2018 (5) TMI 1483 - AT - Service Tax

Tribunal rules in favor of appellants, exempting service tax for heritage conservation services

M/s. Indian National Trust for Art and Cultural Heritage Versus CCE, Puducherry

The Tribunal ruled in favor of the appellants, setting aside the demand for service tax, interest, and penalties. The appellants, a society registered ... Commercial Concern or not - Whether the services provided with the objective of awareness of the preservation of historic buildings of the town and domestic architecture are commercial in nature - Held that:- the agreement furnished by the assessee shows that they had no profit motive and cannot fall under the nature of a commercial concern - thus no tax along with interest penalties and penalties shall be imposed - thus the demand cannot sustain - Decided in favor of assessee. Issues:1. Whether the payments received by the appellants for providing consultancy services fall under 'Architect' Service and are liable to service tax.2. Whether the appellants, a society registered under the Societies Act, 1860, are considered a 'commercial concern' engaged in rendering services in the field of architecture.3. Whether the penalties imposed under section 78 and section 76 of the Act are justified.Analysis:Issue 1:The appellants, a society registered under the Societies Act, 1860, provided consultancy services to clients for the preservation of historic buildings of Pondicherry. The department contended that the payments received by the appellants for the services provided would fall under 'Architect' Service and be liable to service tax. The original authority confirmed the demand, interest, and penalties. In appeal, the Commissioner (Appeals) upheld the demand of service tax along with interest and the penalty under section 78 of the Act but set aside the penalty under section 76 of the Act. The appellant argued that they do not fall within the definition of 'architect' as per section 65(6) since they are not registered as architects under the Architects Act, 1972. The Tribunal noted that the department did not dispute that the appellant's name was not in the register of architects and accepted that the appellant had no profit motive, concluding that the demand cannot be sustained. Therefore, the impugned order was set aside, and the appeal was allowed.Issue 2:The key argument revolved around whether the appellants, being a society registered under the Societies Act, 1860, could be considered a 'commercial concern' engaged in rendering services in the field of architecture. The appellant contended that they did not have a profit motive and were not a commercial concern. The Tribunal referred to a previous decision by the Commissioner (Appeals) in the appellant's case for a different period, where it was acknowledged that non-profit organizations providing such services were not intended to be taxed. Since the department accepted this decision without filing an appeal, it was concluded that the appellant was not a commercial concern, and thus, the demand could not be sustained.Issue 3:Regarding the penalties imposed under section 78 and section 76 of the Act, the Commissioner (Appeals) upheld the penalty under section 78 but set aside the penalty under section 76. The Tribunal did not delve into the details of the penalties in the judgment, focusing primarily on the main issue of whether the appellants were liable for service tax. As the demand itself was set aside due to the appellant not being considered a commercial concern engaged in rendering services in the field of architecture, the penalties associated with the demand were not discussed further in the judgment.In conclusion, the Tribunal ruled in favor of the appellants, setting aside the demand for service tax, interest, and penalties, as the appellants were not considered a commercial concern engaged in rendering services in the field of architecture, and their services were provided with the objective of protecting and conserving heritage buildings.