Demand of service tax liability under the category of Business Auxiliary Service

PJ/CASE LAW/2016-17/3210

Case-MAHARASHTRA CHAMBER OF HOUSING INDUSTRY Versus C.C.E., C. & S.T., MUMBAI

Citation-2016 (41) S.T.R. 441 (Tri. - Mumbai)

Brief Facts-The issue involved in this case is regarding the demand of service tax liability under the category of Business Auxiliary Service. Appellant herein organized an exhibition during October, 2004 to December, 2004 and charged an amount as fees from their members as well as non-members. Revenue authorities are of the view that the appellant is liable to discharge the service tax liability on the amounts collected by them. Accordingly, a show cause notice dated 23-8-2006 was issued by invoking extended period of limitation demanding service tax, interest thereof and for imposition of penalties. Appellant contested show cause notice on merits claiming that the service tax liability does not arise during the material period as has been raised in the show cause notice. After following due process of law, the adjudicating authority did not agree with the contention raised and confirmed the demands raised along with interest and also imposed penalties. On appeal filed by the appellant, the first appellate authority confirmed the service tax liability along with interest but set aside the penalties imposed on the ground that the appellant has paid the service tax liability and there is no mala fide intention as the services were rendered when the services had just been introduced of service tax liability on the Business Auxiliary Service.

Appelants Contention-Learned CA would draw our attention to the facts of the case and submit that the entire issue is demand of service tax liability under the category of Business Auxiliary Service which were rendered during Oct., 2004 to December, 2004 is time barred as the show cause notice is issued on 23-8-2006. On merits it is the submission that appellant has conducted the Exhibition for their members as well as non-members. It is his submission that the amount collected from the members is not taxable as per the decision in the case of Karnavati Club Ltd. v. Union of India - 2010 (20)S.T.R.169 (Guj.) and has been upheld by the Hon’ble Apex Court as reported in 2010 (20)S.T.R.J44 (S.C.). He would also submit that the judgment of the Hon’ble High Court of Jharkhand in the case of Ranchi Club Ltd. - 2012 (26)S.T.R.401 (Jhar.) will also support his case.

Respondents Contention-Learned DR on the other hand would submit that the appellant had never raised the question of limitation before the lower authorities instead before the first appellate authority the appellant sought closure of the entire issue relying upon the provisions of Section 73(3) of the Finance Act, 1994.

Reasoning Of Judgement-After considering the submissions made by both sides, it was found that the issue as correctly pointed out by both sides is as to the tax liability under Business Auxiliary Service for the exhibition conducted by the appellant during October, 2004 to December, 2004 for their members and non-members. It was found that there is no dispute as to the fact that the appellant is covered under the service tax liability of Business Auxiliary Service during the relevant period.
It is also not disputed that the appellant has received an amount from the members of the association as well as from non-members. We find strong force in the contention raised by the learned Counsel as regards the service tax liability on the amount received from the members, no tax liability arises and is covered by the judgment of Hon’ble High Court of Gujarat in the case of Karnavati Club Ltd. (supra) and by the Hon’ble High Court of Jharkhand in the case of Ranchi Club Ltd. (supra). To that extent we hold that the appeal needs to be allowed and the impugned order needs to be set aside and we do so. Consequently the liability of interest and penalty also needs to be set aside; as the appellant is an association of Housing Industry and conducts various exhibitions for benefit of builders, etc., who are members.
As regards the demand raised on the amount received by the appellant from the non-members we find that the service tax liability does arise. On a specific query from the Bench, the learned CA draws our attention to the fact that service tax liability on the amount received is Rs. 4,18,506/- which is annexed at page 217 of the appeal memo. The demand of Rs. 4,18,506/- as also the interest thereof was upheld however as the issue involved in this case of taxability during the period when the tax was introduced on the services, by invoking provisions of Section 80 of Finance Act, 1994, penalty were set aside levied under various Sections in the order-in-original and upheld by impugned order.
As regards the submission made by the CA on limitation, it is observed that since the question of limitation was not raised before both the lower authorities, it was held that the same cannot be gone into by us in the 2nd appeal proceedings, in this case.

Decision- Appeal is disposed

Comment— The gist of the case is that, according to Section 73 of Finance Act, 1994, Fee collected from members by appellant for business auxiliary service is not leviable to Service Tax in terms of decisions in Karnavati Club Ltd. v. Union of India 2010 (20)S.T.R.169 (Guj.) and Ranchi Club Ltd 2012 (26)S.T.R.401 (Jhar.) However Service Tax is leviable under impugned services on fees collected from non-members.
Limitation issue not raised by appellant either at adjudication stage or at first appeal stage so the Tribunal cannot consider this fact at this stage.
In accordance with Section 80 of Finance Act, 1994, issue involved on taxability of a service, being pertaining to a period when tax was introduced, all penalties have been set aside.

Prepared By- Praniti Lalwani

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PJ/CASE LAW/2016-17/3210

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