2024 (9) TMI 317 - AT - Service Tax

Invocation of time limitation for raising demand - Levy of penalty - Exemption from service tax - bundled services or not - game of cricket - Dropping of the demands by the ld. adjudicating authority - demand raised under the category of business auxiliary service - Dropping of the demand under the category of event management service - Dropping of demand under the category of mandap keeper service - Dropping of demand under renting of immovable property service'. Invocation of time limitation for raising demand - Levy of penalty - HELD THAT - The demand has been raised in the notice on the basis of Annual Report for the year 2008-09 to 2013-14 which is published every year and the Ledger A/c maintained by them. When the demand is raised on the basis of the books of accounts maintained by the appellant, extended period cannot be invoked. This view has been held in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR, COMMISSIONERATE VERSUS M/S. HINDUSTAN CABLES LIMITED. 2022 (6) TMI 709 - CALCUTTA HIGH COURT wherein the Hon'ble Calcutta High Court has held that when Show Cause Notice issued is on the basis of book of accounts maintained by the assessee and not discovery of new facts by Department, extended period of limitation cannot be invoked. The demands confirmed in the impugned order for the extended period of limitation is not sustainable. No penalty is imposable as suppression of fact with intention to evade the tax is not established in this case. Exemption from service tax - bundled services or not - game of cricket - HELD THAT - All the services rendered by the appellant are naturally bundled together with the game of cricket. In the present case, it is observed that promoting the game of cricket is the primary objective of the cricket association/JSCA and all the services rendered are in association with promoting the game of cricket. When matches are not played, all the services become irrelevant and JSCA earns money only when these services are provided during the course of cricket matches. Accordingly, JSCA has rendered bundled services in connection with promoting the game of cricket. Since services rendered in connection with promotion of sporting events is exempted from the levy of Service Tax prior to 30.06.2012, no service tax is payable by the JSCA, being a charitable institution engaged in the activity of promoting the game of cricket. For the period after 01.07.2012, vide Mega Exemption Notification No 25/2012-S.T. dated 20.06.2012, exempts all the services rendered by JSCA in connection with sports from the levy of service tax. Accordingly, JSCA are not liable to pay Service Tax for the services rendered by them in connection with promotion of sports. Dropping of the demands by the ld. adjudicating authority - demand raised under the category of business auxiliary service - HELD THAT - The amount received are not taxable under the category of Business Auxiliary Services as the said subsidies are not received for providing any service for the promotion, marketing or sale of any product or service for the client . The said subsidies were merely in the nature of grants-in-aid by the BCCI for promotion of the game of cricket in the State of Jharkhand. The services rendered in connection with promotion of sports is not liable to service tax prior to 30.06.2012. For the period under the Negative List regime also, in terms of Clause 10(b) of the Mega Exemption Notification No 25/2012-S.T. dated 20.06.2012, w.e.f. 01.07.2012 any service provided by a recognized sports body to another is exempted from levy of service tax - the ld. adjudicating authority has rightly dropped the demand raised in the Notice under this category. Dropping of the demand under the category of event management service - HELD THAT - It is observed that the subsidies received from BCCI are in the nature of grants in aid for providing any service in relation to management of any event as an event manager . Accordingly, the ld. adjudicating authority has rightly dropped the demand raised under the category of event management service. Dropping of demand under the category of mandap keeper service - HELD THAT - JSCA had leased corporate boxes, hospitality boxes, etc., to corporate houses for viewing international matches for a specified period (not for all matches). This amount collected is in the nature of entry fee booked in advance to privileged buyers and hence, the said activity could not be treated as a service under the category of mandap keeper service . JSCA also submits that there is no exclusive letting out of the said corporate boxes, hospitality lounges, etc.; in the instant case, JSCA is neither a mandap keeper nor are the corporate boxes mandaps . Accordingly, the ld. adjudicating authority has rightly dropped the demand under this category. Dropping of demand under renting of immovable property service - HELD THAT - The service rendered in this regard by JSCA is not liable to service tax prior to 30.06.2012. W.e.f. 01.07.2012, under the category of declared services , the ground rent received for playing cricket, which is not in furtherance of business, is not taxable. In respect of the other services wherein demands were dropped by the ld. adjudicating authority, there are no infirmity in the dropping of the demand by the ld. adjudicating authority. All the said demands have been rightly dropped by the ld. adjudicating authority and thus, upheld - the demands confirmed by the ld. adjudicating authority in the impugned order set aside - Since the demand itself is set aside, the question of demanding interest and imposing penalties does not arise. Appeal of assessee allowed.

Summary

Issues Involved:
1. Limitation period for raising service tax demand.
2. Classification of services for tax purposes.
3. Applicability of service tax on various services provided by JSCA.
4. Validity of penalties imposed.
5. Revenue's appeal against dropped demands.

Issue-wise Detailed Analysis:

1. Limitation Period for Raising Service Tax Demand:
JSCA contested the demand on the grounds of limitation, arguing that the demand was based on their annual reports and ledger accounts, which are published and maintained regularly. They cited precedents where extended periods of limitation were not invoked when demands were based on published documents. The Tribunal agreed, referencing the case of Commissioner of C.Ex. vs. Hindustan Cables Ltd. and U.T Ltd. Vs. Commissioner of C.Ex., concluding that the extended period of limitation could not be invoked as there was no suppression of facts or intent to evade tax.

2. Classification of Services for Tax Purposes:
The Tribunal reviewed the services provided by JSCA, including selling space for advertisements, franchisee services, club or association services, and maintenance and repair services. They determined that these services were naturally bundled with the primary objective of promoting cricket. According to Section 66F of the Finance Act, 1994, bundled services should be treated as a single service, which in this case was promoting cricket, exempt from service tax.

3. Applicability of Service Tax on Various Services Provided by JSCA:
The Tribunal held that services rendered by JSCA in connection with promoting cricket were exempt from service tax both before and after 30.06.2012, under the Mega Exemption Notification No 25/2012-S.T. The Tribunal also upheld the adjudicating authority's decision to drop demands under various categories like business auxiliary services, event management services, mandap keeper services, and renting of immovable property services.

4. Validity of Penalties Imposed:
Since the Tribunal set aside the demand for service tax, they concluded that penalties under Section 78 and Section 77 of the Finance Act, 1994, were not applicable. The penalties were initially imposed for alleged suppression of facts with intent to evade tax, but this was not established.

5. Revenue's Appeal Against Dropped Demands:
The Revenue appealed against the adjudicating authority's decision to drop demands amounting to Rs.17,12,27,323.90/-. The Tribunal found no merit in the Revenue's appeal, agreeing with the adjudicating authority that the subsidies received by JSCA were grants-in-aid for promoting cricket and not taxable under business auxiliary services or other categories. The Tribunal upheld the dropping of demands under all contested categories.

Conclusion:
The Tribunal set aside the confirmed demands and upheld the dropping of demands by the adjudicating authority. Consequently, the appeal filed by JSCA was allowed, and the appeal filed by the Revenue was dismissed. The cross-objection filed by JSCA was disposed of accordingly. The decision emphasized that promoting cricket, as a charitable activity, was exempt from service tax, and no penalties were applicable due to the absence of intent to evade tax.