2013 (8) TMI 124 - AT - Service Tax

Waiver of pre-deposit Stay application services of Electrical Research and Development Activities - Club or Association - Charitable activities or Not - Appellant in this case is an institution which has been registered under Society s Act for providing the services of Electrical Research and Development Activities - Revenue s submission that the services rendered by assessee to their members would fall under the category of club or association service - Held that - Major portion of the demand is hit by limitation as they have been regularly filing the returns and they were under a bonafide belief that they do not fall under the category of Club or Association Since, the issue is arguable one and the major portion of the demand seems to be, prima facie, time barred, Appellant is directed to deposit an amount of ₹ 2.50 lakhs (Rupees Two Lakhs, Fifty Thousands only) against the demand that can arise within the limitation period in order to hear and dispose the appeal. The said pre-deposit is to be made within a period of eight weeks.

Summary

Issues:
Waiver of Service Tax, interest, and penalties under Sections 77 and 78 of Finance Act, 1994.

Analysis:
The appellant, an institution registered under the Society's Act for providing Electrical Research and Development Activities, sought waiver of Service Tax, interest, and penalties amounting to Rs.19,27,109. The demand was for the period 16.06.2005 to 31.12.2005, related to services provided to members. The appellant argued they regularly discharged Service Tax liability for taxable services like scientific and technical consultancy, believing they did not fall under the Club or Association category. The Department contended the appellant's activities did not qualify as charitable despite being registered under the Society's Act, asserting the services provided to members fell under the club or association service category.

The Tribunal noted the ambiguity surrounding whether the appellant's activities qualified for exemption granted to institutions engaged in charitable, political, or religious public services. The issue required a detailed examination at the final appeal stage. Considering the arguable nature of the issue and the potential time limitation on a significant portion of the demand, the Tribunal directed the appellant to deposit Rs.2.50 lakhs within eight weeks to cover the demand within the limitation period. Upon compliance, the waiver of the remaining balance and stay on recovery were granted until the appeal's disposal.

In conclusion, the Tribunal acknowledged the complexity of determining the appellant's service categorization under the Finance Act, 1994, emphasizing the need for further examination during the appeal process. The decision to allow a partial pre-deposit aimed to facilitate a fair hearing while addressing the potential time-barred aspect of the demand.