2018 (11) TMI 1211 - AT - Service Tax

Non-payment of service tax within time - Club Or Association Service - Restaurant Service - Renting Of Immovable Property Service - non-registration - threshold exemption under Section 69 of the Act read with Rule (4) of the Service Tax Rules, etc. - penalty. Club And Association Services - Held that - In the case on hand, the demand (of short payment) relates to the period 2008-09 (second half) to 2010-11 - the decision in the case of M/s. Handloom Export Promotion Council Vs. C.S.T., Chennai-II 2018 (8) TMI 1590 - CESTAT CHENNAI , squarely applies to the case in hand, where it was held that This Bench in M/S. COSMOPOLITAN CLUB VERSUS CCE & ST, MADURAI 2018 (2) TMI 1052 - CESTAT CHENNAI , has held that for the period up to 30.06.2012, there cannot be any service tax liability on the amounts collected by the clubs/associations from its members under various categories of members - the demand on short payment on the Club and Association Services is not sustainable. Renting of Immovable Property Services - Held that - In the very same case of M/s. Handloom Export Promotion Council (supra), this Bench has taken a view that the same fell within the taxable category - demand with interest upheld. Restaurant Service - Held that - This issue requires fresh adjudication in the light of the appellant s explanation supported by its income and expenditure statement and other material documents - matter on remand. Penalty - Held that - The issue of taxability under the Clubs and Association Services was mired in litigation and was only laid to rest by the decision of High Courts - With regard to Renting of Immovable Property Services provided by the appellants, the appellant was under a mistaken assumption that there would be no tax liability since the appellant had leased out its own premises and that there was no short payment on Restaurant Service - there was reasonable cause for the failure to discharge the impugned tax liabilities, hence impositions of penalties are unjustified - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Demand of service tax on Club or Association Services, Restaurant Service, and Renting of Immovable Property Service.
2. Applicability of penalties under Section 78 of the Act.
3. Fresh adjudication required for Restaurant Service tax liability.

Analysis:
1. Demand of Service Tax on Club or Association Services, Restaurant Service, and Renting of Immovable Property Service:
The case involved M/s. Tuticorin Gymkhana Club providing recreational services under "Club or Association Services" to its members, along with a restaurant facility and leasing out a part of their premises. The Revenue issued a Show Cause Notice for non-payment of service tax under various categories. The Order-in-Original confirmed the demand, interest, and penalties except under Section 78 of the Act. The appellant appealed, arguing against the demand. The Tribunal referred to previous judgments and held that demand for Club and Association Services up to 30.06.2012 was not sustainable. However, for Renting of Immovable Property Services, the demand was upheld. Regarding Restaurant Service, the Tribunal set aside the issue for fresh adjudication based on the appellant's explanation and financial documents.

2. Applicability of Penalties under Section 78 of the Act:
The Tribunal noted that the issue of taxability under Club and Association Services was resolved by previous High Court decisions. For Renting of Immovable Property Services, the appellant's mistaken assumption led to non-payment of tax, justifying the setting aside of penalties. Similarly, as there was no short payment on Restaurant Service due to the appellant's explanation, penalties were deemed unjustified and set aside.

3. Fresh Adjudication Required for Restaurant Service Tax Liability:
The appellant claimed no shortfall in Restaurant Service tax payment, attributing any differences to changes in abatement rates. The Tribunal found the explanation plausible and set aside the issue for fresh adjudication by the adjudicating authority. The appellant's income and expenditure statement and other relevant documents were to be considered for a new adjudication order.

In conclusion, the appeal was partly allowed, with the demand on Club and Association Services being set aside, Renting of Immovable Property Services demand upheld, and the Restaurant Service issue sent for fresh adjudication. Penalties were set aside due to reasonable cause for non-payment in certain instances.