2023 (10) TMI 594 - AT - Service Tax

Extended period of limitation - Suppression of facts or not - Levy of Service Tax - health and fitness service - providing education to patients regarding Yoga - donation received in respect of yoga camp / residential Yoga camp - Donation is related to Education or Health and fitness service or not? - penalty - benefit of Section 80 of FA - HELD THAT - The fact that in case of sister concern in which Shri Acharya Balkrishna was Secretary General certain investigations/ enquiries were being made will not make the appellant immune from the charge of suppression etc., required to be establish for invoking the extended period of limitation. Each case and each period has to be examined for the existence of these ingredients on the facts and evidence available for the said period. More so over in the case of self assessment where the complete trust has been placed on the assesses to conduct their business transparently and file their tax returns accordingly. Any misdemeanour to suppress the income in guise of donation if established is enough to invoke the charge of suppression for that period - the appellant has suppressed the fact that they have received consideration for the provision of these services and collected the same from the participants in residential and non residential camps by reflecting the same as donation on the receipts and the book of accounts. This suppression was clearly with the intent to evade payment of service tax. - Order of Commissioner against the appellant / assessee sustained. Penalties - HELD THAT - The penalties under Section 76 and 77 are for the violation done and are absolute in nature if certain violations are attributable to the appellant. In the present case undoubtedly appellant had failed to take registration as required even though he was providing the taxable services. It is also the fact that they were not paying service tax and not filing the returns as required under provisions of Service Tax law, i.e Chapter V of Finance Act, 1994 and Service Tax Rules, 1994. For the contraventions of these provisions penalty imposed on the appellant under Section 76 and 77 cannot be faulted with. Interest - HELD THAT - The interest liability for delayed payment of service tax also cannot be disputed. Appellant has not paid the service tax, payable by them on the taxable services provided by them by the due date and hence demand of interest on the delayed payment of service tax is justified. There are no merits in the submissions made by the appellant in the appeal filed. However it is observed that demand for the period 01.10.2006 to 31.03.2007 needs to be recomputed after reconciling the amounts received by the appellant during that period with the accounts of appellant and the certificate dated 21.01.2012 of the Chartered Accountant (Anil Ashok Associates). According the impugned order is upheld in all respects, but remanded back to original authority for recomputation of demand and penalty under Section 78 only for period 01.10.2006 to 31.03.2007 after taking into account the afore-stated certificate of Chartered Accountant. Appeal allowed in part.

Summary

Issues Involved:
1. Classification of services provided by the appellant.
2. Nature of donations received.
3. Invocation of extended period of limitation.
4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
5. Liability to pay interest under Section 75 of the Finance Act, 1994.

Summary of Judgment:

1. Classification of Services Provided by the Appellant:
The appellant contended that the services provided, which included teaching yoga for curing specific ailments, should not fall under "health and fitness service" as defined under Section 65 (51) of the Finance Act, 1994. The Tribunal, however, upheld the Commissioner's view that the definition of "health and fitness service" includes yoga, irrespective of whether it is for general well-being or therapeutic purposes. The Tribunal agreed that the appellant's activities of teaching yoga were covered under the taxable category of "health club and fitness centre" as defined under Section 65 (52) of the Finance Act, 1994.

2. Nature of Donations Received:
The appellant argued that the donations received were not in quid pro quo for the services rendered but were voluntary. The Tribunal found that the donations collected were indeed a consideration for the services provided in the yoga camps, both residential and non-residential. This was evidenced by the structured donation system that provided different privileges based on the amount donated. The Tribunal held that these donations were taxable as they constituted consideration for the services rendered.

3. Invocation of Extended Period of Limitation:
The appellant claimed a bona fide belief that their services were not taxable and argued against the invocation of the extended period of limitation. The Tribunal, however, found that the appellant had suppressed material facts with the intent to evade payment of service tax. The Tribunal upheld the Commissioner's decision to invoke the extended period of limitation, citing precedents that supported such action in cases of suppression and deliberate evasion.

4. Imposition of Penalties:
The Tribunal upheld the penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. It was noted that penalties under Section 76 and 78 can be imposed simultaneously for the period before 10.05.2008, but post this date, penalties under both sections could not be imposed together due to an amendment. The Tribunal found no reason to reduce or waive the penalties as the appellant had failed to comply with statutory requirements, including registration and timely payment of service tax.

5. Liability to Pay Interest:
The Tribunal confirmed the appellant's liability to pay interest under Section 75 of the Finance Act, 1994, for the delayed payment of service tax. The Tribunal cited various decisions that supported the mandatory nature of interest on unpaid taxes, regardless of the intention behind the delay.

Conclusion:
The appeal was dismissed for the period 01.04.2007 to 31.03.2011, upholding the demand for service tax, interest, and penalties. For the period 01.10.2006 to 31.03.2007, the matter was remanded back to the original authority for recomputation of the demand and penalty under Section 78, taking into account the certificate of the Chartered Accountant.