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TMI Blog2023 (9) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The income of the society is exempted under section 11 of the Income Tax Act 1961. The Hon ble Supreme Court examined the definition of religious denomination in the landmark judgment of THE COMMISSIONER, HINDU RELIGIOUS ENDOWMENTS, MADRAS VERSUS SRI LAKSHMINDRA THIRTHA SWAMIAR OF SRI SHIRUR MUTT. [ 1954 (4) TMI 29 - SUPREME COURT ]. It was held that a denomination is a collection of individuals, classed together under the same name; now almost always specifically, specially a religious sect or body having a common faith and organisation and designated by a distinctive name. The definition of a religious body has to be broader than that of a religious denomination . A religious denomination is a subgroup within a religion. Religious body can be a part of a religion or a religious denomination and established with the objective of propagating religion and primarily serving the members of its community. Religions are generally propagated and administered with the help of organizations within its domain that are closely integrated with society. These organisations are understood in common parlance to be religious bodies as distinct from religion per se or a religious denomination. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for use in the course or furtherance of business or commerce is liable to service tax under the category of 'Renting of Immovable Property service' with effect from 1.6.2007 in terms of sec. 65(90a) of the Finance Act, 1994. A Show Cause Notice dated 16.9.2013 was issued proposing to demand service tax of Rs.87,96,460/- along with interest for the period from 1.4.2008 to 31.3.2013 and for imposing penalties. After due process of law, the adjudicating authority confirmed the demand as proposed in the Show Cause Notice along with interest and imposed equal penalty under sec. 78 besides penalty under section 77 of the Finance Act, 1994. Aggrieved by the impugned order, the appellant is before the Tribunal. 3. No cross-objection has been filed by the respondent-department. 4. We have learned counsel Shri M.N. Bharathi for the appellant and Shri Harendra Singh Pal, learned Assistant Commissioner (AR) for the Department. 4.1 Shri M.N. Bharathi, learned counsel for the appellant submitted that the appellant is registered under the Societies Registration Act, 1860 and is under the direct control of the Bishop of Tanjore. As per the Memorandum of the Society its object is to promote the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question whether "service tax" under Section 65(105)(zzzz) of the Finance Act, 1994 on renting of immovable property or any other service in relation to such renting, for use in the course of or, for furtherance of, business or commerce is within the legislative competence of the Union Parliament is still before the Hon'ble Supreme Court in the case of Union Of India vs UTV News Ltd., [2018 (13) GSTL 3 (SC)]. Therefore, the appellants were under the bonafide belief that the said activity would not attract tax liability. He submitted the following chart to trace the history of the legal developments regarding the impugned tax. Date Particulars 01.06.2007 "Renting of Immovable Property Services' have been brought under the purview of Service tax with effect from 1.6.2007 with a view to tax the activity of renting of immovable property for use in the course or furtherance of business or commerce. 18.04.2009 Hon'ble High Court of Delhi, in the case of M/s Home Solution Retail India Ltd & Others v UOI and Ors, 2010 (19) STR 3 (Del) held that renting per se cannot be regarded as service. Hence, no service tax could be levied on the activity of renting per se. 08.05.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of this Court in State of W.B. u. Kesoram Industries Ltd. [(2004) 10 SCC 201] which decision has been delivered by a Bench of five Judges of this Court and the decision delivered by a seven-Judge Bench of this Court in India Cement Ltd. v. State of T.N. [(1990) 1 SCC 12], reference to the Bench of nine Judges is requested. The office is directed to place the matter on the administrative side before the Chief Justice for appropriate orders." 23.09.2011 Hon'ble High Court of Delhi in the case of M/s Home Solution Retail India Ltd & Others v. UOI and Ors 2011 (24) STR 129 (Del) has upheld the constitutional validity of retrospective amendment by Finance Act, 2010 in definition of taxable service of commercial renting. 05.04.2018 In the case of Union of India vs. UTV News Ltd reported in 2018 (13) GSTL 3 (SC), the court held that this question of law has been referred to the Larger bench of the Supreme Court vide Mineral Area Development Authority v. Steel Authority of India - (2011) 4 SCC 450 and still remains pending before the Hon'ble Supreme Court, hence any case pertaining to this issue must be kept pending until the question of law is decided by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The impugned order also at para 13 agrees that renting of immovable property does not cover renting by a religious body. The whole issue boils down to whether the appellant is a 'religious body' as contended by them and hence eligible to be exempt from tax till 01/07/2012 when the negative list-based levy came into force or whether they are a 'Public Charitable and Educational Society' and not a religious body as claimed by Revenue and come under the levy in terms of sec. 65(90a) of the Finance Act, 1994 from 01/06/2007. Another question which is related and seeks an answer in the resolution of the dispute is whether a 'Public Charitable and Educational Society' can also be a 'religious body'. 5.1 To examine the issue it would be useful to extract section 65(90a) and section 65(105)(zzzz) of the Finance Act 1994 below: Section 65(90a) "Renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include - (i) renting of immovable property by a religious body or to a religious body; or (ii) renting of immovable property to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order carries an abstract of the statement from Rev. Fr. L. Sahayaraj. Both the sides have not questioned any of the averments made in the statement and it can hence be helpful in understanding the status of the Diocese. The said para is reproduced below: "5. Therefore, a statement was recorded from Rev.Fr.L.Sahayaraj, Secretary of the Diocese of Tanjore Society who was authorized by Most Rev. Dr.M.Devadoss Ambrose, the President of the Society. In his statement dated 19.04.2013 deposed under Section 14 of Central Excise Act, 1944 read with Section 83 of Chapter V of the Finance Act, 1994, Shri. L. Sahayaraj has inter alia stated that,- i. The Diocese of Tanjore Society was registered under the Societies Registration Act, XXI of 1860 on 09.10.1958; ii. The objects of Society are religious and educational, charity, social service, development etc. as stated in the Memorandum of Association of Bylaws of the Society; iii. They are running Primary, Middle Schools, High Schools, Higher Secondary Schools, Arts and Science College, Nursing College, B.Ed., College and Industrial Technical Institutes; iv. As per the objects in Bylaws of the Society, the Education md Education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Objects: Inspired by the good News preached by Christ the objects or purposes for which the Society is established are the following:- (a) Religious and Educational: To promote the spiritual, educational, industrial, technical or agricultural and other interests of primarily the members of the Catholic Community but members of the other communities of the said Diocese of Thanjavur society are not excluded in the places noted above including all the religious, charitable, benevolent and eleemosynary works of the said Diocese in the said places. As regards Education and Educational Institutions they are primarily for Catholics and in addition for members of other communities without distinction of caste or creed. (b) Charity: To perform works of charity primarily for members of the Catholic community in need but members of other communities irrespective of race, caste, community or creed are not excluded. (c) Social Service: To engage in social service activities aimed at improving the living conditions and general welfare of the poor particularly farmers and other working people as well as poor and indigent persons primarily member of the Catholic community but members o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butions or assistance, pecuniary or otherwise to charitable, educational, benevolent, social welfare or other institutions, bodies, persons as from time to time may deem, necessary or appropriate. (j) To invest: To lay aside, deposit in banks or otherwise deal with the moneys or funds of the society not immediately required for the objects of the society and to subscribe for purchase, acquire, hold sell, endorse and negotiate in every way debentures, stocks, shares and securities of every description on the money market. (k) Funds: To borrow and to raise funds with or without security, manner the Society may think fit and to repay the same. (l) Grants: To negotiate with and to enter into arrangements with any Government or authority whether Central, State, District, Municipal, Local, University. Donor agency or other people, public or private body as may seem conducive to the promotion or accomplishments of the objects of the Society or any of them and to obtain, collect, receive or recover from any such Government or authority or body, such grants, allowances, rights, concessions and privileges as may seem from time to time desirable and to carry out, exercise, comply with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ody established for a religious purpose; or (b) an entity that establishes, or directs, controls or administers, an educational or other charitable entity that is intended to be, and is, conducted in accordance with religious doctrines, beliefs or principles. The Act being a foreign legislation is not applicable in India. 5.3 The definition of a 'religious body' has to be broader than that of a 'religious denomination'. A religious denomination is a subgroup within a religion. Religious body can be a part of a religion or a religious denomination and established with the objective of propagating religion and primarily serving the members of its community. Religions are generally propagated and administered with the help of organizations within its domain that are closely integrated with society. These organisations are understood in common parlance to be 'religious bodies' as distinct from religion per se or a religious denomination. Hence, they are recognised by the public and societal institutions as a religious body. In the absence of any definition of a 'religious body' in law, the common understanding would have to be taken into consideration. By definition a Diocese is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s treated as a charitable purpose and, therefore, a society formed for such a purpose would be a charitable society under Act 21 of 1860. The only condition was that it should be for the benefit of the public. No doubt, in some statutes enacted subsequent to Act 21 of 1860, the Legislature used the words "charitable" and "religious" but the definition of these words was expressly stated to be for the. purposes of those, Acts. The subsequent legislation, the Madras High Court held, would not be helpful in interpreting the word "charitable" in Act 21 of 1860. The real question was: "What did the term mean in 1860?" We are in agreement with the view of the Allahabad and Madras High Courts. In fact, Lord McNaughten in his celebrated judgment in CIT v. Pemsel said that charitable purposes which came within the language and spirit of the statute of Elizabeth (43 Eliz Ch. 4) could be grouped into four heads (i) relief of poverty, (ii) education, (iii) advancement of religion, and (iv) other purposes beneficial to the community not coming under any of the preceding heads. The words in Act 21 of 1860 are, therefore, to be understood as including religious purposes also. Point 1 is held agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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