2012 (7) TMI 501 - AT - Service Tax

Club or association services demand of service tax Held that - Rejection of the appellant s appeal for a refund claim as per section 96J on the ground that the matter is pending before the Tribunal. It was submitted that the appeal filed by them against the rejection is pending with Commissioner (Appeals). Therefore no concern with service tax liability on subscription collected by the appellant from their members under club or association service. Business auxiliary service - collecting advertisement charges from manufacturers of medicines for publishing the details of the medicines manufactured in the Chemist News in monthly publication of the appellant Held that - The activity undertaken by the appellant cannot be considered as promotion or marketing or sale of goods produced AS details such as name of the company, name of the product, packing details, category, VAT payable, stocks price, retailer price, MRP and whether the price includes local tax or not are of use only to the chemists and druggists - the purpose is to help the members of the association to know the margins and also to ensure that by at correct price and get the proper margins in their business - mere publication of name of the company and the details explained above cannot amount to sale or promotion. Sale of space - it is quite clear that the activity undertaken by the appellant is nothing but sale of space - details of Chemist News submitted by them for the purpose of registration to support this submission that the monthly news is nothing but a newspaper - the service cannot be classified under business auxiliary service as the service is more specifically covered under the heading sale of space as the activity undertaken is only sale of space in monthly news - in favour of assessee.

Summary

Issues:
1. Liability of service tax on club or association services.
2. Liability of service tax on business auxiliary service.
3. Imposition of penalties under Section 76, 77 & 78 of the Finance Act, 1994.

Analysis:

1. Liability of service tax on club or association services:
The appellant, an association of chemists and druggists, was investigated for not paying service tax on services provided to members under "club or association services." The investigation revealed that the appellant was also providing business auxiliary services by collecting advertisement charges from manufacturers for publishing details in their monthly publication. The demand for service tax on club or association services and business auxiliary service, along with penalties, was confirmed. The appellant's appeal was rejected. However, the appellant argued that a provision existed for not levying service tax on membership fees collected during a specific period and had filed a refund claim, which was rejected. The appellant contended that they were not liable for service tax on subscription fees collected from members under club or association services, as the matter was pending before the Tribunal.

2. Liability of service tax on business auxiliary service:
Regarding the charges collected by the appellant from manufacturers for publishing details in the monthly publication, the appellant argued that this activity did not qualify as business auxiliary service. The appellant's submission was that the information provided in the publication was solely for the benefit of chemists and druggists, not for promoting sales. The appellant contended that the publication aimed to inform members about pricing details, margins, and to prevent overcharging. The Tribunal agreed with the appellant, stating that the service did not amount to business auxiliary service as it did not promote sales or marketing but provided useful information only to chemists and druggists.

3. Imposition of penalties under Section 76, 77 & 78 of the Finance Act, 1994:
The Tribunal's decision to allow the appeal was based on the finding that the service provided by the appellant could not be classified as business auxiliary service. Consequently, the appeal was allowed, providing consequential relief to the appellants. The judgment highlighted that the activity undertaken by the appellant was akin to the sale of space in the monthly news publication and did not fall under the category of business auxiliary service. Therefore, the penalties imposed under various sections of the Finance Act, 1994 were not applicable in this case.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad, showcases the legal intricacies involved in determining the liability of service tax on different services provided by the appellant and the subsequent imposition of penalties.