TaxTMI 
TaxTMI 
2008 (11) TMI 87
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.... vide letter dated 29-7-1999 to file the half yearly ST-3 returns, to which the appellant, vide letters dated 4-8-1999 and 28-3-2003 replied that being an organization set up by the Punjab Government for welfare and rehabilitation of ex-servicemen, they, not having any profit motive, are not a 'commercial concern' and hence are not liable to pay the service tax. The revenue, however, vide letters dated 30-4-2003 and 14-7-2003 clarified to the appellant that they have to pay the service tax. The appellant were asked by the revenue vide letter dated 8-8-2003 to pay the service tax for the past period from October 1998 to March 2003 with interest. In response to the revenue's direction, the appellant paid a total service tax of Rs. 1,41,06,096 during September 2003 to 1-3-2004 period for October 1998-December 2002 period under five TR-6 challans. For ascertaining the correctness of the tax paid, the revenue vide letters dated 2-12-2003 and subsequently vide letter dated 17-3-2004 asked the appellant to furnish total amount received from the clients during October 1998-March 1999, 1999-2000, 2000-01,2001-02 and 2002-03 (up to December 2002) period, which was supplied in April 2004. On ....
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.... following order on 3-8-2007- "A perusal to para 2 of the order dated 11-4-2007, passed by the Customs, Excise and Service Tax Appellate Tribunal, shows that the Tribunal has rightly understood the order passed by this Court on 19-2-2007 when it observed that this Court has set aside the order of the Tribunal dated 6-10-2006 which was passed earlier by the Tribunal. Accordingly, we find no further clarification would be necessary." Accordingly, the appeal is being take up for decision afresh. 2. Heard both the sides. 2.1 Shri Ashish Chopra, Advocate, the learned counsel on behalf of the appellant, made the following submissions- (1) The appellant had obtained service tax registration on 7-12-1998 and their activity was known to the revenue. There was long correspondence between the appellant and the revenue regarding the appellants liability to pay service tax. In view of this, there is no justification for invoking longer limitation period of five years for recovery of allegedly short paid tax. The show-cause notice dated 22-4-2004 for recovery of allegedly short paid tax during October 1994 to December 2002 period is, therefore, time-barred. In this regard judgment....
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....which also includes the security personnel's salary, but is chargeable only on the commission which the appellant get. In this regard, reliance is placed on Tribunal's judgment in case of Malabar Management Services (P.) Ltd. v. CST [2008] 14 STT 107 (Chennai-CESTAT). (7) The appellant being a State Government Undertaking, there is no question of intention to evade the tax. Therefore there is no justification for imposition of penalty on them. 2.2 Shri Amit Jain, the learned Departmental Representative made the following submissions:- (1) The show-cause notice dated 22-4-2004 is not barred by limitation as during the period prior to 10-9-2004, in section 73 mere omission or failure to file the return under section 70 was sufficient for invoking the longer limitation period of five years. In this regard, reliance is placed on Tribunal's judgments in cases of ETA Travel Agency (P.) Ltd. v. CCE [2007] 9 STT 370 (Chennai-CESTAT) and Free Look Outdoor Advertising v. CCE [2006] 4 STT 176 (Bang.-CESTAT). Even the demand for October 1998-March 1999 period is within time as the due date for filing return for the six monthly period October 1998 - March 1999 was 25-4-1999 and show-ca....
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....iable to pay the service tax. The appellant, therefore, are liable for penalty under sections 76 and 78. 3. We have carefully considered the submissions from both the sides. 4. The first point of dispute is as to whether the demand for service tax for the period from October 1998 to December 2002 raised vide show-cause notice dated 22-4-2004 is within time or the same is time-barred. The appellant's contention is that since in this case the correspondence between the appellant and the revenue on the question as to whether the appellant are liable to pay the service tax was going on since July 1999 and there has been a long correspondence on the question of appellant's liability to pay the service tax between the appellant and the revenue, the conditions for invoking longer limitation period of i.e., wilful misstatement, suppression of fact, fraud etc., do not exist and therefore the longer limitation period under section 73 is not applicable and as such the entire demand is time-barred. We do not agree with this contention of the appellant. Section 73(1), as it existed during the period of dispute i.e., during the period prior to 10-9-2004 is reproduced below:- "Section 73....
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....ould not pay the amount specified in the notice: Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words 'one year', the words 'five years' had been substituted." [Emphasis supplied] 4.2 From a reading of the provisions of section 73(1), as the same existed during the period of dispute i.e., during the period prior to 10-9-2004, and as the same existed with effect from 10-9-2004, it is clear that during the period of dispute, the existence for fraud, collision, wilful misstatement, suppression of fact, or contravention of the provisions of Finance Act, 1994 or of the Rules made thereunder with intent to evade the payment of tax, were not required for invoking the longer limitation period and all that was required for inv....
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....ty agency service' as defined under section 65(94) of the Finance Act, 1994 during the period of dispute. It has been pleaded that the appellant Corporation is a corporation set up under PESCO Act for welfare and rehabilitation of ex-servicemen and it has no profit motive. First of all, this contention of the appellant is not factually correct. As per the provisions of section 15(2) of the PESCO Act, under which the Appellant Corporation was constituted, its main charter of function is to "plan, promote and undertake, on its own or in collaboration with or through such ex-servicemen organizations or other agencies, as may be approved by the corporation, programmes of agricultural development, marketing, processing supply and storage of agricultural produce, small scale industry, building construction, transport and such other business, trade or activity, as may be approved in this behalf by the Government." As per sub-section (3) of section 15 of PESCO Act, the corporation in discharging its functions, shall have due regard to public interest, its solvency and welfare of ex-servicemen. Under section 16(1) of PESCO Act, the appellant Corporation can raise money by borrowing from Ban....
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....othing to do with question as to whether the corporation is a commercial concern or a non-commercial concern. An organization may be a charitable organization established for some charitable purposes, but it may still engage in commercial activities, as without any commercial activities, the income required for charitable purposes cannot be generated. For levy of service tax, it is the activity of an organisation which is relevant, not its objective. This principle was upheld by the Hon'ble Supreme Court in the context of Income-tax in case of CIT v. Thakur Das Bhangava [1960] 40 ITR 301 wherein it was held that the amount received by the respondent attracted tax as soon as it was received by him as his professional income and its future destination or application was irrelevant for taxing purposes. 5.2 The appellant have cited the Tribunal's judgments in the cases of Sikar Ex-servicemen Welfare Co-operative Society Ltd. (supra), Kerala State Ex-service League s case (supra), Board of Control for Cricket in India case (supra) and Ex-services Security Co-operative Society Ltd.'s case (supra). 5.2.1 In the Tribunal judgment in the case of Sikar Ex-servicemen Welfare Society Ltd....
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....commercial concern, cannot be applied to the present case. 5.2.4 In the case of Kerala State Ex-Service League (supra) issue was as to whether the appellant, a charitable society registered under Travancore Cochin Societies Registration Act, 1955 and whose objective is to look after the economic and welfare matters of ex-servicemen and their families, is a commercial concern. In this case, the appellant relying upon the Supreme Court's judgment in case of Sai Publication Fund and State of Tamilnadu (supra) and Board of Trustees of the Port of Madras 'case (supra) pleaded that a "commercial concern" is a concern which should earn profits, that the appellant are not a commercial concern and are not earning profits, that they are not preparing balance sheet and profit and loss account, and that as per the above judgments of the Supreme Court, in order to hold a concern to be a "commercial concern", it has to have profit motive, which is relevant where the person carries on trade, commerce or manufacture. The Tribunal in this case accepting the contention of the appellant remanded the matter to the original adjudicating authority for de novo adjudication of the question as to whethe....
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....urity personnel, its commission to cover the administrative expenses and profit. It prepares annual profit and loss account and balance sheet. It is expected to generate resources to sustain itself and not fall into insolvency. It is free to deploy its funds in carrying out its functions which include marketing, processing, supply and storage of agricultural produce, small scale industry, building construction, transport and other business, trade or activity, as approved by the Government and it can invest the surplus funds generated in Government securities or in such other manner as it may decide. The appellant corporation, therefore, functions like a 'commercial concern'. 5.4 In view of the above, we do not accept the appellant's contention that they are not a 'commercial concern'. 6. The next question to be decided is as to whether the service tax is to be charged on the gross value including the salary of the security personnel provided or only on the commission. Tribunal in the case of New Industrial Security Force (supra) and Panther Detective's case (supra) and Hon'ble Madras High Court in the case of GDA Security (P.) Ltd. v. Union of India 2002 (140) ELT 332/[2006] ....