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TMI Blog2017 (6) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have promoted a loyalty programme for their customers and on payment of some consideration, their customers become members of such programme. The said membership entitles the customers for various discounted services in the affiliated hotels - such programmes does not lead to formation of any club or association and the members of such programme cannot be considered as a member of club or association, to be taxed under the taxable category of "club or association". Exhibition service - Held that: - the appellant permitted HSBC to display its board in their premises. There is no evidence of appellant’s holding any business exhibition and allowing HSBC as exhibitor. We find that display of an advertisement board in the premises of the appellant does not make the appellant as an organisor of a business exhibition - there is no service tax liability on such activities under business exhibition services. Extended period of limitation - Held that: - the allegation of fraud or suppression cannot be sustained in respect of the said service - the service tax liability in respect of Franchise services shall be from 18.04.2006 on reverse charge basis. However, demand shall be restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce should have been issued as the appellants have paid service tax even before the issue of show cause notice as in terms of Section 73(3) of the Act the matter should have been closed without issue of show cause notice. (3) The service tax liability on Franchisee Service is on reverse charge basis in terms of Section 66 A of the Act, which was introduced w.e.f. 18.04.2006. The tax liability on receipt of the service when the provider is situated abroad is a new concept and the legal position was clarified and confirmed only by the decision of the Hon ble Bombay High Court in case of Indian National Shipowners Association Ltd. 2009 (13) STR 235 (Bombay). The High Court ruled that service recipient is not liable to pay service tax prior to 18.04.2006 and reverse charge liability will arise only after introduction of Section 66 A and not in terms of Rule 2(1)(d)(iv) of Service Tax Rule 1994. In such situation, there could be no element of willful mis-statement etc. on the part of the appellant for non-payment of service tax. (4). Regarding Mandap Keeper Service, it is submitted that the appellant issued item-wise invoice. They were filing service tax and VAT returns regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the same and allowed the refund of such excess payment after due adjustment in liability of the appellant as confirmed. The Original Authority simply recorded that the proceedings are not for refund and hence did not pass any order on excess payment. When the liability of the appellant was decided by the Original Authority, after taking into account the documents, scope of activities, etc., then a comprehensive view regarding excess or short payment should have been recorded and the amount refundable to the appellant should have been returned. 4. Ld. AR submitted that the Original Authority examined the tax liability of the appellant under each category of service. The demand in respect of Franchisee Service was restricted for the period after 18.04.2006 in terms of the settled legal principle, after the decision of the Bombay High Court cited above. In respect of Mandap Keeper Service and Management, Repair and Maintenance Service, the appellants have not discharged the service tax liability and the same was paid only after the inquiry was initiated by the Revenue. There is no legal interpretation or bonafide doubt with reference to these services. The appellants being an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of show cause notice), though the impugned order did appropriate already paid tax amount. This is to arrive at remaining liability. Further, in the case before Allahabad High Court the demand was set aside on de novo adjudication by the lower appellate authority. The adjudication order was passed later after examining the allegations in the show cause notice along with the submissions made by the appellant. As such, we note that no suo moto refund is possible in such a scenario. However, the eligibility of the appellant, if any, wherever excess payment is proved with supporting documents, along with fulfillment of other conditions, required to be examined by the jurisdictional officer separately. 7. Regarding the liability of the appellant for service tax under the category of Club or Association Service , we note that the appellants have promoted a loyalty programme for their customers and on payment of some consideration, their customers become members of such programme. The said membership entitles the customers for various discounted services in the affiliated hotels . We find that such programmes does not lead to formation of any club or association and the members of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rose on reverse charge basis, there could be bonafide belief about tax liability on the part of the appellant. Admittedly, the concept of reverse charge, making the recipient liable to pay service tax, when the provider of service is situated outside the country, was new and the legal principles were confirmed only after the introduction of Section 66 A, and in terms of ratio laid down by the Hon ble Supreme Court in National Shipowners Association Ltd. (supra) . The scope and application of reverse charge mechanism in respect of foreign service provider has been a matter of dispute, which was resolved only after the said decision of the Hon ble High Court. Hence, it is reasonable to hold that the appellants had bonafide belief about the non-liability of the service tax on the franchisee service during the material time. As such, the allegation of fraud or suppression cannot be sustained in respect of the said service. Further, we also note that the tax paid on such reverse charge basis is available to the appellant as credit for discharging tax on their output service. In such possible situation of revenue neutrality, the allegation of melafide intention to evade payment of servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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