Custom, Excise & Service Tax Tribunal
Bharat Swabhiman Nyas vs Commissioner, Customs, Central Excise ... on 27 January, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
SERVICE TAX APPEAL NO. 52849 OF 2016
(Arising out of Order-in-Original No. 32-33/COMMR/DDN/2016 dated 13.07.2016
passed by the Commissioner, Customs, Central Excise & Service Tax,
Commissionerate, Dehradun)
M/s. Bharat Swabhiman (Nyas) .... Appellant
Rajiv Bhawan, Patanjali Yogpeeth-II
Maharishi Dayanand Gram, Near Bahadrabad
Haridwar-249405
VERSUS
Commissioner Customs, Central Excise & ....Respondent
Service Tax, Dehradun,
E-Block, Nehru Colony, Haridwar Road
Dehradun
APPEARANCE:
Shri B.L. Narasimhan with Ms. Poorvi Asati, Advocates for the Appellant
Shri Anup K. Thapliyal, Authorized Representative of the Department
CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P. V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 14.09.2021
Date of Decision: 27.01.2022
FINAL ORDER NO. 50060/2022
JUSTICE DILIP GUPTA:
M/s. Bharat Swabhiman (Nyas) 1 has filed this appeal to assail
the order dated 13.07.2016 passed by the Commissioner, Customs,
Central Excise & Service Tax, Commissionerate, Dehradun 2 confirming
the demand of service tax with interest and penalty.
2. The appellant is a trust registered under the Registration Act,
1908. It was constituted on 05.01.2009 with an aim to carry out
1. the appellant
2. the Commissioner
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ST/52849/2016
charitable objects, which amongst others included yoga education and
training for achieving a disease-free and healthy India.
3. The appellant is also registered under section 12AA read with
section 12A of the Income Tax Act, 1961 3. The appellant claims that in
order to fulfill its objectives, it engaged itself in organizing residential
as well as non-residential yoga camps to propagate yoga training and
vedic knowledge for which it received donations from its members.
4. An enquiry was, however, conducted in connection with non-
payment of service tax on such membership donations, on freight
charges paid by the appellant, and on the amount by the appellant for
hiring motor vehicles. Ultimately, a show cause notice dated
06.04.2014 was issued to the appellant for the period January 2009 to
March 2013 proposing demand of service tax with interest and penalty
under the category of 'club or association service', 'goods and
transport agency service' and 'rent-a-cab operator service'. This show
cause notice is pending adjudication.
5. Two more show cause notices dated 31.03.2015 and 05.01.2016
were issued to the appellant for the subsequent periods 2013-14 and
2014-15, based on the allegations made in the first and the second
show cause notice, respectively. The appellant filed detailed replies to
the second and the third show cause notices. These two show cause
notices were adjudicated upon by the Commissioner by a common
order dated 13.07.2016. The demand of service tax of Rs.
4,83,52,583/- was confirmed with respect to the membership
donations and freight charges paid by the appellant but the demand of
3. the Income Tax Act
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ST/52849/2016
service tax of Rs. 61,66,706/- was dropped. The gist of the findings of
the Commissioner are as follows:
(i) The second and third show cause notice have been
correctly issued under the provisions of section 73(1A) of
the Finance Act, 1994 4 as the allegations made by the
Department against the appellant were made known to the
appellant in the first show cause notice, which had invoked
the provisions of the Finance Act as applicable during the
pre and post-negative list period;
(ii) The amount of contribution (membership donations)
received from the members is directly relatable to various
privileges assured to the members and thus, the said
amount of contribution is liable to service tax. The decision
of Gujarat High Court in Sports Club of Gujarat
Limited vs. Union of India 5 is not applicable to the
present case in as much as the same dealt with the
provisions of the Finance Act prior to 30.06.2012;
(iii) Explanation 3 to section 65B(44) of the Finance Act treats
an unincorporated association or body of persons and its
members as distinct persons. Further, the appellant is
obliged to provide stated facilities to members in lieu of
donations and thus, is liable to pay service tax on the
same;
(iv) Only specific charitable activities are exempted under
Notification dated 20.06.2012 and the activities of the
4. the Finance Act
5. 2013 (31) STR 645 (Guj.)
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ST/52849/2016
appellant are not covered under the scope of the said
exemption;
(v) The appellant, by virtue of payment of freight charges, is a
person liable to pay service tax and the freight amount is
liable to Service Tax under "transport of goods by road
service'; and
(vi) The categories of persons liable to pay service tax under
reverse charges in terms of rule 2(1)(d)(i)(B) of the
6
Service Tax Rules, 1994 includes an association of
persons. A trust qualifies to be an association of persons
and thus, the Appellant is liable to pay service tax under
'goods and transport agency' service.
6. Shri B.L. Narasimhan, learned counsel appearing for the
appellant assisted by Ms. Poorvi Asati, made the following
submissions:
(i) The show cause notices have failed to invoke the
applicable provisions of law. The Department can issue a
statement of demand or show cause notice for a
subsequent period provided the grounds relied upon for
the subsequent period are the same as mentioned in the
earlier show cause notice. In the present case, the second
show cause notice has not mentioned any grounds on
which the demand has been proposed and, therefore, the
pre-requisite condition of grounds being same cannot be
verified;
6. 1994 Rules
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ST/52849/2016
(ii) The second and third show cause notices, while proposing
the demand of service tax on the amount received post
01.07.2012, neither invoke nor mention the charging
provisions i.e. section 66B and section 66B(44) of the
Finance Act;
(iii) The demand of service tax on membership donations is not
sustainable as the activities of the appellant are exempt
under Notification dated 26.09.2016 from 01.07.2012 to
20.10.2015;
(iv) The activities of the appellant are exempt under
Notification dated 20.06.2012 w.e.f. 21.10.2015;
(v) The doctrine of principle of mutuality is also applicable in
the present case;
(vi) The appellant is not liable to pay service tax on the freight
amount paid by it; and
(vii) Interest is not recoverable and penalty is not imposable.
7. Shri Anup K. Thapliyal, learned authorized representative
appearing for the Department has, however, the justified the
impugned order and in this connection placed various paragraphs of
the order.
8. The submissions advanced by the learned counsel for the
appellant and the learned authorized representative appearing for the
Department have been considered.
9. The issue that arises for consideration is regarding the demand
of service tax on the donations received by the appellant from its
members and on freight charges paid by the appellant under the
reverse charge mechanism.
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10. Learned counsel for the appellant submitted that the demand of
service tax on membership donation is not sustainable as the activities
of the appellant are exempt under Notification dated 26.09.2016 from
01.07.2012 to 20.10.2015 and under Notification dated 20.06.2012
w.e.f. 21.10.2015.
11. It would, therefore, be appropriate to first reproduce the
Notification dated 26.09.2016 and it is as follows:
"Notification No. 42/2016-S.T. dated 26-Sep-2016
Whereas, the Central Government is satisfied that in
the period commencing on and from the first day of July,
2012 and ending with the 20th day of October, 2015
(hereinafter referred to as the said period) according to a
practice that was generally prevalent, there was non-levy of
service tax on the services by way of advancement of Yoga
provided by entities registered under section 12AA of
Income-tax Act, 1961 (43 of 1961) and this service was
liable to service tax, in the said period, which was not being
paid according to the said practice.
Now, therefore, in exercise of the powers conferred
by section 11C of the Central Excise Act, 1944 (1 of 1944),
read with section 83 of the Finance Act, 1994 (32 of 1994),
the Central Government hereby directs that the service tax
payable under section 66B of the Finance Act, 1994, on the
service by way of advancement of Yoga provided by entities
registered under section 12AA of Income-tax Act, 1961 (43
of 1961) in the said period, but for the said practice, shall
not be required to be paid."
12. The appellant is registered under section 12AA of the Income
Tax Act and the education and training in yoga provided by the
appellant is towards the activity of advancement of yoga. Thus, as
both the conditions are satisfied by the appellant, the membership
donations collected by the appellant would be exempt from payment of
service tax for the period from 01.07.2012 to 20.10.2015.
13. The appellant is also entitled to exemption from payment of
service tax under the Notification dated 20.06.2012 w.e.f. 21.10.2015.
The relevant extract of the said Notification is reproduced below:
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ST/52849/2016
"Notification No. 25/2012-S.T. dated 20-June-2012
In exercise of the powers conferred by sub-section (1) of
section 93 of the Finance Act, 1994 (32 of 1994)
(hereinafter referred to as the said Act) and in supersession
of notification number 12/2012-Service Tax, dated the 17th
March, 2012, published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i) vide
number G.S.R. 210(E), dated the 17th March, 2012, the
Central Government, being satisfied that it is necessary in
the public interest so to do, hereby exempts the following
taxable services from the whole of the service tax leviable
thereon under section 66B of the said Act, namely :
...........
4. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;
...........
2. Definitions.
For the purpose of this Notification, unless the context otherwise requires,-
(k) "charitable activities" means activities relating to-
(i) public health by way of -
(a) care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol, or
(b) public awareness of preventive health, family planning or prevention of HIV infection;
(ii) advancement of religion or spirituality;
(iii) advancement of educational programmes or skill development relating to,-
(a) abandoned, orphaned or homeless children;
(b) physically or mentally abused and traumatized persons;
(c) prisoners; or
(d) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife; or
(v) advancement of any other object of general public utility up to a value of, -
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(a) eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12;
(b) twenty five lakh rupees in any other financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year;"
(emphasis supplied)
14. An amendment was made in the aforesaid Notification dated 20.06.2012 by Notification dated 21.10.2015 in paragraph 2 (ii) and is as follows:
"(ii) in paragraph 2, .........
(b) in clause (k), in sub-clause (ii), for the words religion or spirituality, the words religion, spirituality or yoga shall be substituted."
(emphasis supplied)
15. The definition of 'charitable activity' in the Notification dated 20.06.2012 was amended to include activities relating advancement of yoga.
16. It is, therefore, clear that the twin conditions that the entity must be registered under section 12AA of the Income Tax Act and activities must be carried out by way of charitable activities stand satisfied.
17. The next issue that remains to be decided is whether the appellant is liable to pay service tax on the freight amount paid by it on a reverse charge mechanism.
18. 'Goods transport agency' service has been defined in section 65(26) of the Finance Act to mean any person who provides service in relation to transport of goods by road and issues consignment notes, by whatever name called. In the present case, consignment notes 9 ST/52849/2016 have not been issued and so the activities cannot be said to be covered under 'goods transport agency' services.
19. In this connection it would be useful to refer to the decision of the Tribunal in Bhoramdeo Sahakari Shakhar Utpadam Karkhana vs. Commissioner of Customs, Central Excise & Service Tax, Raipur 7, wherein it has been held that service tax can be levied only if consignment notes are issued.
20. Thus, service tax liability could not have been fastened on the appellant under the reserve charge mechanism.
21. It would, therefore, not be necessary to examine the other contentions raised by the learned counsel on behalf of the appellant.
22. The order dated 13.07.2016 passed by the Commissioner, therefore, cannot be sustained. It is, accordingly, set aside and the appeal is allowed.
(Order Pronounced on 27.01.2022) (JUSTICE DILIP GUPTA) PRESIDENT (P. V. SUBBA RAO) MEMBER (TECHNICAL) Shreya
7. 2019 (10) TMI 1416 - CESTAT, New Delhi