2007 (7) TMI 277 - AT - Service Tax

Charitable trust liable for service tax on training programs; directed to deposit Rs. 10 lakhs.

The Tribunal found that a charitable trust conducting training programs was not fully exempt from service tax due to charging fees and making profits. The ... Management Association of various members conducting various Diploma/Certificate Programmes - demand of service tax under the category of “Commercial training or coaching services” and “services by club or association” and under “Convention services” - appellant submits that as a charitable trust, they are working on ‘No Profit, No Loss’ basis; whatever profit made is used only for the purposes of association and therefore, they are not subjected to service tax - case is an arguable one - applicant has not made out a strong case for total waiver of the dues – stay granted partly Issues:1. Whether a charitable trust conducting training programs is liable to pay service tax.2. Applicability of exemption No. 9/2003 ST to a charitable organization.3. Requirement of pre-deposit for waiver of balance service tax and penalties.Analysis:1. The case involved a charitable trust, Ahmedabad Management Association, conducting training programs and facing a demand for service tax. The Commissioner confirmed a demand of service tax under various categories along with penalties. The appellant argued that being a charitable trust working on a 'No Profit, No Loss' basis, they should be exempt from service tax, citing a similar judgment involving the Board of Control for Cricket in India. The Department contended that the trust charges fees for training programs, makes profits, and thus falls under the purview of service tax as per the Finance Act.2. The Tribunal considered the submissions and acknowledged that the trust is indeed a charitable organization but is charging fees for the programs, resulting in profits. The Tribunal noted that the issue of whether the trust qualifies for exemption No. 9/2003 ST needed detailed examination during the final hearing. While recognizing the arguable nature of the case, the Tribunal held that the appellant did not establish a strong case for a total waiver of dues as per the Commissioner's order. Consequently, the Tribunal directed the appellant to deposit a sum of Rs. 10 lakhs within 12 weeks and report compliance. Upon this pre-deposit, the balance service tax and penalties were waived, and recovery stayed. Failure to make the pre-deposit would lead to the dismissal of the appeal without further notice.3. The judgment highlighted the importance of examining the specific circumstances of a charitable trust conducting commercial activities to determine its liability for service tax. The Tribunal's decision to require a pre-deposit for partial waiver of dues reflects the balancing act between the charitable nature of the trust and its commercial operations, ensuring compliance with tax regulations while considering the organization's charitable objectives.