2024 (5) TMI 132 - AT - Service Tax

Levy of service tax - subscription fees and entrance fees collected by the appellant from existing members and new members - Supply of Tangible Goods Services - appellant has received freight charges from M/s. BPCL for supply of Lorries for transport of petrol - Business Auxiliary Service - discount and commission accounted by the appellant - receiving reimbursement of Bank charges as well as commission of Demand Drafts from M/s. BPCL in respect of transactions with M/s. BPCL - amount received by the appellant for sale of fleet cards - Extended period of limitation - suppression of facts or not - Penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services - service tax paid already. Levy of service tax - subscription fees and entrance fees collected by the appellant from existing members and new members - HELD THAT - The said issue as to whether subscription fee collected from members can be subject to levy of service tax prior to 01.07.2012 has been settled in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. 2019 (10) TMI 160 - SUPREME COURT . Following the same, it is opined that the demand of service tax under this category cannot sustain and requires to be set aside. Levy of service tax - Supply of Tangible Goods Services - appellant has received freight charges from M/s. BPCL for supply of Lorries for transport of petrol - HELD THAT - As per the Show Cause Notice, it is seen that the appellant has collected only freight charges. The appellant has not collected any amount as hire charges in addition to the freight charges. Further, the service tax on the freight charges has been paid by M/s. BPCL who is the service recipient - The Tribunal in the case of M/S. ERODE LORRY OWNERS ASSOCIATION VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, SALEM COMMISSIONERATE 2019 (3) TMI 43 - CESTAT CHENNAI had considered the issue on very similar set of facts and held that the demand of service tax under Supply of Tangible Goods Services cannot sustain. Following the said decision, the demand cannot sustain and requires to be set aside. Levy of service tax - Business Auxiliary Service - discount and commission accounted by the appellant - HELD THAT - The amount received is only the difference in the price rate of fuel sold by the appellant. It is found that the demand cannot sustain and requires to be set aside. Levy of service tax - receiving reimbursement of Bank charges as well as commission of Demand Drafts from M/s. BPCL in respect of transactions with M/s. BPCL - HELD THAT - These are nothing but reimbursable expenses and cannot be subject to levy of service tax prior to 2015. The issue stands decided by the decision in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT , where it was held that 'only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax' - demand set aside. Levy of service tax - amount received by the appellant for sale of fleet cards - HELD THAT - The appellant has sold the fleet cards to customers on behalf of M/s. BPCL. However, they have not received any mark-up or profit on the fleet cards. The fleet carts were sold on the amount as reimbursed by M/s. BPCL. The appellant has not been given any consideration for sale of fleet cards, it is found that the actual amount received from M/s. BPCL for sale of fleet cards cannot be subject to levy of service tax. The demand under this head is set aside. Extended period of limitation - suppression of facts or not - HELD THAT - The Department has not established any positive act of suppression on the part of the appellant. The entire figures have been obtained from the accounts maintained by the appellant. This apart, most of the amounts do not fall under the category of taxable service. For this reason, the invocation of extended period cannot sustain. Penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services - service tax paid already - HELD THAT - The appellant has already discharged service tax on these amounts. They are also registered for these services. For these reasons, the penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services required to be set aside - However, the demand of service tax or the interest thereon on Renting of Immovable Property as well as Mandap Keeper Services is not interfered and only the penalty in this regard is set aside. The impugned order is modified to the extent of upholding the demand and interest in regard to Renting of Immovable Property Services and Mandap Keeper Services and setting aside the demand, interest and penalty in respect of all other services - Appeal allowed in part.

Summary

Issues involved: The issues involved in the judgment are the demand of service tax under various categories such as Club's or Association's Membership Services, Supply of Tangible Goods Services, Renting of Immovable Property Services, Business Auxiliary Services, and penalties imposed under Section 77(1)(a) of the Finance Act, 1994.

Club's or Association's Membership Services: The appellant collected subscription, donation, and entrance fee from members without discharging service tax under this category. The Tribunal held that based on the decision in the case of Calcutta Club Limited, the demand of service tax on subscription fees cannot sustain and set it aside.

Supply of Tangible Goods Services: The appellant collected freight charges from M/s. BPCL for supplying tanker lorries. The Tribunal noted that the appellant did not collect hire charges in addition to freight charges, and M/s. BPCL had already paid service tax on the freight charges. Citing a similar case, the demand of service tax under this category was set aside.

Business Auxiliary Services: The demand of service tax on discount and commission accounted by the appellant was contested. The Tribunal found that these amounts were adjustments for price differences in fuel sales and not subject to service tax. Therefore, the demand under this category was set aside.

Reimbursement and Fleet Cards: Reimbursements for bank charges, demand draft commissions, and sale of fleet cards were deemed reimbursable expenses and not subject to service tax prior to 2015. The Tribunal set aside the demands related to these items.

Extended Period and Penalties: The Department alleged suppression of facts to evade service tax, but the Tribunal found no positive act of suppression by the appellant. As most amounts did not fall under taxable services, the invocation of the extended period was deemed unsustainable. Penalties under Renting of Immovable Property Services and Mandap Keeper Services were set aside, while demands and interest for these services were upheld.

Conclusion: The impugned order was modified to uphold the demand and interest for Renting of Immovable Property Services and Mandap Keeper Services, setting aside demands, interest, and penalties for all other services. The appeal was partly allowed accordingly.