2019 (12) TMI 646 - AT - Service Tax

Recovery of service tax alongwith interest and penalty - receipts from members for providing club or association service and convention service - HELD THAT - The appellant is national professional body of qualified pharmacists and, besides ensuring compliance with the highest standards, is engaged in improving the quality of their service - the appellant, whose membership comprises qualified pharmacists does not conforms to club or association services - demand in relation to tax as provider of club or association service fails. Convention services - HELD THAT - The appellant does not offer convention services but gets events organised by professionals and, by collecting fees which are transmitted to such organisers, enables its members to participate in them. There is no allegation that any part of the fees charged by convention organisers is retained by the appellant. Thus, the activity is beyond the purview of taxability under section 65 (105) (zc) of Finance Act, 1994. Appeal allowed - decided in favor of appellant.

Issues:
1. Recovery of tax, interest, and penalty from M/s Indian Pharmaceutical Association for club or association services and convention services.
2. Applicability of tax under section 65(105)(zzze) of Finance Act, 1994 to a charitable organization.
3. Retrospective exemption under section 96 of Finance Act, 1994.
4. Legal precedents from Jharkhand and Gujarat High Courts regarding the tax liability of clubs and professional bodies.
5. Taxability of services provided by the appellant as a national professional body of qualified pharmacists.
6. Taxability under section 65(105)(zc) of Finance Act, 1994 for organizing training programs and imparting knowledge.
7. Taxability of convention services provided by the appellant.

Analysis:
1. The judgment dealt with two notices issued to M/s Indian Pharmaceutical Association for recovery of tax, interest, and penalty for providing 'club or association service' and 'convention service' for specific periods. The appellant challenged the imposition of tax under section 65(105)(zzze) of Finance Act, 1994, claiming retrospective exemption and citing legal precedents from Jharkhand and Gujarat High Courts in their favor.

2. The appellant argued that as a registered charitable organization, they were exempt from the said tax, especially considering the retrospective exemption provided by section 96 of the Finance Act, 1994. They relied on judgments from the Hon’ble High Courts of Jharkhand and Gujarat to support their position, asserting that the tax demand was not applicable to them.

3. The judgment referenced the decision of the Hon’ble High Court of Jharkhand, emphasizing the distinction between sale and service, and the necessity of two legal entities for a service transaction. The court held that if a club provides services to its members, based on mutuality and the absence of two legal entities, it does not constitute a taxable service. This reasoning was extended to professional bodies like the appellant.

4. Regarding the convention services provided by the appellant, the judgment clarified that the appellant acted as an agent to recover costs charged by professional organizers for events, without retaining any fees. As such, the activity fell outside the scope of taxability under section 65(105)(zc) of the Finance Act, 1994.

5. Ultimately, the Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal based on the arguments presented and the legal analysis provided. The judgment highlighted the specific legal provisions, exemptions, and precedents that supported the appellant's position, leading to the decision in their favor.

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