Club or Association service - Transfer of amounts related to cost of land to sister concern- admissibility of cenvat credit

PJ/Case Laws/2011-12/1334

Case: COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, HYDERABAD v/s M/S COUNTRY CLUB (INDIA) LTD

Citation: 2011-TIOL-1163-CESTAT-BANG

Issue:- Club or Association Service – service tax liability on transfer of amounts related to cost of land to sister concern for allotment to individual members - Adjudicating authority allowing Cenvat credit without verification of relevant documents- matter remanded for verification.

Brief Facts:- Respondent are a club. They had transferred amounts related to cost of land to sister concern for allotment to individual members of club. Revenue demanded service tax on the same.

The Adjudicating Authority only confirmed an amount on the 'Club or Association Services taking into calculation and consideration the non inclusion of the value/cost of the land which was received by the respondent. The Adjudicating Authority also allowed Cenvat credit and did not demand interest on liability admitted as well as did not impose penalty under Section 76 & 78.

Revenue is in appeal against the impugned order.

Appellant’s Contention:- Revenue is aggrieved by the said order-in-original on the ground that the Adjudicating Authority has allowed Cenvat credit without verification of relevant documents and they has not confirmed the amounts demanded in the show cause notice, they has only confirmed an amount on the 'Club or Association Services taking into calculation and consideration the non inclusion of the value/cost of the land which was received by the respondent.

Revenue contended that Respondent is not disputing the amount of Service Tax paid by them to the tune of approximately Rs. 1.45 crores plus Cenvat credit allowed by the Adjudicating Authority that is total tax liability of approximately Rs. 2 crores. Further Revenue said that the Adjudicating Authority should have charged interest under Section 75 of the Finance Act on the amount which has been accepted as liability by the assessee. Revenue argued that penalties imposed under Sections 76 & 78 should be also on the amount which has been accepted by the assessee. It is submitted that the impugned order being silent on this issue, and the Cenvat credit allowed to the assessee being done without verification of the duty paying documents, the matter should be remanded for reconsideration of the Adjudicating Authority.

Respondent’s Contention:- Respondent argued that as regards the Service Tax liability on the cost of the land which was received by the assessee, the Tribunal vide Final Order No. 1323 & 1324/2010 dated 07.10.2010 [2011-TIOL-335-CESTAT-BANG] has remanded the matter back to the Adjudicating Authority with a clear observation. They further submitted that if the matter is remanded back to the Adjudicating Authority for the verification of the documents of availment of cenvat credit, they have no objection, but prays for a clear direction from the Tribunal.

Reasoning of Judgment:- The Tribunal found that the Adjudicating Authority has confirmed demand of approximately Rs. 1.75 crores while the demand raised in the show cause notice is approximately Rs. 3.62 crores. Further they found that the demand raised in the show cause notice has to be reconsidered by the learned Commissioner in line of direction given in their Final Order dated 07.10.2010 and arrive at the correct tax liability of the assessee. While arriving at such correct tax liability, they also direct the Commissioner to consider the issue of Cenvat credit availed by the appellant after due verification of the duty paying documents. They made clear that the Adjudicating Authority also should keep in mind that assessee is disputing only the inclusion value of the cost of land to be included in the aggregate value of the services rendered by them and not the amount of Service Tax admitted and paid by them under 'Health Club and Fitness Services'.

The Tribunal also direct that the Adjudicating Authority should consider the imposition of penalties under Sections 76, 77, 78 and interest under Section 75 after arriving at a conclusion as per the direction given above and direction given in Tribunal’s Final Order dated 07.10.2010 [2011-TIOL-335-CESTAT-BANG].

Decision:- Appeal disposed of by way of remand.

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PJ/Case Laws/2011-12/1334

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