2022 (1) TMI 1127 - AT - Service Tax

Levy of service tax - donations received by the appellant from its members and on freight charges - reverse charge mechanism - applicability of Notification dated 26.09.2016 from 01.07.2012 to 20.10.2015 and Notification dated 20.06.2012 w.e.f. 21.10.2015 - HELD THAT - The appellant is registered under section 12AA of the Income Tax Act and the education and training in yoga provided by the appellant is towards the activity of advancement of yoga. Thus, as both the conditions are satisfied by the appellant, the membership donations collected by the appellant would be exempt from payment of service tax for the period from 01.07.2012 to 20.10.2015. Whether the appellant is liable to pay service tax on the freight amount paid by it on a reverse charge mechanism? - HELD THAT - Goods transport agency service has been defined in section 65(26) of the Finance Act to mean any person who provides service in relation to transport of goods by road and issues consignment notes, by whatever name called. In the present case, consignment notes have not been issued and so the activities cannot be said to be covered under goods transport agency services - In this connection it would be useful to refer to the decision of the Tribunal in BHORAMDEO SAHAKARI SHAKHAR UTPADAM KARKHANA VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, RAIPUR 2019 (10) TMI 1416 - CESTAT NEW DELHI , wherein it has been held that service tax can be levied only if consignment notes are issued. Thus, service tax liability could not have been fastened on the appellant under the reserve charge mechanism. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax on membership donations and freight charges paid by the appellant.

Analysis:
The appellant, a trust registered under the Registration Act, 1908, engaged in charitable activities including yoga education. The Department issued show cause notices for non-payment of service tax on membership donations, freight charges, and hiring motor vehicles. The Commissioner confirmed a demand of service tax on membership donations and freight charges but dropped a portion of the demand. The appellant challenged the order citing exemptions under Notifications dated 26.09.2016 and 20.06.2012. The appellant argued that the activities were exempt under these notifications. The Tribunal analyzed the notifications and held that the appellant was exempt from paying service tax on membership donations for the relevant periods based on the conditions specified in the notifications.

Regarding the liability to pay service tax on freight charges under reverse charge mechanism, the Tribunal referred to the definition of 'goods transport agency' service under the Finance Act. As consignment notes were not issued, the activities did not fall under this category. Citing a previous Tribunal decision, it was established that service tax could only be levied if consignment notes were issued. Consequently, the service tax liability on the freight amount paid by the appellant was deemed invalid. As a result, the Tribunal set aside the Commissioner's order, allowing the appeal in favor of the appellant.

In conclusion, the Tribunal ruled that the appellant was exempt from paying service tax on membership donations based on specific notifications and that the service tax liability on freight charges was not applicable due to the absence of consignment notes. The Commissioner's order was overturned, and the appeal was granted in favor of the appellant.