TaxTMI 
TaxTMI 
2023 (10) TMI 594
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....e Tax amount, under Section 75 of the Finance Act, 1994. iii. I hereby impose a penalty on noticee under Section 76 of the Act, for their failure to pay service tax by due dates. The penalty is imposed @ Rs. 200/- (Rs. Two hundred only) for every day (up to 09.05.2008) during which such failure continues or at the rate of 2% 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. However, the total amount of the penalty payable in terms of this section shall not exceed the amount of Service Tax payable upto 09.05.2008. iv. I further, impose a penalty of Rs. 4,94,33,027/- (Four Crore Ninety Four Lac Thirty Three Thousand and Twenty Seven Only) under Section 78 of the Finance Act, 1994 for their failure to pay Service Tax by suppressing the value of taxable service & also various acts of omission and commission. v. I also impose a penalty under Section 77 for their failure to take registration in accordance with the provisions of Section 69/ rules made thereunder at the rate of two hundred rupees for every day during which such failure continued, sta....
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....he present case:- • Whether providing education to patients regarding Yoga falls under "health and fitness service" defined under Section 65 (51) of the Finance Act, 1994? • Whether the donation received in respect of yoga camp was not in quid pro quo for educating regarding yoga because such education was provided free of cost also? • Whether the donation received in respect of residential Yoga camp was not in quid pro quo for educating regarding yoga as such amount was used to meet various costs such as food, lodging, medicines, medical tests, etc. and education regarding yoga was free of cost? • Whether the amount received as donation was charity and such amount does not form consideration for providing any health and fitness service? • When the fact regarding such alleged service/or activity was known to the department then extended period of limitation is available to the department for issuance of the show cause notice? • Whether the appellant was entertaining a bona fide belief that the alleged activity was not a taxable service in the facts where the department made a thorough investigation during....
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.... services are not taxable and all the relevant information has persuaded by the department was furnished and no show cause notice was issued. Accordingly, the appellant-trust headed by the same person Shri Acharya Balkrishna was under impression that the services are not taxable. Accordingly, invocation of extended period as per proviso to Section 73 (1) is erroneous. • As extended period cannot be invoked so penalty under Section 78 cannot be imposed on them. • Further, all the activities in respect of these camps were well advertised in the media and through the news-papers. Any of such residential and non-residential camps were also telecasted all the activities of the trust in relation to organization of these camps was well within the knowledge of public atlases including Department. Hence, extended period could not have been invoked. In support of the above proposition that extended period could not have been invoked, reliance is placed on following judgments:- • Shriram Chits Pvt. Ltd. [2023 (69) G.S.T.L. 397 (Tri.Hyd.)] upheld by dismissing the Civil Appeal filed by the department as reported at 2023 (69) G.S.T.L. 338 (SC); â....
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....nt or donation coupons carry seating privileges, this facts has been confirmed by Shri Shyamvir Singh Saini as well as from Shri Alok Jain of Ayojan Samiti in their statement recorded stating that sitting arrangements are of three or four types and sitting arrangements were made according to the denomination of donation coupons i.e. donation coupons of higher denominations puts the person in the front seating and people with lower denominations were made to sit in the back seat of the camp. • Contention of the appellant that these amounts were collected as donation to the trust, hence, cannot be considered as consideration for providing these services is itself pointing to the suppression made by the appellant. Appellant have been very cleverly taking the consideration received by use of these donation coupons in order to get exemption from payment of service tax. • Appellant neither registered themselves with the Department nor paid any service tax, a case for suppression is clearly made out against them. Accordingly, extended period of limitation cannot be invoked. • Contention of the appellant that the investigation/inquiries were made in t....
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.... for a service to be covered under 'health or fitness' service, it is, first of all quintessential that it should be for physical well-being. Thus, yoga provided for such purposes would be covered and not yoga for therapeutic purposes. 4.8 I observe that dispute revolved on the word yoga as appearing in above said definition of "health and fitness service". The notice has alleged that the noticee is providing the health and fitness service by teaching yoga whereas noticee contends that yoga provided for physical well being would only be covered and not yoga for therapeutic purposes. 4.9 I find that the above definition encompasses the activity of Yoga among others, as falling under the category of 'Health and Fitness Services' and the provision of 'health & fitness service' attracts Service tax. Therefore, it is necessary to understand as to what the yoga means in terms of definition of health and fitness service in view of claims of notice and the noticee. It is observed that the meaning of Yoga as described in Wikipedia, (the free encyclopaedia) is as under: a. "Yoga (Sanskrit, Päli: jaoga/yoga) is a commonly known generic t....
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....lly has to be imparted by someone who is adept in such teachings. Further, the study of five points of yoga reveals that it is a curriculum/system of functioning which helps to keep and maintain the physical well being. It is also true that practicing yoga help in curing specific ailment depending upon the body resistance of the person concerned. 4.12 In view of above backdrop, the contention of noticee, that yoga for therapeutic purposes will not be covered by the said definition of "health and fitness service" only tends to impart a new meaning to the definition not provided by the statute. The noticee argues that yoga provided for physical well being would only be covered and not yoga for therapeutic purposes. I find that the definition provides exception only in respect of massage and not to any other activity be it yoga or any other, included in the definition. Thus, it is clear that yoga of all sorts is included in the definition of "health and fitness service". Moreover, had it been the case, the provision would have been made in the statute itself, as had been done in the case of massage (excluding therapeutic massage). Accordingly, the contention of noticee runs c....
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....e, the taxable service is defined under Section 65(105) (zw) as below: Section 65(105) - "taxable service" means any service provided or to be provided "(zw) - to any person, by a health club and fitness centre in relation to health and fitness services" The definition of 'health club and fitness centre' under Section 65(52) is as under: (52) "health club and fitness centre" means any establishment, including a hotel or a resort, providing health and fitness service; Accordingly, 'health and fitness services' will be taxable only if it is provided by a health club and fitness centre in relation to health and fitness services". 4.15 It is observed that the service of health and fitness are liable to service tax if the same are provided by a health club and fitness centre. The issue to be decided is as to whether M/s PYPT situated at Maharishi Dayanand Gram, Delhi Haridwar NH, Near Bhadarabad, Haridwar is a health club and fitness centre or not. ii. It is an admitted fact that M/s Patanjali Yog Peeth Trust is an organization interalia carrying out the activities of teaching yoga at the above said place. The notice has alleg....
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....ther as regards the receipt of consideration by the noticee is concerned there is denying of the fact that Chief Accounts Officer of noticee-company, Shri Shyamvir Singh Saini in his statements dated 17.10.2011 and 17.11.2011 has admitted that the main source of income of M/s Patanjali Yogpeeth Trust is from different types of donation, such as the donations received for participation in residential and non-residential yoga shivirs; as membership; and as general donations. The statement and evidences on record like their website http://www.divyayoga.com/free-services.html, which mentions that they are organizing Yoga Science Camps and the people below poverty line are permitted to participate in the Residential and Non Residential Yoga Science Camps held in towns and cities of India from time to time in the benign presence of Yogrishi Swami Ramdevji Maharaj. This clearly goes on to show that other persons have to pay an entry fees for attending the Yog -Science camps. The fees collected from participant ranges from Rs. 7000/- onwards and the facilities provided during the camp varies with the amount of entry fees such as AC Rooms, sitting in front row.etc. Thus, it is amply clear t....
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....77, I find that noticee has failed to take registration in accordance with the provisions of Section 69 or rules made thereunder, therefore the noticee is also liable to pay a penalty under this Section. 4.23 Further, as regards the imposition of penalty under Section 78 of the Act, the noticee has submitted that penalty under Section 78 of the Act can be imposed only for reasons identical to those required for invoking extended period or suppression of any fact with an intention to evade payment of service tax. Therefore, penalty under Section 78 of the Act cannot be imposed. 4.24 It is observed that a trust has been reposed on the service provider so far as the service tax is concerned & accordingly measures like self assessment based on mutual trust & confidence have been put in place. As a result, the private records maintained by the service provider for transacting the normal business are accepted for the service tax purposes. From the evidence laid before me, I find that the assessee had not taken into account the consideration received by them for rendering taxable service for the purpose of payment of service tax and thereby refrained from paying their ta....
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....ts on the issue of taxability of activities undertaken by the appellant, the Bench had observed as follows:- "6. The subject matter of dispute in this case is various residential as well as non-residential yoga courses being organized by the appellant. There is no dispute that in respect of residential as well as non- residential yoga courses being organized by the appellant some amount are being collected from the participants. Section 65 (105) (zw) of the Finance Act, 1994 makes the services provided by "health club and fitness centre", as defined under Section 65 (52) to any person taxable. Under Section 65 (52) of the Finance Act, 1994 'health club and fitness centre means any establishment including the hotel or a resort, providing health and fitness service. Under Section 65 (51), 'health and fitness service' means "service for physical well being such as sauna and steam bath, Turkish bath, solarium, spas, reducing or slimming salons, gymnasium, yoga, meditation, massage (excluding therapeutic massage) or any other like service. Thus, what is covered under the definition of health and fitness service' is basically the services for physical well being ....
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....cted the entry fee to event organized as Yoga camp - both residential and non residential from the participants, disguising it as "Donation". They issued the entry ticket of various denominations. The holder of the ticket was granted different privileges depending on the denomination of the ticket. In return the appellant provided the person entry to camp where, Swami Baba Ramdev would give instructions in respect of Yoga and Meditation. Appellant has relied upon the decision rendered by the Hon'ble Delhi High Court in their own case in ITA 886/2017, (Order date 23.10.2017). The said order is in respect of series of question of law framed by the Income Tax department and finding that many of the questions do not give rise to the question of law or the decision of ITAT was based on appreciation of fact in hand have refused to admit some of these questions and have admitted only following questions for their consideration- "12. So far as the other issues are concerned, the following questions of law arise: I. "Whether ld. ITAT erred in law in holding that assessee is entitled to exemption u/s 11 & 12 of the Income Tax Act, 1961? II. Whether ld. ITAT has err....
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....ifferentiate a donation from a research grant. As a general rule, a research grant will be for a specific piece of research activity e.g. to examine the relationship between shark migration and global warming, whereas a donation will be much more general e.g. to fund the research and other activities of Professor Plum. ..... What makes income a trading activity? Trading income is income earned by a department from either another university department or an external customer, for the provision of goods or services, or for the use of space or facilities. Therefore, for the income to be a donation it is important to ensure that a funder, or provider of a grant, receives nothing in return." From the above it is quite evident that the amounts received by the appellant as donation, was nothing but the consideration for the provision of service taxable under the category of Health and Fitness services. This fact these donations were the source of income of the trust has been admitted by the Chief Accounts Officer of noticee-company, Shri Shyamvir Singh Saini in his statements dated 17.10.2011 and 17.11.2011. The entire submission made by the appellant in thei....
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....for the taxable service provided by the appellant in these residential and non residential camps. 4.9 The demand has been made on the amounts received by the trust in the garb of donation. Annexure 1 to the Show Cause Notice whereby the amount of demand has been worked out is reproduced below: Period Amount of Camp Donations (In Rs) Value taxable Service Rate of Service tax, Education Cess & Higher Education Cess Service Tax (In Rs) Education Cess (In Rs) Higher Education Cess (In Rs) Total (In Rs) 01.10.06 - 10.05.07 148301133.8 132128593.9 12% + 2% 15855431 317109 0 16172540 11.05.07 - 23.02.09 254166461.2 226207245.7 12% + 2% + 1% 27144869 542897 271449 27959216 24.02.09- 31.03.11 56769930.1 51468658.3 12% + 2% + 1% 5146866 102937 51469 5301272 TOTAL 459237525 409804498 48147167 962943 322917 49433027 Figures of donations have been worked out in the Annexure 1 a to the Show Cause Notice. Relevant parts of said Annexure is reproduced below: Period Amount of Donation Received During the period Remark I 01.10.2006 to ....
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....itation. This belief was based on certain correspondences undertaken between Divya Yoga Mandir (DVM) in which Shri Acharya Balkrishna was Secretary General and the department in the year 2004-05. They have produced the copies of the correspondence which are at page 304 to 400 of the paper book. They have placed reliance on a series of the decisions to buttress their argument that extended period of limitation could not have been invoked in this case. It is settled principle in law that existence of ingredients leading to invocation of extended period of limitation is a "question of the fact" and the facts of the case in hand will determine whether the extended period of limitation could have been invoked, unlike the "question of law" where the determination can be made on the basis of the available judicial precedents. Further being a charitable trust or body is not the certificate for holding that the appellant cannot have any intention to evade payment of taxes. In case of Bhatnagar Education and Research Trust [(2021) 9 SCC 439], Hon'ble Supreme Court has upheld the order cancellation of the registration as trust by Commissioner Income Tax on finding the irregularities commit....
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....d the issue of suppression and has rendered the finding against the appellant in this respect. We also place reliance on the following decisions wherein various courts and tribunal has held in invocation of extended period of limitation in similar circumstances. In case of Neminath Fabrics [2010 (256) E.L.T. 369 (Guj.)], Hon'ble Gujarat High Court has held as follows: "14. Thus the scheme that unfolds is that in case of non-levy where there is no fraud, collusion, etc., it is open to the Central Excise Officer to issue a show cause notice for recovery of duty of excise which has not been levied, etc. The show cause notice for recovery has to be served within one year from the relevant date. However, where fraud, collusion, etc., stands established the period within which the show cause notice has to be served stands enlarged by substitution of the words "one year" by the words "five years". In other words the show cause notice for recovery of such duty of excise not levied etc., can be served within five years from the relevant date. 15. To put it differently, the proviso merely provides for a situation whereunder the provisions of sub-section (1) are recast by th....
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.... period of limitation would stand extended from one year to five years. This is the only requirement of the provision. Once it is found that the ingredients of the proviso are satisfied, all that has to be seen as to what is the relevant date and as to whether the show cause notice has been served within a period of five years therefrom. 20. Thus, what has been prescribed under the statute is that upon the reasons stipulated under the proviso being satisfied, the period of limitation for service of show cause notice under sub-section (1) of Section 11A, stands extended to five years from the relevant date. The period cannot by reason of any decision of a Court or even by subordinate legislation be either curtailed or enhanced. In the present case as well as in the decisions on which reliance has been placed by the learned advocate for the respondent, the Tribunal has introduced a novel concept of date of knowledge and has imported into the proviso a new period of limitation of six months from the date of knowledge. The reasoning appears to be that once knowledge has been acquired by the department there is no suppression and as such the ordinary statutory period of limitat....
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....e appellant amounting to Rs. 991.66 lakhs and at that stage only the department came to know that the work order was to carry out the job for furniture also. A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years." 4.14 In the case of ICICI Econet Internet & Technology Fund [2021 (51) G.S.T.L. 36 (Tri. - Bang.)], Bangalore bench has observed as follows: 46. We find that the appellants have argued that this is a matter of interpretation and all the information being in public domain, suppression of any material fact with intent to evade payment of duty cannot be alleged. The appellants have relied upon this Bench's decision in the case of Gateway Hotels, 2020 (37) G.S.T.L. 210 (Tri. - Bang.). We find that in that case, the fact was that the appellants have been filing the returns regularly and there was a confusion regarding the corr....
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....port 2003-04, it is mentioned "Noncharging of service tax on certain services". This implies that even where service tax has been collected the same was not deposited pending registration. It has also been recorded by the statutory auditors that service tax was payable on the services rendered by AIL to AASL. However, on the pretext that consideration has not been received (despite realization of the same from sale of tickets conducted on behalf of AASL), AIL has not discharged the service tax liability. In the light of the observations of the statutory auditors, We are not convinced with the argument taken by appellants that service tax was not paid on the basis of bona fide belief that service tax was not payable. Consequently, we are concluding that Revenue is entitled to invoke the extended period of limitation in this case." 4.16 In case of TATA Steel Ltd. [2016 (41) S.T.R. 689 (Tri. - Mumbai)], Mumbai bench held as follows: "48. The invocation of the extended period of limitation is a mixed question of facts and law and is mainly based upon the facts of individual cases. During the relevant period the appellant had not taken registration under the Banking and Fina....
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....In view of the above factual matrix it is not possible to accept the contention that the appellant had a bona fide doubt. In my view, even if they had a bona fide doubt, they should have provided the precise information in July, 2007 itself so that the show cause notice could have been issued within the normal period of limitation. I also find that the Member (Judicial) has observed that the information was available in the balance sheet, etc. In my considered view, the information should be provided to the concerned jurisdictional assessing authority. The balance sheet may be providing some details but these generally do not provide the precise details to enable the department to issue demand notice. In any case the balance sheet may be a public document but the question is whether the balance sheet or information was given to the assessing authorities. In the present case, the appellants did not provide the information in July, 2007. They did not pay the tax as per the direction of the letter dated 27-8-2007. Under the circumstances, I am of the view that the relevant information was suppressed from the department and extended period of limitation has been correctly invoked." ....
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....rate the conditions, subject to which and the extent to which the penalty may be reduced. 18. One cannot fail to notice that both the proviso to subsection 1 of Section 11A and Section 11AC use the same expressions : "....by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,...". In other words the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under Section 11A(1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provisio....
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.... Act, 1961 (in short the IT Act') taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 (in short the "Rules') and a decision of this Court in Chairman, SEBI v. Shriram Mutual Fund & Anr. [2006 (5) SCC 361] and was of the view that the basic scheme for imposition of penalty under section 271(1)(c) of IT Act, Section 11AC of the Act and Rule 96ZQ(5) of the Rules is common. According to the Division Bench the correct position in law was laid down in Chairman, SEBI's case (supra) and not in Dilip Shroff's case (supra). Therefore, the matter was referred to a larger Bench." After referring to a number of decisions on interpretation and construction of statutory provisions, in paragraphs 26 and 27 of the decision, the court observed and held as follows : "26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating t....
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....d counsel what was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the outer limit of penalty is fixed and the statute provides that it should not exceed a particular limit, that itself indicates scope for discretion but that is not the case here." 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides." 4.19 Relying on certain decisions, Commissioner has in the impugned order concluded that penalty can simultaneously imposed under Section 76 and Section 78 of Finance Act, 1994 upto 09.05.2008. In view of the amendments made effective from 10.05.2008 by the Finance Act, 2008, the penalty if imposed under Section 78 the same could not have been imposed under 76. The text of the amendment as effective fro....
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....state that the provision does not further the object of the Statute or violates the legislative intent when read as it stands. Hence, Section 76 of the Act as it stands does not give any discretion to the authority to reduce the penalty below the minimum prescribed." 4.20 It is also noticed that the penalties under Section 76 and 77 are for the violation done and are absolute in nature if certain violations are attributable to the appellant. In the present case undoubtedly appellant had failed to take registration as required even though he was providing the taxable services. It is also the fact that they were not paying service tax and not filing the returns as required under provisions of Service Tax law, i.e Chapter V of Finance Act, 1994 and Service Tax Rules, 1994. For the contraventions of these provisions penalty imposed on the appellant under Section 76 and 77 cannot be faulted with. In case of Gujarat Travancore Agency [1989 (42) ELT 350 (SC)], Hon'ble Supreme Court has held as follows: "3. At the instance of the Revenue the Appellate Tribunal referred the question set forth earlier to the High Court of Kerala. It may be mentioned that another question was also....
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....njury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We are supported by the statement in Corpus Juris Secundum Volume 85, page 580, Paragraph 1023 : "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws." 5. A....