TaxTMI 
TaxTMI 
2018 (6) TMI 480
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.... over the country are its members and the appellants are primarily involved in introducing the Indian Gem & Jewellery products to the international market in order to promote its goods and to facilitate the export of diamonds, He pointed out that the appellants have been registered with Service Tax Department for various taxable services such as Business Exhibition Services, Business Auxiliary Service, convention Services, Intellectual Property Services, Membership of Club or Association Services, Renting of Immovable Property Services and Sale of space or time for advertisement services etc. During the scrutiny of records maintained by the appellant, Revenue issued two show-cause notices demanding Service Tax on the following services:- (i) Technical Inspection and Certification Services, (ii) Membership of Club & Association Services, (iii) Business Exhibition Service (iv) Business Auxiliary Services, 2.1 Learned Counsel pointed out that while issuing Kimberley Process Certificate (KP Certificate in short), the appellants are no carrying out any inspection or examination of goods or process or material. The KP certificate is issued to various exporters/ importers of Gem & Je....
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....y documents are seen for the purpose of issue of certificate. 2.4 The next issue relates to demand of Service Tax on Membership of Club and Association Service. He argued that the basic objective of the appellant is to promote and develop the export of the country and for that purpose, the Gems & Jewellery Export Promotion is proposed. The appellant undertake to promotional activities by organizing international jewellery shows, sending and hosting trade delegation, and sustained image building exercises through advertisements abroad, publications and audio-visuals. The appellant also organizes 'India Pavilion' at major international trade exhibitions. Learned Counsel relies on the decision in the case of Federation of Indian Chambers of Commerce & Industries (FICCI) - 2015 (38) STR 529 (Tri-Del), wherein the Tribunal after examining the definition of Club and Association Service has held that Electronic and Computer Software Export Promotion Council would fall under the exclusionary clause (i) of Section 65(25a) of the Act. Section 65(25a) of the Act defines Club or Association and clause (i) excludes from its purview as body'established' or 'constituted' ....
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....Pvt. Ltd. - 2013 (29) STR 9 (Del) to assert that the reimbursable expenditure on account of Safe Deposit Vault cannot be considered as a provision of service. 2.7 The next issue relates to the demand under the head of Business Auxiliary Service in respect of the amount collected by the appellant from the clients to book the stalls in foreign exhibition. He argued that the amount collected from the clients is in the nature of reimbursement of expenditure of cost incurred by them as per agent of exhibitor. He further argued that the Council had bona fide belief that they were discharging the tax liability bonafidely and therefore, penalty under Sections 76 and 77 cannot be imposed. 3. Learned AR for the Revenue argued that the appellant had not taken the above grounds before the lower authority and therefore, they are precluded from raising the same at the appellate stage. He argued that the appellant had never challenged before the lower appellate authority the classification of service provided by them to its members. He pointed out that the impugned order correctly holds that the appellants are not covered by the exclusionary clause (iii) of section 65(25a) of the Finance Act, 1....
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....to determine the relationship between the Club and its members on the basis of facts. After examining the matter, the following 3 questions have been framed by the Hon'ble Court : (i) Whether the doctrine of mutuality is still applicable to incorporated clubs or any other club after the 46th amendment to Article 366(29A) of the Constitution of India ? (ii) Whether the judgment of this Court in Young Men's Indian Association (supra) still holds the field even after the 46th amendment of the Constitution of India; and whether the decisions in Cosmopolitan Club (supra) and FatehMaidan Club (supra) which remitted the matter applying the doctrine of mutuality after the constitutional amendment can be treated to be stating the correct principle of law ? (iii) Whether the 46th amendment to the Constitution, by deeming fiction provides that provision of food and beverages by the incorporated clubs to its permanent members constitute sale thereby holding the same to be liable to sales tax? In view of the same, all the judgments passed on the basis of Mutuality, based on the Hon'ble Supreme Court's judgment in the case of Young Men's Indian Association, are in jeopardy. These....
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....xpenses and excludible from the gross violation of the taxable services. He argued that in respect of Business Auxiliary Service, the payments made on account of Safe Deposit Vault on behalf of foreign exhibitors is sought to be excluded from the taxable value. He argued that the said service cannot be treated as reimbursable expenditure. Similarly, in respect of Business Auxiliary Service, the amount collected from the Indian clients to book the stalls in foreign exhibitions, which is paid by the appellant is sought to be excluded from the gross value of the taxable service. He argued that the expenses incurred are an integral part of the service provided by the appellant, 3.5 Learned AR relied on the decision of the Larger Bench of the Tribunal in the case of Bhagvathy Traders reported in 2011(24) STR 290 (Tri-LB) to assert that the claim of reimbursement towards expenses like rent for premises, telephone charges, stationery charges, etc. cannot be permitted as reimbursable expenses. 3.6 Learned AR relied on sub-rule (2) of the Service Tax Determination of Value Rules 2006, wherein expenditure or cost incurred by the service provided as a pure agent of the recipient of service ....
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....nt force in the arguments of the Ld AR. Thus the decisions relied by the appellants do not rule the field anymore in view of the fact that the very foundation of the said decisions, the decision of the Hon'ble apex court in the case of Young Men's Indian Association has been doubted. Moreover Ld AR has raised another important issue. He has argued that the Legislature has power to enact law and to include deeming provision under the taxing statute, like that in certain cases, labelling or relabelling of containers or repacking from bulk packs to retail packs etc. have been treated as manufacture by virtue of deeming provision. He pointed out that the legislature in its wisdom has made the services provided by clubs and associations to its members taxable. In view of an express provision in the Finance Act 1994, to tax such transactions,prima facie the principal of mutuality cannot be invoked. However the matter being subjudice before the Hon Apex Court in the case of State of West Bengal &Ors. Vs. Calcutta Club Ltd. no final view can be taken at this stage on the issue regarding services provided by the appellant to its members. 4.2 The next ground to challange the demand unde....
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....nt periodically for constitution and/or transaction or business by EPCs; and that EPCs are required to adopt such bye-laws with such modifications as the Central Government may approve, having regard to the special nature or functioning of such EPC. We also noticed that a list and product category of EPCs including Commodity Boards is set out in the Appendix to the FTP, stipulating EPC to be an Authority for issuing RCMC; and that ECSEPC is listed and recognized as an EPC, in the Appendix, In Dr. Indramani Pyarelal Gupta v. W. R. Nathu and Ors. - AIR 1963 SC 274, inter alia the validity of bye-law 52AA of the bye-laws of the East India Cotton Association as amended/substituted by the Central Government, exercising powers conferred by Section 12 of the Forward Markets Regulation Act, 1952 was in issue. On behalf of the appellant therein it was contended that the function or the duty cast upon it by the amended bye-law 52AA was not such as could be assigned by the Forward Markets Commission, by or under the Act. The Constitution Bench was therefore required to consider the scope of "by or under" and the extent and nature of the duties assigned to the FMC by the Act. The Constitutio....
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....Bombay, and Narayanaswami Naidu v. Krishnamurthi.) That In such a sense bye-laws would be subordinate-legislation "under the Act" is clear from terms of Sections 11 and 12 themselves. Section 11(1) enacts : "11. (1) Any recognized association may, subject to the previous approval of the Central Government make bye-laws for the regulation and control of forward contracts', and sub-section (2) enumerates the matters in respect of which bye-laws might make provision. Subsection (3) refers to the bye-laws as these made under this section and the provisions of sub-section (4) puts this matter beyond doubt by enacting : "11 (4) Any bye-laws made under this section shall be subject to such conditions in regard to previous publication as may be prescribed, and when approved the Central Government, shall be published in the Gazette of India and also in the Official Gazette of State in which the principle office of the recognized association is situate; ..................................................." Section 12 under which the impugned bye-law was made states in subsection (2) : "12(2) where in pursuance of this section, any bye-laws have been made or amended, the bye-laws so m....
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....ell as those under "rules" we are unable to appreciate the line of reasoning by which powers conferred by bye-laws have to be excluded because of the specific reference to powers conferred by "rules". Undoubtedly, there is some little tautology in other use of the expression "as may be prescribed" after the comprehensive reference to the Dowers conferred 'under the Act" but in order merely to avoid redundancy you cannot adopt a rule of construction which cuts down the amplitude of the words used except, of course to avoid the redundancy. Thus the utmost that could be that though normally and in their ordinary signification the words "under the Act" would include both "rules" framed under Section 28 as well as "bye-law" under Section 11 or 12, the reference to "rules" might be eliminated as Tautologous since they have been specifically provided by the words that follow. But beyond that to claim that for the reason that it is redundant as to a part, the whole content of the words "under the Act" should be discarded, and the words "by the Act" should be discarded, and the words "by the Act" should be read in a very restricted and, if one may add in an unnatural sense as excluding ....
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....Court explained that the expression "established" or "constituted under" has a different connotation from the expression "established" or "constituted by"; that the word "under" is wider in its sweep than the word "by". Drawing guidance from the principles postulated by the Supreme Court in R.C. Mitter & Sons v. CIT - AIR 1959 SC 868, the High Court ruled that the expression "constituted under any Central Act would have reference to institutions conceived or contemplated under a Central Act though subsequently clothed in legal form by registration such as under the Companies Act. The Court went on to explain that the word "constituted" would also refer to giving legal or official form or shape to and thus an institution constituted by or under any Central Act would have reference to a company which though formed and registered subsequently under the Companies Act, was conceived and contemplated under a Central Act such as the Repeal Act, 1993. Quoting with approval and following the principles derived from the decision in S. Azeez Basha v. Union of India - AIR 1968 SC 662, the Delhi High Court held that the word "established" would have either a narrow meaning implying "created by"....
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....f the Act, observed the Court. The Court went on to explain that the word "under" would include establishment or constitution under power or authority conferred on an authority/body by an enactment, Notification/order; that a Notification or order could also be issued in exercise of Executive power and be a result of power conferred by legislation or even by subordinate legislation on an authority/body. As earlier noticed, the definition of "Club or Association" excludes from its ambit any body established or constituted by or under a law for the time being in force. The appellant - ECSEPC though a body registered under the Societies Registration Act, 1860, is notified to be an EPC and is enumerated to be so qua the Appendix to the FTP; the appellant is obliged to confirm to uniform bye-laws as may be periodically framed by the Central Government regulating the constitution and/or transaction of its business. ECSEPC is also chartered to function as an EPC and authorised to issue RCMC (Registration cum Membership Certificate). We therefore, conclude that the appellant-ECSEPC is a body "established" or "constituted" under a law for the time being in force, namely the Foreign Trade ....
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....te of Boilers inspects and issues certificate for boilers; or Explosive Department inspects and issues certificate for petroleum storage tank, LPG/CNG tank in terms of provisions of the relevant laws. Fee as prescribed is charged and the same is ultimately deposited into the Government Treasury. A doubt has arisen whether such activities provided by a sovereign/public authority required to be provided under a statute can be considered as 'provision of service' for the purpose of levy of service tax. 2.The issue has been examined. The Board is of the view that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government Treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public au....
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.... chamber or EPC or Trade Association which issues COOC acts as a technical inspection and certification agency, and issuance of COOC attracts service tax under 'technical inspection and certification agency' service, which is a specific description when compared to a general description like 'club or association service', by the application of the principles of classification provided in section 65A of Finance Act, 1994. 4. Service tax paid on 'technical inspection and certification' of export goods is eligible for refund under Notification 17/2009-S.T., dated 7th July, 2009. It is seen that this circular merely decides the classification of the service. It does not specifically deals with the services of 'statutory and mandatory' nature like the earlier circular dated 18.12.2006. Thus even if the service is held to be classifiable as Technical Inspection and Certification Services, still being 'statutory and mandatory' nature no tax can be demanded in terms of the circular dated 18.12.2006. In view of above we hold in favor of the appellant on this issue. The appeal on this count is allowed. 4.4 In respect of demands of service tax under the head....