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TMI Blog2024 (4) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... ged the service tax up to 31.12.2012 under VCES. As per the said scheme assessee is not required to pay interest or penalty. In the present case the assessee inadvertently paid the interest also. On being pointed out the adjudicating authority has appropriated the said amount towards the interest payable for the period prior to 01.07.2012. Penalty for the period after 30.06.2012 - HELD THAT:- The assessee being a religious body was not liable to pay service tax prior to 01.07.2012. after the amendment w.e.f. 01.07.2012 the assessee is liable to pay service tax and has discharged the same before passing the order. The issue being interpretational and the period being transitional when the new service tax regime become applicable, we do not find any grounds to impose penalty for the period 31.12.2012 to 30.09.2013. the view of the adjudicating authority in not imposing penalty is upheld. The department appeal is dismissed. Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is registered under Section 25 of Companies Act and has been issued certificate of incorporation. The assessee owns various shops and rent its immovable properties to tenants for commercial purposes. They have received the rental income which is used for maintenance of churches, prayer houses, hospitals and schools and maintenance of bishops, deacons, pastors, teachers and other workers of CSI. Such income is also used for the relief, Provident Fund and for charitable purposes. The assessee had contended before the adjudicating authority that the assessee is a religious body and is not liable to pay service tax as per exclusion under Section 65 (90a)(i) of the Finance Act 1994. However, the show cause notice has been was issued alleging that the assessee has not furnished the necessary documents to show that it is a religious body. The assessee filed writ petition before the Madurai Bench of Hon'ble High Court of Madras as W.P (M.D) No.7205 of 2013 and M.P (MD)No. 1 of 2013. As per order dated 26.04.2013 the Hon'ble Madurai bench directed the Department to consider the representation of assessee dtd 15.4.2013 in which they had stated that they are exempted from the levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdered for appropriation of the amount towards the interest payable by the assessee for the period prior to 30.06.2012 which is erroneous. The Ld. Counsel prayed that the appeal may be allowed. 6. The Ld. AR Shri. M. Ambe, appeared and argued for the department. The findings of the impugned order was reiterated. The Ld.AR adverted to para 18 of the impugned order to submit that the objects stated in the Memorandum of Association has been reproduced by the AA in this para and it can be seen that the object does not specify any religious activity. Though assessee may be undertaking some religious activity, they are managing the immovable property by renting out these properties for commercial purposes. The assessee has not produced any document to show that they fall under the category of 'religious body'. The certificate issued by the income tax is only for being a charitable association and not religious body. The same cannot be accepted for giving the benefit of crucial under renting of immovable property. The AA has set aside the penalties for the period after 30.06.2012. Though the assessee has paid the service tax for the period after 30.06.2012 under VCES, the penalties ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Section 10(23C)(v) of Income Tax Act 1961 as a charitable organization. Further, on perusal of Memorandum of Association, the objects for which this association is established includes maintenance of bishops, presbyters, deacons, pastors etc. So also assessee engages in maintaining churches, chapels, churchyards, burial grounds, schools, colleges etc. The income generated from immovable property is used for these purpose. From the objects of the trust/association it is sufficiently clear that assessee is a religious body and cannot be said that they are merely a charitable organization. In the case of Diocese of Tanjore Society (supra) the Tribunal relied upon the decision of the Hon'ble Supreme Court in the case of Hindu Public and Ors Vs Rajdhani Puja Samithee and Ors - 1999 (2) TMI 723 - Supreme Court the relevant paras of the decision of Tribunal in the case of Diocese of Tanjore Society is reproduced as under:- 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 object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 was not permissible as the society was formed for "religious purposes only" and not for charitable purposes. The Allahabad High Court rejected the said contention and held that a society for religious purposes would ordinarily be a society for charitable purposes. A similar question arose before the Madras High Court in Khaji Muhammad Hussain Sahib v. Majiday Mahmood Jamait Managing Committee. A Division Bench consisting of Wadworth. and Venkataramana Rao, JJ. held that Act 21 of 1860 was passed in 1860 when according to English Law, a gift for the advancement of religion or promotion of religious worship was 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices up to 30.06.2012. Therefore, the demand for the period prior 30.06.2012 cannot be sustained and require to be set aside. Order accordingly. 11. For the period after 30.06.2012 the assessee discharged the service tax up to 31.12.2012 under VCES. As per the said scheme assessee is not required to pay interest or penalty. In the present case the assessee inadvertently paid the interest also. On being pointed out the adjudicating authority has appropriated the said amount towards the interest payable for the period prior to 01.07.2012. 12. The department has filed appeal contending that the adjudicating authority ought to have imposed penalty for the period after 30.06.2012. as the assessee has paid service tax opting for VCES, the penalty would automatically stand waived. The demand in the SCN is for the period upto 30.09.2013. as per para 14 of the impugned order the assessee has paid the service tax for the period 01.07.2012 to 30.09.2013 before passing of the adjudication order. The assessee being a religious body was not liable to pay service tax prior to 01.07.2012. after the amendment w.e.f. 01.07.2012 the assessee is liable to pay service tax and has discharged the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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