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TMI Blog2014 (1) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... ards based upon a High Court judgment in 2013. Confirmation of service tax demands under the taxable service category of Mandap Keeper Service, Club and Association service, Renting of Immovable property service and Sale of space for advertisement service is sustainable in law. In the case of Club & Association service, the tax demand has to be recomputed excluding the bar sales subject to the appellant producing satisfactory evidence in this regard - appellant is liable to pay interest on the above service tax demands in accordance with law - appellant is liable to penalty under Section 76 and 77 - appellant is also liable to penalty under Section 78 of the said Finance Act except in the case of Renting of Immovable property service - demand of service tax under the category of Business Support Services is unsustainable in law and the same is set aside. Consequently, there will be no interest and penal liability on account of this demand - Decided partly in favour of assessee. - ST/136/12 & ST/85107/13 - Final Order Nos. A/2303-2304/2013-WZB/C-I(CSTB) - Dated:- 4-12-2013 - P R Chandrasekharan And Anil Choudhary, JJ. For the Appellant : Shri Bharat Raichandani, Adv. with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,11,323/- during 2007-08 to 2009-10 involving a service tax liability of Rs.3,58,725/- and no service tax liability has been discharged on the said service. e) The appellant was affiliated to the Board for Control of Cricket in India (BCCI in short) and the BCCI had conducted various cricket matches/tournaments utilizing the facility of the appellant's stadium and BCCI had paid the appellant by way of various subsidies such as TV subsidy, IPL subsidy, Tournament receipts, Advance lease fees, etc. amounting to Rs.123,05,20,263/- during 2006-07 to 2009-10 on which the service tax liability worked out to Rs.14,57,72,251/- and the said service provided by the appellant to BCCI merited classification under "Business Support Services" (BSS in short) as defined in section 65 (104c) read with section 65 (105) (zzzq). 2.1 On conclusion of the investigation, a show cause notice dated 30-09-2010 was issued to the appellant proposing to classify the services under the various categories of taxable services as discussed above and to demand a total service tax liability of Rs.16,45,61,441/- along with interest thereon and also proposing to impose penalties on the appellant under the vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort), they have provided the space for installation of a giant screen and mere providing of space for installation of screen is not taxable service per se prior to 1-7-2010. Reliance is placed on the decisions of this Tribunal in the case of Dr. Lal Path Laboratories [2006 (4) STR 0527] and Federal Bank [2008 (10) STR 320] in support of this contention. iv) Regarding the demand of service tax under the category of club or association service, the ld. Counsel submits that the said service excludes from its purview, the services rendered by any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature. It is contended that as per the memorandum and rules of Vidarbha Cricket Association, which is an affiliate of BCCI, the aims and objects include - 1) encouragement of cricket in the area under its territorial jurisdiction; 2) encourage bona fide cricket clubs in promoting cricket activities; 3) facilitate and provide conditions for training to players; 4) arrange, promote, regulate and control cricket tournaments in the area within the jurisdiction of the association; 5) un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to business or commerce. Further there is no nexus between the amounts received by way of subsidies/grants with the usage of the facility. Therefore, the demand of service tax under the category of BSS is unsustainable in law. vi) It is also contended that the demand is time barred as the appellant was under the bona fide belief that no tax is payable. Reliance is placed on the decisions of the hon'ble Apex court in the case of Cosmic Dye Chemical vs. Collector of Central Excise, Bombay [1995 (75) ELT 721 (SC)], CCCE vs Chemphar Drug and Liniments [1989 (40) ELT 276 (SC)], Pushpam Pharmaceuticals Company vs. CCE, Bombay [1995 (78) ELT 401 (SC)] and Tamil Nadu Housing Board [2004 (74) ELT 9 (SC)]. vii) It is urged that no penalty is imposable on the appellant as the appellant was under the bona fide belief that they are not liable to service tax in view of the decisions of the department in the case of Gujarat Cricket Association and Saurashtra Association, the charitable nature of the organization of the appellant, dispute on the leviability of service tax on renting of immovable property before various high courts/supreme court, etc. and the appellant's case merits waive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SFIPL and TFPL does amount to activity in relation to sale of space or time for advertisement and hence correctly leviable to service tax. The argument of revenue neutrality advanced by the appellant does not merit acceptance because the levy is not dependent on the availability of credit at the subsequent stage and therefore, this argument has to be rejected outright. Accordingly he pleads for upholding the demand in this regard. e) Regarding the demand of service tax on the consideration received from BCCI under BSS service, the ld. AR submits that the decisions of the Commissioner of Service Tax, Ahmedabad in the case of Gujarat Cricket Association and Saurashtra Cricket Association were rendered in a different context altogether wherein the demand was made under the category of "Event Management Service". That is not the position in the present case. The appellant has allowed utilization of its infrastructural facilities by BCCI for conducting cricket tournaments/matches and has received consideration in the form of subsidies/grants from BCCI. Thus there is a nexus between the service rendered and the consideration received. Therefore, the said service attracts levy under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service is involved, that would not make the legislation beyond the legislative competence of Parliament. So long as the legislation does not trench upon a field which has been reserved to the State legislatures, the only conclusion that can be drawn is that the law must be treated as valid and within the purview of the field set apart for Parliament. There is, it must be emphasised, no violation set up of any provision in Part III of the Constitution." The hon'ble high court also upheld the retrospective amendment made to the provisions relating to the levy on renting of immovable property. 5.2.1 A larger bench of the hon'ble high court of Delhi in the case of Home Solutions Retails (India) Ltd. vs. UOI and others also upheld the vires of the levy and held as follows:- "69. In view of our aforesaid analysis, we are disposed to think that the imposition of service tax under Section 65(105)(zzzz) read with Section 66 is not a tax on land and building which is under Entry 49 of List II. What is being taxed is an activity, and the activity denotes the letting or leasing with a purpose, and the purpose is fundamentally for commercial or business purpose and its furtherance. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for advertisement in print media and sale of time slots by a broadcasting agency or organisation. Explanation 1.-For the purposes of this sub-clause, "sale of space or time for advertisement" includes,- (i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet; (ii) selling of time slots on radio or television by a person, other than a broadcasting agency or organisation; and (iii) aerial advertising. Explanation 2. - For the purposes of this sub-clause, "print media" means, - (i) "newspaper" as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867; (ii) "book" as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867, but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes;" Section 65(2) defines advertisement as follows:- "advertisement" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability. Every service provider has to discharge service tax liability on the activity undertaken by him on the consideration received by him. If the recipient of the service undertakes further taxable services, he has to discharge service tax liability on the value addition made by him by taking credit of the service tax paid at the preceding stage. That is the essence of value added taxation in service tax. The appellant has also argued that the demand pertains to a revenue neutral situation. The concept of revenue neutrality applies when taxability arises within the same legal entity. That is not the situation here. The appellant and SFIPL and TFPL are different and distinct legal entities. The tribunal's larger bench had an occasion to examine the applicability of revenue neutrality in Jay Yushin case and the larger bench held as follows:- "(a) Revenue neutrality being a question of fact, the same is to be established in the facts of each case and not merely by showing the availability of an alternate scheme; (b) Where the scheme opted for by the assessee is found to have been misused (in contradistinction to mere deviation or failure to observe all the conditions) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... care, transport, or the removal of waste, which is organized by the Government or an official body in order to benefit all people in a particular society or community". As per Shorter Oxford English Dictionary (5 th Edition), "public service means- a) Government employment; b) a service provided for the community, especially under the direction of local or central government or other official agency" From these definitions, it can be inferred that to constitute public service, the activity should sub-serve an essential public need. There are many countries in the world where cricket is not played at all and only in very few countries, cricket is played. Can it, therefore, be said that promotion of cricket sub-serves an essential public need? It is difficult to answer this question in the affirmative with any certainty. 5.4.2 Is the appellant a charitable organization merely because it is held so for the purposes of Income Tax Act. Income Tax Act and Finance Act, 1994 are not pari materia and they operate in totally different fields. As per Black's Law dictionary charity' is defined as: "aid given to the poor, the suffering or the general community for religious, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expenses reimbursement; 6) lease fees for Corporate Box; and 7) subsidy granted by BCCI. The nature of these subsidies needs examination. From the minutes of the BCCI's meetings distributing subsidies, the following picture emerges:- (i) As regards TV rights subsidy, BCCI receives income by selling TV rights of international matches and at the end of the financial year, the income earned by selling these rights are distributed among the affiliates and the formula for distribution is approved by the AGM. This amount has nothing to do with the organizing of any particular match by the affiliates and even associations who do not stage any match also receive subsidy from BCCI. (ii) Tournament receipts, reimbursement of players' expenses and payment of subsidy are made when their team participates in any tournament. This amount is paid to meet the expenses of travel, lodging, daily allowance payable to the members of the team. (iii) IPL subsidy is distributed to all affiliates out of the income generated from IPL events. Even when no IPL event is held, the affiliate gets the subsidy. For example in 2009 when IPL events were held in South Africa, each affiliate got a sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardly any free speech element in the right to telecast when it is asserted by the latter, it will warped and cussed view to take when the former claim the same right and contend that in claiming the right to telecast the cricket matches organized by them, they are asserting the right to make business out of it. The sporting organizations such as BCCI/CAB which are interested in promoting the sport or sports are under an obligation to organize the sports events and can legitimately be accused of failing in their to do so. The promotion of sports also includes its popularization through all legitimate means. For this purpose, they are duty bound to select the best means and methods to reach the maximum number of listeners and viewers. Since at present, radio or TV are the most efficacious methods, thanks to technological development, the sports organizations like BCCI/CAB will be neglecting their duty in not exploring the said media and in not employing the best means available to them to popularize the game. That while pursuing their objective of popularizing the sports by selecting the best available means of doing so, they incidentally earn some revenue, will not convert either th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was the under the bona fide belief that it was not liable to pay service tax. We have perused the decision cited by the appellant to entertain this belief. The decisions in the case of Delhi Stock Exchange Association and Banaras Brass Merchant and Manufacturers Association was in relation to the provisions of the Income Tax Act which is not pari materia with service tax laws. As regards the reliance on the decision in the case of Secretary, Ministry of Information and Broadcasting, we have already granted the benefit of this decision in the case of BSS service. As regards the reference to Tribunal's decision in the case of Institute of Banking and Personnel Selection, the said case relates to manpower recruitment agency services which is not an issue before us. As regards the decision of the Delhi High court in the case of renting of immovable property, the said decision was rendered in the case of Home Solutions, the first judgment was rendered in 2009 whereas the demand pertains to the period from 2007 onwards. Therefore, it cannot be said the appellant could have entertained a bona fide belief in 2007 on the basis of a judgment rendered in 2009. In the case of Mandap Keeper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the departmental authority is entirely absent. Hence, if one imports such concept in sub-section (1) of section 11A of the Act or the proviso thereunder it would tantamount to rewriting the statutory provision and no canon of interpretation permits such an exercise by any Court. If it is not open to the superior court to either add or substitute words in a statute such right cannot be available to a statutory Tribunal. 17. The proviso cannot be read to mean that because there is knowledge the suppression which stands established disappears. Similarly the concept of reasonable period of limitation which is sought to be read into the provision by some of the orders of the Tribunal also cannot be permitted in law when the statute itself has provided for a fixed period of limitation. It is equally well settled that it is not open to the Court while reading a provision to either rewrite the period of limitation or curtail the prescribed period of limitation" A similar view had been taken by this Tribunal in the case of Usha Rectifier Corporation (I) Ltd. [2001 (130) ELT 485] affirmed by the Apex Court in [2011 (263) ELT 665 (SC)]. In the light of these decisions, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and. 7. The appeals are disposed of in the above terms. (Operative part of the Order pronounced in the Court on / / 2013) PER : Anil Choudhary 8.1 I had the advantage to go through the order recorded by my learned brother Mr. P.R.Chandrasekharan, Member (Technical), but with all humility I differ with the holding of the appellant as a non-charitable organization. Both the Finance Act, 1994 and the Income Tax Act, 1961 are Acts framed by the Parliament of India under the scheme of the Constitution of India. Charitable purpose' as defined in Section 2(15) of the Income Tax Act includes education and the advancement of any other object of general public utility (emphasis supplied). The objects of the appellant includes cricket education, study research, to promote other sports, etc. Advancement of sports and games is definitely in larger public interest. 8.2 That the Finance Act, 1994 or the Service Tax Rules, 1994 do not define either charitable purpose' or charitable organisation'. Further there is no stipulation in the Finance Act, 1994 or the Rules, that definition of other Act(s) or particularly Income Tax Act, 1961 is not applicable. Every term or phrase cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax on the services rendered to its members under Club or Association Service' as held by the Member (Technical) on the ground that the appellant is not rendering any public service nor are they a charitable organization and the provisions of Income Tax Act, 1961 are not pari materia with Chapter V of the Finance Act, 1994 OR The appellant, M/s. Vidarbha Cricket Association is not liable to service tax under Club or Association Service' as held by Member (Judicial) on the ground that the appellant is treated as a charitable organization under the Income Tax act, 1961 ii) Whether the appellant is liable to penalties under Sections 76, 77 and 78 of the Finance Act, 1994 in cases where the service tax demands have been confirmed invoking the extended period of time as held by Member (Technical) OR The appellant is not liable to penalty under the above provisions on the ground that there is no contumacious conduct on the part of the appellant and the disputes had arisen as a matter of interpretation of the tax provisions, as held by Member (Judicial). iii) Is there any inherent contradiction in the waiver of penalty by Member (Judicial) inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia ors. Vs. Cricket Association of Bengal ors. reported in (1995)2 SCC 161, to bring out the point that the appellants are not a 'commercial concern'. Further, the Income Tax Appellate Tribunal in the appellant's own case has held that the object of the appellants is charitable in nature and the appellants are exempt from payment of income tax. 14.1 The learned counsel further argued that the very fact that there is difference of opinion between the two learned Members of this Tribunal shows that the issue is debatable in nature and this difference is good enough for not invoking the extended period of limitation. He further stated that the Income Tax Appellate Tribunal as also the Commissioner of Income Tax (Appeals) have held that the appellants are charitable organisation and therefore they had bona fide belief that they are not required to pay service tax. 14.2 The learned counsel further stated that no penalty can be imposed as the issue involved is purely one of interpretation and legal in nature. There is a reasonable cause for non-payment of tax and this is an appropriate case for waiving penalty under Section 80 of the Finance Act. He further argued that the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , they never approached the department for any clarification on the issue. The learned AR also quoted the following case laws in support of various contentions. (i) CCE Guntur vs.Andhra Sugar ltd. reported in 1988 (38) ELT 564(SC); (ii) Gujarat Travancore Agency vs. CIT reported in 1989 (42) ELT 350 (SC) and (iii) ACCE vs. Krishna Poduval reported in 2006 (1) STR185 (Ker.) 16. The first point raised by the learned counsel for the appellants is relating to the decision by the Hon'ble High Court in the case of Sports Club of Gujarat Ltd. (supra). I find that this particular issue was not raised before the referral Bench and the matter has been referred to the undersigned for the limited purpose of the three issues. I, therefore, will not be going into question, but state my opinion on the points referred to me. 17. The first issue referred to is whether M/s. Vidarbha Cricket Association, the appellants, is liable to service tax on the services rendered to their members under 'club or association service' on the grounds that the appellants are not rendering any public service nor are they a charitable organization and the provisions of the Income Tax Act,1961 are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y subsidized rate and are for the poor and needy. I find the object of the appellants is to promote the game of cricket which cannot be considered as service to poor and needy and therefore cannot be considered as charitable in nature. The service being taxed is the 'Club and Association Service'. In fact, club and Association Service provided by the appellant is not utilized by the poor and needy but by the people who have social status and are financially well off. Moreover, it is not the case that activity of promoting cricket is supported by donations by such members of the Association. I am therefore of the view that the appellants are not providing public service and that of 'charitable nature'. I have gone through the apex court judgment in the case of Secretary, Ministry of Information Broadcasting, Govt. of India Ors. (supra). The issue before the Hon'ble Supreme Court has nothing to do with the present issue. While discussing the issue, the Hon'ble Supreme Court has observed that Cricket Association of Bengal is a non-profit making organisation. An organization begin 'commercial' or 'non-profit' is very different from a 'charitable organisation'. A charitable organisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant is a commercial organization or not but whether the appellant is engaged in activates having objectives which are in the nature of public service and are of charitable in nature. Thus the issue before the Tribunal was entirely different. 18. The second point of difference is whether the appellants are liable to penalties under Sections 76, 77 and 78 of the Finance Act or the appellants are not liable to penalty under the above provisions on the ground that there is no contumacious conduct on the part of the appellants and dispute had arisen as a matter of interpretation of the tax provisions. Sections 76, 77 and 78 of the Finance Act are as under:- 76. Penalty for failure to pay service tax. - Any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made under this Chapter, who fails to pay such tax, shall pay, in addition to such tax and the interest on that tax in accordance with the provisions of section 75, a penalty which shall not be less than one hundred rupees for every day during which such failure continues or at the rate of one per cent. of such tax, per month, whichever is higher, starting with the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct are elaborated in the Sections. Only in Section 78 certain clauses require intent to evade or willful suppression. None of these Sections stipulate contumacious conduct on the part of the appellants. In fact, scheme of Service Tax Law is self determination/assessment of tax and payment in the bank. There is no requirement to interact with authority. In the present case 'club or association service' was introduced in 2005. Being a leading Club, it was expected that they would take steps to at least find out whether there is a tax liability on them. There is no evidence whatsoever that they have taken any steps to even find out whether the tax is payable by them. The appellant has not challenged the levy and cannot form bona fide belief from 2005 onwards based upon a High Court judgment in 2013. The learned counsel for the appellant has cited service of Renting in this very order. Case of Renting of Immovable Property is on entirely different footing. In that case, large number of person challenged the levy in various High Courts and the same was widely published in newspapers. Hon'ble High Courts decided in favour of petitioners. The law was amended with retrospective effect. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced, leave alone proving. Thus penalty cannot be waived in the present case. 20. The matter be placed before the regular Bench for passing majority order. (Pronounced in Court on 20.11.2013) ORDER NO. A/2303-2304/13/CSTB/CI dated 04/12/2013 MAJORITY ORDER 21. In view of the majority decision, we pass the following order: a) the confirmation of service tax demands under the taxable service category of Mandap Keeper Service, Club and Association service, Renting of Immovable property service and Sale of space for advertisement service is sustainable in law. In the case of Club Association service, the tax demand has to be recomputed excluding the bar sales subject to the appellant producing satisfactory evidence in this regard. b) the appellant is liable to pay interest on the above service tax demands in accordance with law. c) the appellant is liable to penalty under Section 76 and 77 of the Finance Act, 1994. d) the appellant is also liable to penalty under Section 78 of the said Finance Act except in the case of Renting of Immovable property service. e) the demand of service tax under the category of Business Support Services is unsustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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