2014 (7) TMI 197 - AT - Service Tax

Demand is in respect of the amounts which were received as donations - Club & Association service - Held that - Appellants had not bothered to file reply to the show-cause notices nor appeared before the adjudicating authority in spite of notices issued to them. The contentions of the appellants now raised before us were not before the adjudicating authority. Further in the impugned order, we find that certain amounts were received as activity and maintenance charges . As the appellants had not co-operated with the adjudicating authority, therefore, we find that it is a fit case to impose cost on the appellants - As the impugned order is passed ex-parte and the issue as per the appellants, is settled by the Hon ble High Court of Gujarat in the case of Sports Club of Gujarat Ltd. 2013 (7) TMI 510 - GUJARAT HIGH COURT - pre-deposit waived - matter remanded back - Decided in favour of assessee.

Summary

Issues: Stay applications for waiver of pre-deposit of service tax, applicability of service tax on services provided by a club, failure to respond to show-cause notices, charitable institution status, imposition of cost on the appellants.

Analysis:
1. Stay Applications for Waiver of Pre-deposit: The appellants filed stay applications seeking waiver of pre-deposit of service tax, interest, and penalties amounting to Rs. 1,51,11,575. The demand was confirmed due to the services provided falling under the ambit of 'Club & Association' as per specific sections of the Finance Act.

2. Failure to Respond to Show-Cause Notices: Three show-cause notices were issued to the appellants, raising demands and penalties. The appellants neither replied to the notices nor appeared before the adjudicating authority for the hearing, leading to confirmation of the demand and imposition of penalties.

3. Applicability of Service Tax on Club Services: The appellants contended that the demand was related to donations received, citing precedents where courts held certain provisions of the Finance Act as ultra vires concerning service tax on services provided by clubs to members. The revenue, however, pointed out that the appeal against the Gujarat High Court decision was pending before the Supreme Court.

4. Charitable Institution Status: The appellants claimed to be a charitable institution utilizing donation income for charitable purposes. However, as certain amounts were identified as 'activity and maintenance charges,' and due to the lack of cooperation with the adjudicating authority, a cost of Rs. 20,000 was imposed on the appellants.

5. Judgment and Remand: The impugned order was set aside as it was passed ex-parte, and the matter was remanded to the adjudicating authority for fresh consideration. The appellants were directed to appear with a reply to the show-cause notice and proof of deposit, allowing the authority to decide the issue in accordance with the law.

6. Disposition: The appeals were disposed of by way of remand, emphasizing the need for the appellants to actively participate in the proceedings and cooperate with the adjudicating authority.