TaxTMI 
TaxTMI 
2014 (1) TMI 204
X X X X Extracts X X X X
X X X X Extracts X X X X
....membership fees during 2005-06 (from August, 2005) to 2009-10 involving service tax of Rs.1,52,48,932/-. The said service rendered by the appellant merited classification under Club or Association Service as defined in Section 65 (25a) read with Section 65(105)(zzze) of the Finance Act, 1994. b) It was noticed that the appellant had entered into an agreement with M/s Sporting Frontiers India Pvt. Ltd. providing exclusive rights to the said company to use the Advertising sites to sell and exhibit advertising of any kind and advertising signs, during matches and erect, display, affix, maintain, renew, repair and remove advertising signs of any kind but limited to sites allocated to the said company at the ground at least three days prior to a match and removal within two days. The appellant received a consideration of Rs.7,91,20,000/- during 2006-07 to 2009-10 involving service tax liability of Rs.31,26,600/- under the taxable service category of Sale of space or time for advertisement as defined under section 65(105) (zzzm) of the Finance Act. c) The appellant had rented out temporarily their premises for conduct of social, official or business functi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appellant is before us. 3. The ld. Counsel for the appellant made the following submissions. i) The appellant does not dispute the service tax liability in respect of Mandap Keeper Services. ii) As regards the service tax on renting of immovable property, since the issue is pending consideration before the Apex Court, they would abide by the decision of the Apex Court in the matter. iii) As regards the demand under the category of Sale of Space or time for advertisement, it is their contention that they have not rented out the space for advertisement. They had entered into an agreement with M/s Sporting Frontiers India Pvt. Ltd. (SFIPL in short) providing exclusive rights to the said company to use the Advertising sites to sell and exhibit advertising of any kind. It is M/s Sporting Frontiers India Pvt. Ltd. who has actually rented out the space for advertisement. Therefore, they are not liable to pay any service tax on sale of rights under the said category. If it all any tax liability arises on the said activity, it is SFIPL who are liable to pay the service tax and not the appellant. It is also stated that the SFIPL has discha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is liable to pay tax, the computation of service tax demand is wrong since the value of bar/liquor sales made by the appellant to its members has been included in the taxable value which is not permissible. Hence it is contended that the activity does not attract service tax. v) With respect to the demand of service tax under the category of Business Support Services (BSS in short), the appellant is an affiliate of BCCI and they have received subsidies/reimbursements from BCCI under various categories such as TV Rights subsidy, Tournament receipts, IPL subsidy, Players expenses re-imbursements and subsidy for international matches. These amounts granted by BCCI is for promoting cricket within the region and therefore, the question of levy of service tax would not arise at all since the amounts received are not in consideration of any service rendered. Similar demands raised against Gujarat Cricket Association and Saurashtra Cricket Association have been dropped by the jurisdictional Commissioner of Service Tax vide orders dated 24/09/2007 and 27/03/2009. In the appellant's case, the demand has been made under the category of BSS. In Secretary, Ministry of Informati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roperty, the hon'ble High Court of Bombay vide order dated 4-8-2011 in a batch of writ petitions filed by Retailers Association and others Vs. UOI upheld the validity of the levy of service tax on renting of immovable property. Similarly, the hon'ble Delhi High Court in W.P.No. 3398/2010 upheld the validity of levy on renting of immovable property. Though the said order is under challenge before the Supreme Court, the same has not been set aside. Therefore, as per the current legal position, the renting of immovable property is a taxable service attracting service tax levy and therefore, the demand of service tax along with interest thereon needs to be upheld. c) Regarding the demand of service tax under Club or Association Service, the ld. AR submits that the fact that the appellant is treated as a Charitable Organization for the purposes of Income Tax Act does not in any way obliterate or nullify the levy of service tax under Finance Act, 1994 as the two enactments are not pari materia. He also relies on the circular 96/7/2007 dated 23-8-2007 issued by CBEC wherein it has been clarified that exemption under the Income Tax Act on the ground of being a public charit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tions 76 for default in payment of service tax, under section 77 for non-compliance with the statutory procedures and under section 78 for suppression of facts with an intent to evade payment of tax. Accordingly he pleads for upholding the imposition of penalties on the appellant. In the light of the foregoing submissions, the ld. AR pleads for upholding the impugned order. 5. We have carefully considered the submissions made by both the sides. Our findings and conclusions are discussed in the ensuring paragraphs. 5.1 As regards the service tax demand under the category of Mandap Keeper Services, the appellant himself has admitted to the tax liability. Therefore, we uphold the demand in this regard along with interest liability, if any. 5.2 As regards renting of immovable property, the said service falls squarely within the definition of taxable service as defined in section 65(105)(zzzz) of the Finance Act. The vires of the levy was challenged before the hon'ble Bombay High Court in Retailers Association and others vs. UOI decided on 4-8-2011 and the hon'ble high court held as follows:- "33. Therefore in our view, looked at from either stand point, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the residuary entry, that is, Entry 97 of List I." 5.2.2 Though the matter is pending in appeal before the hon'ble Apex Court, the ratio of these decisions has not been set aside. Therefore, the demand of service tax on this activity by the appellant under the category of renting of immovable property service is sustainable in law and we hold accordingly. Needless to say, our decision in this regard is subject to the outcome of the appeals pending before the hon'ble apex court. 5.3 The next issue for consideration relates to demand of service tax under the category of 'sale of space or time for advertisement'. From the agreement entered into by the appellant with SFIPL, it is seen that the appellant, having control of the ground for the purpose of stating the match/or extra match, has granted exclusive rights at the ground to use the advertising sites to sell and exhibit advertising of any kind, and advertising signs, during matches and extra matches and the right to erect, display, affix, maintain, renew, repair and remove or permit the erection, display, affixing, maintenance, renewal, repair or removal within two days following and the right at all times, during the matche....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act the levy of service tax. The sale of advertising rights to M/s SFIPL and TFPL is in relation to advertisement and the appellant has allowed these agencies to use the space for advertisement purposes. The expressions "in relation to" and "in any manner" are wide enough to cover the activities of the appellant. It is not necessary that the person to whom the space has been sold should himself advertise. If the space provided is used for advertising, it would suffice. There is no dispute in the present case that the space provided by the appellant has been used for advertising purposes. If that be so, the appellant cannot escape the tax liability in respect of such a transaction. 5.3.3 The scope of the phrase "in relation to" was examined by the hon'ble Apex Court in Hrishikesh Nag Ishwar Chandra vs. State [AIR 1965 Tri 13 at p 14] and the Supreme Court held as follows:- "The words "in relation to" do not mean that the offence must have been committed after the proceeding had started. Even if the offence was committed prior to the proceeding, it can be said to be in relation to the proceeding if the proceeding is undertaken in consequence of it. If the proceedin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dit available to the assessee himself and not by way of availability of credit to the buyer of the assessee's manufactured goods; (d) We express our opinion in favour of the view taken in the case of M/s. International Auto Products (P) Ltd. (supra) and endorse the proposition that once an assessee has chosen to pay duty, he has to take all the consequences of payment of duty." In view of the above factual and legal position, we are of the considered view that the appellant is liable to discharge service tax on the sale of space for advertisement and the demand confirmed by the adjudicating authority in this regard is sustainable in law. 5.4 The next issue for consideration is the liability of the appellant to pay service tax under the category of "Club or Association Service". The appellant's claim is that they fall within the exclusion clause under section 65(25a) which reads as "any person or body of Persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature". It is argued that activity of promotion of cricket undertaken by the appellant is "public service" and the appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s received". There is nothing on record to show that the activities rendered by the appellant are for the benefit of the needy people who cannot pay for the benefits received. In view of the above legal and factual position, we are unable to accept the plea of the appellant that they fall within the exclusion clause under section 65(25a) of the Finance Act, 1994. 5.4.3 The CBEC has also vide circular 84/2/2006-ST dated 19-9-2006 has clarified that exemption under the Income Tax Act on the ground of being a public charitable institution is of no consequence to levy of service tax and the levy of service tax is entirely governed by the provisions of the Finance Act, 1994 and the rules made there under. Though the clarification given is not binding on this Tribunal, it has persuasive value as CBEC is the apex agency administering and enforcing service tax and due weightage needs to be given to views of the said agency while interpreting the legal provisions relating to service tax. In the decision of the apex Court in the case of K.P. Varghese vs. Income Tax Officer [(1981) 131 ITR 597 (SC)] and Collector of Central Excise, Guntur vs. Andhra Sugar Ltd. 1988 (38) ELT 564 (SC), it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o promote the game of cricket in India; b) to arrange, organize, control and finance the visits of Indian Cricket team to other countries and visits of Cricket Teams of other countries to India; c) to build, construct, maintain and repair various stadia and other amenities; d) to help junior cricketers, needy cricketers, retiring cricketers, players, umpires and other persons connected with the game of cricket; e) creation of infrastructure. 5.5.3 The question is whether these activities constitute Business support services as defined in the law. As per section 65(104c) of the Finance Act, 1994 - "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational or administrative assistance in any manner, formulation of customer service and pricing policies, infrastr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions or the right claimed by them to explore the said means, into a commercial right or interest. It must be further remembered that sporting organizations such as BCCI/CAB in the present case, have not been established only to organize sport events or to broadcast or telecast them. The organization of sporting events is only a part of their various objects, as pointed out earlier and even when they organize events, they are primarily to educate the sportsmen, to promote and popularize the sports and also to inform and entertain the viewers. The organization of such events involve huge costs. Whatever surplus is left after defraying all the expenses is ploughed back to them the organization itself. It will be taking a deliberately distorted view of the right claimed by such organizations to telecast the sporting event to call it an assertion of their commercial right." From the above decision of the hon'ble Apex Court, it clearly comes out that sports organizations are not business or commercial organizations, conduct of sports or sporting events and their broadcasting/telecasting is not assertion of commercial rights. The ratio of the above judgment applies squarely to the fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ace or time for Advertisements, the appellant has not cited any decision/judgment in their favour for entertaining any reasonable belief. Therefore, such belief cannot be automatically presumed. 5.7 Similarly in the case of Club & Association service, the decision of the Income Tax Appellate Tribunal holding them to be charitable institution for the purposes of Income Tax Act was rendered on 31-7-2009 whereas the demand of service tax under the said category is for the period 2005-06 to 2009-10. Therefore, the appellant could not have entertained a reasonable belief in 2005-06 onwards about their non-liability to pay tax based on a decision rendered in 2009-10. This Tribunal in the case of Interscape [2006(198) ELT 275] held that bona fide belief is not blind belief. Belief can be said to be bona fide only when it is formed after reasonable considerations are taken into account. No evidence has been led before us to show that the appellant undertook such precautions either by way of referring the matter to the Departmental authorities or by seeking a legal opinion. Therefore, the argument of bona fide belief lacks conviction and is not convincing. It appears to be an argument of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e considered view that larger period of limitation has been correctly invoked in the present case and the demands are not time barred. 5.8 As regards the demand for interest, once the service tax demands are upheld, interest liability thereon is automatic and consequential. Interest is a compensatory payment for the delay in payment of tax. Accordingly we uphold the demand for interest. 5.9 The last issue for consideration is with regard to the imposition of penalties under sections 76, 77 and 78 of the Finance Act, 1994. While penalty under section 76 is for the default in payment of tax and no mens rea is required to impose this penalty as held by the hon'ble High Court of Kerala in Krishna Poduval case [2006 (1) STR 185 (Ker)], penalty under section 77 is for non-compliance with the statutory provisions/requirements such as registration, filing of returns and so on. In the present case, there is no dispute in this regard. Therefore, we uphold the penalties imposed under sections 76 and 77 of the Finance Act, 1994. As regards the penalty imposed under section 78, except in the case of renting of immovable property (where the levy itself is under challenge before the Supreme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tax Act, 1961 is not applicable. Every term or phrase cannot be defined in every Act. Disregard to the provisions of other Acts, for the terms/phrase(s), where the relevant Act is silent, will lead to anomalous situation. Thus, the recognition of the appellant as a charitable organisation under the Income Tax Act is relevant and applicable for the purposes of Finance Act, 1994. Accordingly, I hold that the appellant is a 'charitable organisation' for the purpose of the levy of Service Tax. 8.3 That a co-ordinate Bench of this Tribunal in the case of Board of Control for Cricket in India (BCCI) vs. Commissioner of Service Tax, Mumbai, (2007) 7 STR 384 (Tri-Mum) have held that the BCCI is not a commercial concern or an Advertising agency. Credence was placed on the status of BCCI being recognized as a 'Charitable Institution' under the Income Tax Act, 1961. 8.4 Thus consequently the demand for Service Tax in respect of membership fees/subscription is set aside. 9. That so far penalty under Section 76, 77 & 78 is concerned, I find that out of assessed demand of about 16.5 crores, only about Rs.36 lacs remain payable, pursuant to this order. Further it is noticed that appella....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons, as held by Member (Judicial). iii) Is there any inherent contradiction in the waiver of penalty by Member (Judicial) inasmuch as he has upheld the confirmation of demand of service tax invoking the extended period of time and the same pre-supposes suppression of facts on the part of the appellant whereas while waiving of the penalty, the learned Member (Judicial) has held that there is no contumacious conduct on the part of the appellant. Further for imposition of penalty under Sections 76 and 77 no mens rea is required and mere contravention of the statutory provisions would suffice. (Pronounced in the Court on 14/06/2013) 12. I have gone through the order recorded by learned Member (Technical) and Member (Judicial) as also the points on which there is difference of opinion. The case was heard extensively on 30.8.2013. The learned counsel for the appellant also filed written submissions on 20.9.2013 briefing the points made by them during the hearing. 13. The learned counsel for the appellant's first contention is that levy of service tax under "club or association service' as defined under the Finance Act, 1994 has been held to be ultra vires and voi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le cause for non-payment of tax and this is an appropriate case for waiving penalty under Section 80 of the Finance Act. He further argued that the learned Members of the referral Bench have set aside penalty in case of renting of immovable property service inasmuch as the issue involved was one of interpretation. Similar argument applies in the other service. The learned counsel quoted the following decisions in support of various contentions. (i) Board of Control for Cricket In India vs. CST reported in 2007 (7) STR 384 (Tri-Mum (ii) Institute of Banking Personnel Selection vs. CST reported in2007 (8) STR 579 (Tri-Mum). (iii) Continental Foundation Jt. Venture vs.CCE reported in2007 (216) ELT 177 (SC); (iv) CCE vs. Vinay Bele & Associates reported in 2008 (9) STR 350(Bom) (v) CCE vs. Asshish Vasantrao Patil reported in 2008 (10)STR 5 (Bom) and (vi) UOI vs. Amit Kumar Maheswari reported in 20-09 (233) ELT 311 (Raj.) 15. The learned AR opposed various contention and drew attention to the Board's circular No. 84/2/2006-ST dated 19.9.2006. In the said circular, it has been clarified tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o service tax on the services rendered to their members under 'club or association service' on the grounds that the appellants are not rendering any public service nor are they a charitable organization and the provisions of the Income Tax Act,1961 are not pari materia with Chapter V of the Finance Act, 1994 or the said Association is a charitable organization because it has been held to be a Charitable Organisation under the Income Tax Act, 1961. 17.1 The appellants are claiming exemption from the definition of 'club or association' under clause (iii) which excludes any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature. The exclusion, as is worded, requires two conditions to be satisfied. The first condition is the objectives should be in the nature of 'public service' and the second is 'charitable in nature'. I find that the learned Member (Technical) has held that the appellants are not providing any public service as promoting the game of cricket cannot be considered as a public service. My learned brother Member (Judicial) has only stated that charitable purpos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iscussing the issue, the Hon'ble Supreme Court has observed that Cricket Association of Bengal is a non-profit making organisation. An organization begin 'commercial' or 'non-profit' is very different from a 'charitable organisation'. A charitable organisation collects the money from various donors and provides certain services to the poor and needy without any consideration or on very nominal charges. The object of non-profit organization is not to earn profit but they do not do any charity. The object of the charitable institution is to do charity. The term 'charitable purpose' is defined under the Charitable Endowments Act, 1890 as - Charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility, but does not include a purpose which relates exclusively to religious teaching or worship. The real ordinary use of the word "charitable" as distinguished from any technicalities whatsoever always does not involve the relief of poverty. The exclusion clause under the 'club or association service' is "(iii) any person or body of persons engaged in any activity having objectives which are in the nature of public ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... interest on that tax in accordance with the provisions of section 75, a penalty which shall not be less than one hundred rupees for every day during which such failure continues or at the rate of one per cent. of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax: Provided that the total amount of the penalty payable in terms of this section shall not exceed fifty per cent. of the service tax payable. ................. ....................." "77. Penalty for contravention of rules and provisions of Act for which no penalty is specified elsewhere. (1) Any person,- (a) who is liable to pay service tax, or required to take registration, fails to take registration in accordance with the provisions of section 69 or rules made under this Chapter shall be liable to pay a penalty which may extend to ten thousand rupees or two hundred rupees for every day during which such failure continues, whichever is higher, starting with the first day after the due date, till the date of actual com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m. The appellant has not challenged the levy and cannot form bona fide belief from 2005 onwards based upon a High Court judgment in 2013. The learned counsel for the appellant has cited service of Renting in this very order. Case of Renting of Immovable Property is on entirely different footing. In that case, large number of person challenged the levy in various High Courts and the same was widely published in newspapers. Hon'ble High Courts decided in favour of petitioners. The law was amended with retrospective effect. Thereafter, levy was again challenged and Hon'ble High Courts upheld the levy. Circumstances in the "Club & Association Service" nowhere near to such circumstances. Under the circumstances, I agree with the learned Member (Technical) that penalties under Sections 76, 77 and 78 of the Finance Act, 1994 are imposable. 18.3 The learned counsel for the appellant has also quoted the Hon'ble Supreme Court judgment in the case of Continental Foundation Jt. Venture (supra) relating to interpretation of the expression 'suppression' used in proviso to Section 11A of the Central Excise Act. In the said case the Hon'ble Supreme Court was considering dutiability of ready mix....