Charitable trust treated as commercial concern under service tax law was sent back for fresh decision on the foundational objection.

A charitable trust's contention that it was not a commercial concern and therefore fell outside section 65(105)(zzb) of the Finance Act, 1994 was treated as a foundational objection going to the root of service tax liability. Because no finding had been recorded on that plea before the adjudicating authority, the Tribunal held that the matter required reconsideration after affording a reasonable opportunity of hearing. The impugned order was set aside and the dispute was remanded to the Commissioner for fresh decision on this issue and on all other pleas raised by the assessee.

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Issues: Whether a charitable trust could be treated as a commercial concern so as to fall within the scope of section 65(105)(zzb) of the Finance Act, 1994 and be liable to service tax on the activity in question.

Analysis: The Tribunal noted that the assessee had specifically raised the contention that, being a charitable trust, it was not a commercial concern and therefore outside the reach of the charging provision. This contention had been raised before the adjudicating authority, but no finding had been recorded on it, even though it went to the root of the demand. In the absence of any determination on this foundational objection, the matter required reconsideration after giving the assessee a reasonable opportunity of hearing.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner for fresh decision on this issue and on all other pleas raised by the assessee.

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