Custom, Excise & Service Tax Tribunal
M/S National Association Of Software vs Cst, Delhi on 26 September, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 26/09/2014. DATE OF DECISION : 26/09/2014. Service Tax Appeal No. 1418 of 2010 [Arising out of the Order-in-Original No. 35/RDN/2010 dated 12/07/2010 passed by The Commissioner of Service Tax, Delhi.] For Approval and signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s National Association of Software ] Appellant and Service Companies (NASSCOM) ] Versus CST, Delhi Respondent
Appearance Shri B.L. Narasimhan, Advocate for the appellant.
Shri Govind Dixit, Authorized Representative (DR) for the Respondent.
CORAM : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 54201/2014 Dated : 26/09/2014 Per. Rakesh Kumar :-
The facts leading to filing of this appeal are, in brief, as under.
1.1 The appellant are an apex body of software companies with various software companies as its Members who together contribute subscription amount for achievement of various objectives of public, industry and national importance including awareness/ education/ exports/ intellectual capital growth/ governance/standard/technology. The Department was of the view that the subscription amount charged by the appellant from its Members would attract service tax as Club and Association Service under Section 65 (105) (zzze) readwith Section 65 (25a) of the Finance Act, 1994. Beside this, it was found that the appellant have also provided business exhibition service which also attracted service under Section 65 (105) (zzo) of the Finance Act, 1994. It is on this basis that the Commissioner, Central Excise, Delhi I vide order-in-original dated 12/07/10 confirmed service tax demand of Rs. 7,24,98,866/- against the appellant alongwith interest thereon under Section 75 of Finance Act, 1994 and beside this, while imposed penalty of equal amount on them under Section 78 ibid, another penalty of Rs. 200/- per day for every day till the date of actual compliance under Section 77 was imposed under Section 77 ibid for contravention of the provisions of this Finance Act, 1994 and the Rules made thereunder. Out of the total service tax demand of Rs. 7,24,98,866/- confirmed against the appellant, the demand of Rs. 2,12,011/- is on account of Business Exhibition Service and the remaining demand for the period from 16/06/05 to 30/09/08 pertains to Club and Association Service. Against this order of the Commissioner, this appeal has been filed.
2. Heard both the sides.
3. Shri B.L. Narasimhan, Advocate, the learned Counsel for the appellant, pleaded that the appellant do not contest of service tax demand of Rs. 2,12,011/- on account of Business Exhibition Service, that they are contesting only the balance amount of service tax demand confirmed in respect of the Club and Association Service, that so far as the service tax demand on Club and Association Service is concerned, the issue stands decided in favour of the appellant by the Tribunal judgment in the case of Federation of Indian Chambers of Commerce and Industry vs. CST reported in 2014 (TIOL) 701 (CESTAT Del.), the judgment of Honble Gujarat High Court in the case of Sports Club of Gujarat Ltd. vs. Union of India reported in 2013 (31) S.T.R. 645 (Guj.) and the judgment of Honble Chhattisgarh High Court in the case of Ranchi Club Ltd. vs. CCE & ST, Ranchi Zone reported in 2012 (26) S.T.R. 401 (Jhar.), that in view of this, the entire demand on account of Club and Association Service is not sustainable, and that as regards penalty of Rs. 200/- per day on the appellant till the day of the actual compliance under Section 77, the Commissioner has wrongly imposed the penalty on the basis of the provisions of Section 77, as the same stood at the time of adjudication, while during the period of dispute in terms of the provisions of Section 77, maximum penalty of only Rs. 1,000/- could be imposed. With regard to penalty under Section 78 Shri Narasimhan pleaded that since the entire service tax demand of Rs. 2,12,011/- in respect of Business Exhibition Service has been paid before the adjudication alongwith interest and since no option had been given in the order in terms of proviso to Section 78 of the Finance Act, 1994 to pay lower penalty by paying penalty equal to 25% of the service tax demand during the period of 30 days from the date of communication of the order-in-original, in terms of the judgment of Honble Delhi High Court in the case of K.P. Pouches (P) Ltd. vs. Union of India reported in 2008 (228) E.L.T. 31 (Del.), the penalty imposable would be only 25% of the service tax demand. Shri Narasimhan, thus, pleaded that only the service tax demand of Rs. 2,12,011/- which has not been contested can be upheld and the penalty of only 25% of this amount would be imposable on the appellant under Section 78 and as regards penalty under Section 77, in terms of the provisions of this Section, as the same were in force during the period of dispute, only the maximum penalty of Rs. 1,000/- could be imposed.
4. Shri Govind Dixit, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner.
5. We have considered the submissions from both the sides and perused the records.
6. The service tax demand of Rs. 2,12,011/- on account of Business Exhibition Service is not contested and the same is upheld.
7. However, as regards the balance amount of service tax demand on account of Club and Association Service, we find that the issue in this regard stands decided in favour of the appellant by
(a) judgment of the Tribunal in the case of Federation of Indian Chambers of Commerce and Industry vs. CST (supra) ;
(b) judgment of Honble Gujarat High Court in the case of Sports Club of Gujarat Ltd. vs. Union of India (supra) and
(c) the judgment of Honble Jharkhand High Court in the case of Ranchi Club Ltd. vs. CCE & ST, Ranchi Zone.
7.1 In view of this, the service tax demand in respect of Club and Association Service alongwith penalty of equivalent amount under Section 78 is not sustainable and is set aside.
8. Since the appellant had paid the service tax of Rs. 2,12,011/- in respect of Business Exhibition Service even before the adjudication alongwith interest and since no option had been given in the adjudication order in terms of proviso to Section 78 of the Finance Act, 1994 to pay lower penalty by paying the same within a period of 30 days from the date of communication of order, in accordance with the judgment of Honble Delhi High Court in the case of K.P. Pouches (P) Ltd. vs. Union of India (supra), the benefit of lower penalty in terms of proviso to Section 78 cannot be denied and accordingly the penalty under Section 78 is reduced to 25% of the service tax demand upheld i.e. 25% of Rs. 2,12,011/-. As regards penalty on the appellant under Section 77, the penalty for any contravention of the provisions of the Act or the Rules made thereunder has to be imposed only under the provisions in force at the time of offence and since during the period of dispute the maximum penalty which could be imposed under Section 77 was Rs. 1,000/-, the penalty of Rs. 200/- per day till the date of actual compliance is not sustainable. Accordingly, the penalty under Section 77 is reduced to Rs. 1,000/-. The appeal, thus, is partly allowed.
(Operative part of the order pronounced in the open court.) (Archana Wadhwa) Member (Judicial) (Rakesh Kumar) Member (Technical) PK ??
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