2014 (1) TMI 204 - AT - Service Tax

Demand of service tax - Whether appellants, is liable to service tax on the services rendered to their members under club or association service - Render of public service - Penalty u/s 76, 77 & 78 - Held that - penalties are to be imposed under Sections 76, 77 and 78 of the Finance Act are elaborated in the Sections. Only in Section 78 certain clauses require intent to evade or willful suppression. None of these Sections stipulate contumacious conduct on the part of the appellants. In fact, scheme of Service Tax Law is self determination/assessment of tax and payment in the bank. There is no requirement to interact with authority. In the present case club or association service was introduced in 2005. Being a leading Club, it was expected that they would take steps to at least find out whether there is a tax liability on them. There is no evidence whatsoever that they have taken any steps to even find out whether the tax is payable by them. The appellant has not challenged the levy and cannot form bona fide belief from 2005 onwards based upon a High Court judgment in 2013. Confirmation of service tax demands under the taxable service category of Mandap Keeper Service, Club and Association service, Renting of Immovable property service and Sale of space for advertisement service is sustainable in law. In the case of Club & Association service, the tax demand has to be recomputed excluding the bar sales subject to the appellant producing satisfactory evidence in this regard - appellant is liable to pay interest on the above service tax demands in accordance with law - appellant is liable to penalty under Section 76 and 77 - appellant is also liable to penalty under Section 78 of the said Finance Act except in the case of Renting of Immovable property service - demand of service tax under the category of Business Support Services is unsustainable in law and the same is set aside. Consequently, there will be no interest and penal liability on account of this demand - Decided partly in favour of assessee.

Issues Involved:
1. Service tax liability under Mandap Keeper Services.
2. Service tax liability on renting of immovable property.
3. Service tax liability under the category of Sale of Space or Time for Advertisement.
4. Service tax liability under the category of Club or Association Service.
5. Service tax liability under the category of Business Support Services (BSS).
6. Invocation of extended time limit for demand.
7. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Detailed Analysis:

1. Service Tax Liability under Mandap Keeper Services:
The appellant admitted to the service tax liability under Mandap Keeper Services. The tribunal upheld the demand along with interest.

2. Service Tax Liability on Renting of Immovable Property:
The service falls within the definition of taxable service as per Section 65(105)(zzzz) of the Finance Act. The vires of the levy were upheld by the Bombay High Court and Delhi High Court. The demand of service tax on this activity by the appellant is sustainable in law, subject to the outcome of the appeals pending before the Supreme Court.

3. Service Tax Liability under the Category of Sale of Space or Time for Advertisement:
The appellant allowed SFIPL and TFPL to use advertising space, which falls under the taxable service category as per Section 65(105)(zzzm) of the Finance Act. The tribunal held that the appellant is liable to discharge service tax on the sale of space for advertisement. The argument of being a sub-contractor and revenue neutrality was rejected.

4. Service Tax Liability under the Category of Club or Association Service:
The appellant claimed exemption under Section 65(25a) as a charitable organization. However, the tribunal held that the appellant does not qualify as a charitable organization for service tax purposes and is liable for service tax on membership fees. The tax demand should be recomputed excluding bar sales.

5. Service Tax Liability under the Category of Business Support Services (BSS):
The tribunal found that the subsidies received from BCCI do not constitute Business Support Services as they are not in relation to business or commerce. The demand under BSS was set aside.

6. Invocation of Extended Time Limit for Demand:
The tribunal upheld the invocation of the extended period for demand, finding that the appellant suppressed facts with an intent to evade tax. The argument of bona fide belief was not accepted.

7. Imposition of Penalties under Sections 76, 77, and 78 of the Finance Act, 1994:
- Section 76: Penalty for failure to pay service tax was upheld.
- Section 77: Penalty for non-compliance with statutory provisions was upheld.
- Section 78: Penalty for suppression of facts with intent to evade tax was upheld except for renting of immovable property service.

Majority Order:
1. Confirmation of service tax demands under Mandap Keeper Service, Club and Association service, Renting of Immovable property service, and Sale of space for advertisement service is sustainable. The tax demand for Club & Association service should exclude bar sales.
2. The appellant is liable to pay interest on the service tax demands.
3. The appellant is liable to penalties under Sections 76 and 77.
4. The appellant is liable to penalty under Section 78 except for Renting of Immovable property service.
5. The demand of service tax under Business Support Services is set aside, with no interest or penal liability.

Note: The judgment included a dissenting opinion by one member who disagreed on the charitable status of the appellant and the imposition of penalties, which was resolved by a majority decision.

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