpose of being leased out a residential accommodation for their life time. The said leasing, to our opinion, is not ancillary and incidental object to the main charitable object of the appellant Trust - he benefit of exemption for appellant being charitable in nature cannot be granted. Intellectual property Service - whether the permission as given by the appellant Trust to Star News Channel to record the Yoga Camps and to telecast on their News Channel can be termed as a right to Intellectual property, which is either a trade mark or design(s) or patent(s) or any other similar intangible property recognized as such under any existing Indian law? - Held that - The permission as granted by appellant Trust is neither a trade mark nor a design nor even a patent. At best it is in the form of copy-right, which has been excluded from the definition of Intellectual Property Service. Hence, mere grant of permission by the appellant to cover its Yoga Camps for being telecasted does not emerge from the above definition of Intellectual Property - demand set aside. Extended period of limitation - Held that - Appellant is a Trust rendering its services across the country at mega level. It is also been registered for rendering some taxable services. Unawareness on part of such Trust cannot be presumed. Thus, not disclosing the taxable income shows an intention to evade payment of tax - invocation of extended period confirmed. Appeal allowed in part.
Issues Involved:
1. Club and Association Services on Membership Donations 2. Club and Association Services on Vanprastha Ashram Donations 3. Intellectual Property Services 4. Renting of Immovable Property 5. Limitation and Extended Period Issue-wise Detailed Analysis: 1. Club and Association Services on Membership Donations: The appellant, a Trust engaged in teaching Yoga and researching Vedic traditions, was alleged to have provided taxable services under the category of Club and Association Services as defined under Section 65 (25) A of the Finance Act, 1994. The Department raised a demand based on membership donations. The appellant relied on the decision in Sports Club of Gujarat Ltd. vs. Union of India, which held such services to be ultra vires. The Tribunal agreed, stating that the element of mutuality existed between the Trust and its members, making the demand unsustainable. Consequently, the demand related to membership donations was set aside. 2. Club and Association Services on Vanprastha Ashram Donations: Under the Vanprastha Ashram Scheme, the appellant leased accommodations to individuals for their lifetime in exchange for donations. The Tribunal found that these individuals did not become members of the Trust but were leaseholders, creating a relationship without mutuality. Therefore, the services provided under this scheme were taxable under Section 65 (25a) of the Act. The Tribunal upheld the demand, rejecting the appellant's argument that the Trust's charitable nature exempted it from service tax, as the leasing was deemed a commercial activity. 3. Intellectual Property Services: The appellant permitted a news channel to telecast its Yoga camps, receiving a monthly amount. The Department considered this as providing Intellectual Property Services. However, the Tribunal held that the permission granted did not constitute a trade mark, design, or patent but was akin to a copyright, which is excluded from the definition of Intellectual Property Services under Section 65 (55A) of the Act. Therefore, the demand under this head was set aside. 4. Renting of Immovable Property: The appellant conceded the demand related to renting immovable property. Consequently, the Tribunal confirmed the order under challenge regarding this issue. 5. Limitation and Extended Period: The Tribunal found no infirmity in the adjudicating authority's findings on limitation and the invocation of the extended period. Given the appellant's extensive operations and existing registrations for other taxable services, unawareness could not be presumed. The non-disclosure of taxable income indicated an intention to evade tax, justifying the extended period's applicability. Conclusion: The appeal was partly allowed. The demands related to membership donations and Intellectual Property Services were set aside. However, the demands for Vanprastha Ashram Scheme donations and renting immovable property were confirmed, along with the proportionate interest and penalty. The Tribunal pronounced the judgment on 23.07.2018.
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