TaxTMI 
TaxTMI 
2014 (10) TMI 883
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....facts of the case are that : (a) based on intelligence by the Range officer, Tiruchengode that the applicant failed to pay Service Tax on the taxable value received during the period in dispute, issued letter to the applicant on 30-8-2012 followed by summons to the President of the applicant unit vide letter dated 1-10-2012 to appear before the Superintendent on 4-10-2012; (b) in compliance to the Summon dated 4-10-2012, the Secretary of the applicant unit appeared on 4-10-2012 and produced balance sheets for the years 2007-08 to 2011-12 along with documents relevant to this matter. (i) In his statement he inter alia stated that they are registered under Service Tax Registration No. AAAAT7061KSD001, dated 19-10-2011 and paid Service Tax of Rs. 2,43,238/- for the years 2010-11 and for 2011-12 on 30-3-2012 along with interest of Rs. 39,090/-. (ii) They had not paid Service Tax for the earlier period as they thought the liability came only from 2010-11 and ST-3 returns were also not filed. (iii) They were collecting donations from both new members and existing members from the Lorry Owners Sangam members. ....
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....16-5-2011 onwards service provided or to be provided to any person including the member of the 'Club's or Association Membership Service' is taxable. Therefore it appears that the service provided by the applicant is taxable under the category of 'Club's or Association's Membership Service' on the value of subscription and any other amount received by the service provider. Supply of Tangible Goods Service 1.6 The applicant had provided transport vehicles (oil tankers) to their client (M/s. HPCL) on hire charge basis. The Service Tax liability on the 'Supply of Tangible Goods Service', is liable to Service Tax i.e. the transport vehicles is tabulated as under : Name of the tangible goods Period of supply of such tangible goods Whether taxable or not Remarks Transport vehicle 16-5-2008 to 25-6-2008 Taxable --- -do- 26-6-2008 to 4-1-2009 Not taxable by Notification 29/2008-S.T., dated 26-6-2008 Unconditional exemption -do- 5-1-2009 onwards Taxable/Not taxable subject to the condition of the Notification 1/2009-S.T., dated 5-1-2009 Conditional exemption 1.7 On perusal of accounts of the applicant it is seen that "hire charges" for supplying the tanker lo....
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.... be appropriated in the SCN. Penal provisions were invoked under Sections 76, 77 & 78 of the Finance Act, 1994. Applicant's disclosure 2.1 They filed an application for settlement on 25-11-2013 which was numbered as SA ST/54/2013. A notice was issued to the applicant and on the basis of the reply dated 29-11-2013, the application was allowed to be proceeded with vide order dated 9-12-2013. The applicant made the following submissions : 2.2 The applicant admitted Service Tax liability of Rs. 40,872/- on the 'Club's or Association's Membership Service' and Rs. 3,39,924/- on 'Renting of Immovable Property Service' totalling to Rs. 3,80,796/- out of the total demand of Rs. 46,54,256/. The interest on the admitted liability as worked out by the applicant is Rs. 40,675/-. The applicant paid the above admitted tax liability along with interest vide challans on various dates during March 2012 and November 2012. Club or Association Membership Service 2.3 The applicant admitted that the Sangam is an association of the lorry owners established for the mutual benefit. The members are entitled to the services from the Sangam only on the payment of subscription. Hence the rec....
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....the Donation, Entrance fee and Forfeiture of election deposit received by the Sangam do not come within the ambit of taxation. 2.8 Hence it is prayed that the Service Tax liability on the subscription received by the Sangam under 'Club's or Association's Membership Service' be settled as Rs. 40,872/- as per the computation made by the applicant. Supply of Tangible Goods Service 2.9 The applicant entered into agreement for transportation of petroleum product by road with M/s. Hindustan Petroleum Corporation Limited. The applicant owns two Tanker Trucks and the contract was awarded by M/s. HPCL for a contract price depending on the actual transportation of the goods per Kilolitre per Kilometer basis. 2.10 M/s. HPCL is construed as GTA and applicant is considered as a Service Provider as contemplated in the SCN under Section 65(105)(zzzzj) of the Finance Act, 1994. According to the definition of the taxable service referred in the above Section, the 'Supply of Tangible Goods Service' must be for use apparently by the service receivers. The Department has no basis to claim the HPCL was rendering service as GTA by using the Tanker Trucks (i.e. Tangible Goods) received....
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....es. 2.16 Hence it is prayed that the Service Tax liability of the applicant under the head 'Business Auxiliary Service' be settled as NIL. Renting of Immovable Property Service 2.17 The applicant claimed cum-tax benefit as per Section 67(2) of the Finance Act, 1994 as Service Tax has not been collected separately. The applicant prayed that the Service Tax liability under the head of 'Renting of Immovable Property Service' be settled as Rs. 3,39,924/- as computed by the applicant. 2.18 The applicant prayed before the Hon'ble Settlement Commission to grant immunity from penalty and prosecution. Jurisdictional Commissioner's report 3.1 A copy of the application was forwarded to Jurisdictional Commissioner on 16-12-2013 for his report on the application. The Commissioner in his report dated 6-6-2014 made the following submissions. (a) Club or Association 'Membership' Service 3.2 The applicant's contention that only subscription collected from the members are taxable was not accepted for the reason that as per Section 65(105)(zzze) 'taxable service' means any service provided or to be provided to its members by any club or association in relation to....
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....ant admitted the tax liability in respect of the service and claimed cum-tax benefit for the years 2010-11 and 2011-12 and worked out the admitted amount of Rs. 3,39,924/- against demand of Rs. 5,78,741/- as tax liability. 3.9 Particulars of Service Tax payments made by the applicant are furnished as under : The amount of Service Tax demanded in the SCN and appropriation proposed if any, Rs. 46,54,256/- Appropriation of Rs. 2,42,436/- is proposed in the SCN The amount of Service Tax admitted Rs. 3,80,796/- The amount of Service Tax paid *Rs. 3,79,602/- Amount of interest payable Not worked out as the applicant has not admitted their liability of Service Tax to the extent of Rs. 42,73,460/- Amount of interest paid Rs. 56,654/- The reason for difference in the amount of Service Tax demanded and the amount of Service Tax accepted by the applicant if any Discussed in detail in the earlier part of the report Details of BG/Bond Executed Nil Whether the applicant is eligible for any refund on the subject issue and if so the amount of refund Nil * However the applicant in their Annexure-II enclosed to the application stated that they have paid Rs. 14,785/- in excess....
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....ial pronouncements and circulars the applicant contended that the services provided by the Club to its member is not constituting providing of service, as the primary requirement of service provider and service receiver are one and the same and governed by principles of mutuality. 5.2 Relying on the judgments in the case of Saturday Club Limited v. Asstt. Commr., Service Tax Cell, Calcutta - 2005 (180) E.L.T. 437 (Cal.) = 2006 (3) S.T.R. 305 (Cal.) and many judgments of High Courts, submitted that the members have provided for themselves these facilities through the instrumentality or the agency of the Club or Association and that the members are joint owners of the properties and therefore governed by principles of mutuality and not by the relationship of service provider and recipient. 5.3 That only from 1-7-2012 on the introduction of Negative List the 'Club or Association Service' became liable for Service Tax. Likening the services of the Sangam to that of a farmer's Co-operative Society it was stated that the Sangam provides only operational services like facilitations with RTOs, Tollgates, Police, Safety and Security enroute, accident reports, representation to G....
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....the service was rendered from 1-4-2007 to 31-3-2012 for renting the vacant land alone is taxable and prior to the period no Service Tax was leviable on rental of vacant land. They accepted the Service Tax liability on rental of building to Canara Bank, Reliance, etc.; * Board Circular DOF 334/1/2007-TRU, dated 28-2-2007 renting of vacant land is exempt up to 30-6-2010, when the exemption was in force the Department demanded Service Tax for renting of vacant land which is incorrect; * They also pleaded for immunity from prosecution and penalties; 5.5 Pursuant to directions of the Bench, he produced few copies of consignment notes which contained informations as required under Rule 4B of Service Tax Rules, wherein the oil companies were shown as a consignor, the applicant as GTA service provider transporting the goods to the consignee of the oil companies. He further submitted that they collected only freight charges from the oil companies. The ownership of the tanker lorries maintenance, repairs and various statutory certification were vested wholly with the applicants. The tankers are dedicated and customized with reference to lubricating oil, motor spirit, diesel and the....
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....tax benefit the Commissioner stated that the applicant did not initiate any effort to recover Service Tax element from their service receivers and in such scenario extending the benefit of cum-tax benefit does not arise and mere failure on the part of the applicant to collect Service Tax separately from their service receivers and later claiming cum-tax benefit would result in the deprival of legitimate revenue due to the Government. Findings of the bench and decision 7.1 The Bench has gone through the application and considered the oral and written submissions made by the applicant and the Jurisdictional Commissioner during the hearing and thereafter. Maintainability of the application 7.2 On perusal of the application and enclosures thereto, the Bench finds that the applicant has not complied with the requirement of Section 32E(l)(a) inasmuch as they did not file the periodical returns in the prescribed manner. However, they filed ST-3 returns along with late fee as prescribed in Rule 7C of Service Tax Rules, 1994 read with Section 70 of Finance Act, 1994. The applicant was directed to explain the reasons for non-filing of returns in the prescribed manner. The appli....
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....acilities and amenities to their members. Such donations were collected from both new members and existing members. The applicant stated that the 'donation' was collected prior to the donors becoming members of the Sangam or even thereafter. However, this 'donation' was voluntary and not mandatory or compulsory for either to become the member of the Sangam or to avail the services provided by Sangam. The submission that : * 'The Sangam' is like a farmers agricultural co-operative society engaged in providing only operational services for the members in their business of plying the trucks with loads, across the country where problems like traffic compliance, tollgates, troubleshooting when accidents happened, Police intervention etc., and the body, also negotiated freight rates, road taxes etc., with the Government Departments for the benefit of members; * the society was not rendering any recreational services like hosting parties, sponsoring musical and sports events, conducting indoor/outdoor games for relaxation of the mind and body of the members, therefore the Sangam should not be equated with a 'Club or Association' as these institutions were understood in common parlanc....
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....gredients of the definition of supply of Tangible Goods Service ingrained in Section 65(105(zzzzj) namely that there should be a service provider and recipient, the service must be in relation to supply of goods and the goods supplied must be tangible goods, including machinery, equipment and appliances, the goods supplied must be for use apparently by the service recipients and supply of machinery goods or appliances must be without transferring the right of possession and the effective control. The Sangam did not issue any invoices/bills/chits or any other document for the 'hire charges' collected from HPCL. Revenue went on further to state that the issue involved was a classification dispute as to whether the service rendered was classifiable under supply of Tangible Goods Service or GTA service and therefore this issue could not be brought before the commission for Settlement. 7.8 The Bench finds from the averments of the applicant that : * the transport contract was processed by participating in Tender floated by HPCL; * there was an elaborate contractual agreement entered into by the applicant with HPCL; * the freight charges paid were for the actual transportatio....
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....the Bench finds that applicants rebuttal of the Revenue's claim, substantiated with brimming facts and reasoning, is acceptable and that the nature of activity involved in transportation of petroleum products from the oil companies to the respective destinations by the applicant in their tanker trucks gets covered within the scope of GTA service also gets support from the fact that the same has been accepted by the respective jurisdictional authority and assessed to Service Tax on HPCL and they complied with payment of the Service Tax under Reverse Charge Mechanism and filed periodic ST-3 returns. Moreover, if the Service Tax on the Supply of Tangible Goods Service is paid the same would be available as CENVAT credit for payment of Service Tax on GTA service, thereby making the exercise revenue neutral. Therefore the Bench holds that the entire Service Tax of Rs. 3,50,451/- demanded on this activity in the impugned show cause notice is infructuous and not sustainable in law. (c) Business Auxiliary Services 7.10 The Bench finds that, the Services on which Service Tax was demanded in the category of 'Business Auxiliary Services' in the impugned notice, the applicant repud....
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....Revenue contended that the applicant has exceeded the threshold limit during the preceding financial year itself by clubbing the Service Tax liability arrived at, on the various services provided by the applicant. Bench finds that even after holding that major portion of Service Tax demanded in the impugned show cause notice, unsustainable in view of the above findings, still finds that the applicant has exceeded the threshold exemption limit during the year 2010-11 itself as the value of the services held to be taxable exceeded the threshold exemption limit of Rs. 10 lakhs in that year. Therefore the Bench, accepting the contention of the Revenue, holds that the applicant is eligible for total exemption for Service Tax for the years 2007-08 to 2009-10 and holds that they are liable to pay Service Tax on the service value of Rs. 7,24,861/- in excess of the threshold exemption limit of Rs. 10 lakhs for the year 2010-11 and no exemption for the year 2011-12, in terms of Notification No. 06/2/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012. However, the Bench holds that the cum-tax benefit sought for by the applicant in terms of Section 67(2) is not admiss....
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.... directs the Jurisdictional Commissioner to cause verification on the arithmetical accuracy of the settled amount as well as interest amount as accepted by the applicant within the framework of this order and they are free to collect any amount if found due on verification of the calculations. Penalty 7.14 This is a case of non-payment of Service Tax. The applicant has put in greatest efforts in rebutting the huge demand made in the show cause notice by submitting extensive reply based on law and facts. However, the Bench finds that but for the action initiated the applicant's Service Tax liability would have remained unpaid. In view of the true and frill disclosure of tax liability and co-operation extended by the applicant the Bench takes a lenient view and extend partial immunity from penalty to the applicant. Prosecution 7.15 Considering the facts and circumstances of the case, the Bench considers it as a fit case for grant of immunity from prosecution to the Applicant. ORDER 8.1 In the light of the above, the Bench settles the case on the following terms and conditions under the Central Excise Act, 1944 made applicable to Service Tax by Section 83 of the F....