Service tax upheld for business auxiliary & club services. Arithmetical correction made. Activities subject to tax due to sales & commission.

The Tribunal upheld the demand of service tax under 'Business Auxiliary Service' and 'Club or Association Service', corrected an arithmetical mistake in tax quantification, and determined that the applicant's activities fell within the purview of service tax due to the nature of transactions involving the sale of certificates and earning commission. The Tribunal directed the applicant to deposit a specified amount and waived predeposit of the balance dues pending the appeal.

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Issues:
1. Demand of service tax under 'Business Auxiliary Service'.
2. Demand of tax under 'Club or Association Service'.
3. Arithmetical mistake in quantification of tax.
4. Whether the applicant's activities fall within the purview of service tax.

Issue 1: Demand of service tax under 'Business Auxiliary Service'
The applicant, an association of textile/spinning mills, sold Carbon Emission Reduction (CER) Certificates to a company in Sweden and retained 5% of the sale proceeds. The contention was that the entire transaction was a sale and purchase based on the 'CDM Emission Purchase Agreement', not a taxable service. The learned counsel argued that the applicant's service to its members did not fall under service tax. However, the AR contended that the sale of certificates was a business activity and the commission earned was akin to that of a commission agent. The Tribunal found that the applicant's activities, including earning commission, were not within the regular course of activities of a club or association, leading to the demand of tax under 'Business Auxiliary Service'.

Issue 2: Demand of tax under 'Club or Association Service'
The applicant, initially an unregistered trade union later registered as a trade union, argued that as a trade union, it should not be covered under the definition of 'Club or Association Service'. The AR contended that the association provided services beneficial to its members against subscription charges. The Tribunal noted that the activities of the applicant, particularly the sale of certificates and earning commission, were not typical activities of a club or association providing services to members against subscription charges. Therefore, the demand of tax under 'Club or Association Service' was upheld.

Issue 3: Arithmetical mistake in quantification of tax
The learned counsel pointed out an arithmetical mistake in the quantification of tax, which was acknowledged by the Tribunal. The correct amount of tax was determined, and the applicant had already paid a portion of it. This issue was resolved by correcting the quantification of tax.

Issue 4: Whether the applicant's activities fall within the purview of service tax
The Tribunal analyzed the nature of the applicant's activities, emphasizing that the sale of certificates and earning commission were not typical activities of a club or association providing services to its members. The Tribunal found that the applicant's actions constituted a service on behalf of its members in a business capacity, leading to the conclusion that the demand of tax was justifiable. The Tribunal directed the applicant to deposit a specified amount and waived predeposit of the balance dues pending the appeal.

In conclusion, the judgment upheld the demand of service tax under 'Business Auxiliary Service' and 'Club or Association Service', corrected the arithmetical mistake in tax quantification, and determined that the applicant's activities fell within the purview of service tax due to the nature of the transactions involving the sale of certificates and earning commission.

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