TaxTMI 
TaxTMI 
2014 (10) TMI 883
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.... 3,80,796/-. 1.2 Briefly stated the 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 fr....
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....members alone were taxable and service provided or to be provided to any other person was not taxable. However, from 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/....
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....the Finance Act, 1994. An amount of Rs. 2,42,436/- paid by the applicant towards Service Tax on 'Club's or Association's Membership Service' and 'Renting of Immovable Property Service' and interest amount of Rs. 39,892/- already paid was proposed to 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 Asso....
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....Sangam's account. By no stretch of imagination, such forfeiture can be considered as a consideration for any service rendered/to be rendered by the Sangam to its' members to be taxed under 'Club's or Association's Membership Service'. 2.7 Based on the above, 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 ....
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....b) achieving customer satisfaction. All these receipts from M/s. HPCL or other automobile spare parts manufacturers is not subject to any tax deductions under the provisions of Income-tax Act, as these payments arose only due to the contract of sale between the applicant and the companies. 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 'Mem....
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....pplicant), it was seen that the applicant, was getting turnover discount and certain percentage of Commission for promotion of sales of spares and for improving the ambience of the sales outlet, and squarely fall under 'Business Auxiliary Service'. (d) Renting of Immovable Property Service 3.8 The applicant 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 accep....
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....e discretion of the Commission. Further submissions by applicant 5.1 The applicant vide his written submissions filed on 15-7-2014 in the Court, reiterated that the scope of 'Club or Association Membership Service' was expanded by an amendment with effect from 1-5-2011 to include any other person as beneficiary, besides its own members; relying on many judicial 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 ....
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....as been held that the services should be treated as GTA only; • on the issue of 'Business Auxiliary Services' the applicant opposed the Service Tax demand on turnover discount/performance bonus, commission on oil/spare parts sale and subsidy received for petrol bunk employees and HPCL extra care compensation as trade related activities, by citing various facts; • on the issue of Renting of Immovable Property Service, the applicant contended that 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 4....
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....s correct in law subject to production of documentary evidences. He further stated that threshold exemption of Rs. 8/10 lakhs in terms of Notification No. 6/2005-S.T., dated 1-3-2005 and Notification No. 33/2012-S.T., dated 20-6-2012 is applicable only for the aggregate value of all such taxable services. Since the aggregate turnover was more than 8/10 lakhs in the preceeding Financial Years for all the services provided by the applicant, they are not eligible for exemption. In respect of claim for cum-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 o....
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....the show cause notice and the rebuttal and counter claims of the applicant are dealt with separately hereunder. (a) Club's or Association's membership service 7.5 Bench finds that Revenue considered 'donations', 'subscriptions', 'entrance fee' and 'election deposit forfeited' as the total taxable income for all the five years and demanded Service Tax on this income. Revenue reasoned that with the donation collected from their members, Sangam could purchase lands and construct buildings to provide better facilities 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 comp....
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....- for the year 2010-11 and Rs. 3,31,750/- for the year 2011-12 is liable for Service Tax after allowing the threshold exemption value for the year 2010-11 determined along with value of taxable service for other services held taxable elsewhere in this order. (b) Supply of Tangible Goods Service 7.7 Revenue demanded Service Tax on the basis of the description 'Hire charges' reflected in the financial statements of the Sangam and construed the activity of transporting petroleum products from oil companies namely HPCL as Supply of Tangible Goods Service. Revenue adduced that the essential ingredients 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 c....
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....ry and allowances, etc., were mentioned as the responsibility of HPCL; • the Sangam's averment that had it been 'hire charges' these expenses should have been factored in such 'hire charges'; then there would be inbuilt clauses for the same in the agreement. Whereas all such charges were borne by Sangam; • M/s. HPCL had already registered this activity under GTA service, discharged Service Tax on the freight charges paid to Sangam under reversed charge mechanism; • they also furnished copies of consignment notes to establish that their activity is only GTA service and not Supply of Tangible Goods Service; the Bench finds that Revenue's contention that these consignment notes are 'after thought' is not backed by any evidence; • 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....
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.... income received on rental of building to Reliance, Canara Bank and the rental income on the vacant land received from HPCL from 1-7-2010. The total value of service on account of rental of immovable property works out to Rs. 14,25,776/- for the year 2010-11 and Rs. 20,07,593/- for the year 2011-12 is liable for Service Tax after allowing the threshold exemption value for the year 2010-11 determined along with value of taxable service for other services held taxable elsewhere in this order. Threshold Exemption and Service Tax Liability 7.12 The applicant right through their various submissions stated that they were liable for Service Tax only from the year 2009-10, that too after availing the threshold exemption limit of Rs. 8/10 lakhs for the respective financial year. However, 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 appli....
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.... Likewise in respect of Renting of Immovable Property Service Bench holds that the service of renting vacant land from 1-7-2010 to 31-3-2012 and 'Renting of buildings, for the entire period is held to be liable for Service Tax. The Bench finds, that the applicant has made a true and fiill disclosure of Service Tax liability and extended cooperation in the proceedings before the Bench. Commissioner vide his report dated 6-6-2014 confirmed payment of Rs. 3,79,602/- towards Service Tax and Rs. 56,654/- towards interest. The difference in payment thus far made requires to be reconciled by the Department and the applicant. Accordingly the Bench settles the Service Tax liability at Rs. 3,80,796/- in terms of proviso to Section 32F(8) ibid and interest payable thereon should be worked out. The Bench 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 greates....