Custom, Excise & Service Tax Tribunal
Erode Lorry Owners Association vs Salem on 21 February, 2019
1
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
[COURT III : Division Bench B1]
Appeal No.: ST/40738/2015
[Arising out of Order-in-Appeal No. 05/2015 dated
08.01.2015 passed by the Commissioner of Central Excise
(Appeals-I), Foulks Compound, Salem.
M/s. Erode Lorry Owners Association, : Appellant
2/95N, Bhavani Main Road,
Erode - 638 004
Versus
The Commissioner of G.S.T. & Central Excise, : Respondent
Salem Commissionerate Appearance:-
Shri. J. Shankaraman, Advocate for the Appellant Shri. S. Govindarajan, AC (AR) for the Respondent CORAM:
Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Hon'ble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing/Decision: 21.02.2019 Final Order No. 40368 / 2019 Per Bench :
The facts of the matter are that appellants are a Lorry Owners Association and are providing various services such as "Club or Association Membership Services", "Renting of Immovable Property Services" and "Supply of Tangible Goods Service". 2
2.1 Pursuant to perusal of their Balance Sheet/P&L account for the years 2008-09 to 2012-13, it appeared to the Department that the appellants had not discharged their duty liability under the following categories :
(i) Club or Association Membership Service in respect of subscription and donation collected from their members;
(ii) Supply of Tangible Goods Service in respect of transport vehicles (oil tankers) from their client i.e., M/s. HPCL on hire charge basis as per "bulk petroleum products transport agreement" between the appellant and M/s. HPCL;
(iii) Renting of Immovable Property Service in respect of renting out land and building to their members and receipt of lease/rent amount from them.
2.2 Accordingly, Show Cause Notice dated 23.09.2013 was issued to the appellants inter alia proposing demand of service tax liabilities in respect of membership fee/subscription (Club or Association Service), Tanker/lorry rent (Supply of Tangible Goods Service) and lorry stand parking rent/building rent (Renting of Immovable Property Service) totally amounting to Rs. 13,83,616/- with interest 3 thereon. The Show Cause Notice also proposed imposition of penalties under various provisions of law.
2.3 In adjudication, the Original Authority vide Order dated 09.09.2014 upheld the tax liabilities proposed in the Show Cause Notice, imposed equal penalty under Section 78 of the Finance Act, 1994 and also penalty under Section 77 of the Act ibid. Late fee at applicable rate was also demanded under Rule 7C of the Service Tax Rules, 1994. In appeal, the Commissioner (Appeals) vide impugned Order dated 08.01.2015 upheld the order of the lower authority and rejected the appeal filed by the appellant. Aggrieved, the appellants are now before this Tribunal.
3. Today when the matter came up for hearing, Ld. Advocate Shri. J. Shankaraman made oral and written submissions which are broadly summarized as under :
(i) The demand in respect of Club/Association Service cannot be sustained in view of the various decisions, for example M/s.
Ranchi Club Ltd. Vs. Chief Commr. of C.Ex. & S.T., Ranchi Zone - 2012 (26) S.T.R. 401 (Jhar.) and M/s. Sports Club of Gujarat Ltd. Vs. Union of India - 2013 (31) S.T.R. 645 (Guj.) which were also followed by CESTAT Chennai in M/s. 4 Cosmopolitan Club & Ors. Vs. C.C.E. & S.T., Chennai & Ors. vide Final Order Nos. 40366-40385/2018 dated 06.02.2018;
(ii) In respect of the demand under Supply of Tangible Goods Service, Ld. Advocate drew our attention to the transport agreement between them and M/s. HPCL where only pure transportation charges were collected and further, service tax on GTA that became liable was discharged by the service recipient viz. M/s. HPCL themselves. The appellant had also issued consignment notes and the same was placed before the Commissioner (Appeals). In the circumstances, there cannot be any further tax liability under Supply of Tangible Goods Service; otherwise, it would result in the same activity being taxed twice under two different services;
(iii) Once the above two demands are set aside, the value on taxable service in respect of Renting of Immovable Property in each of the disputed years will all fall within the threshold limit and there would be no tax liability on the same. 4.1 On the other hand, Ld. AR Shri. S. Govindarajan appearing on behalf of the respondent submits that the decision in the case of M/s. Ranchi Club Ltd. (supra) relied upon by the Ld. Advocate has been 5 referred to the Larger Bench of the Hon'ble Supreme Court and hence, it cannot be said that the matter is finally settled. 4.2 In respect of the remaining demands, Ld. AR reiterates the impugned Order.
5. Heard both sides.
6.1 Notwithstanding the assertions of the Ld. AR for the respondent, we find that the law, as settled at this point of time, is the one which has been laid down by the Hon'ble High Court of Jharkhand in M/s. Ranchi Club Ltd. (supra) relied upon by the Ld. Advocate. This ratio has been reiterated in a number of judgements not only by other High Courts but also by this very Bench as in the case of M/s. Cosmopolitan Club & Ors. (supra) which has also been relied upon by the Ld. Advocate.
6.2 In the event, we are of the considered opinion that no tax liability can be demanded in respect of this category. Hence, the demand that has been confirmed under Club or Association Services cannot be sustained and is set aside. So ordered.
7. Coming to the tax liability on Supply of Tangible Goods, from the agreement and other facts on record it is evident that the contract was for transportation of petroleum products on which 6 service tax under GTA has been discharged by M/s. HPCL themselves. The nature and type of arrangement between the two parties also service to indicate that there is no Supply of Tangible Goods involved in this matter. This being so, the demand made under this category also cannot be sustained and requires to be set aside. So ordered.
8.1 From Annexure-1 to the Show Cause Notice dated 23.09.2013, we find that the year-wise and category-wise amounts received by the appellant have been indicated and the final tax liability of Rs. 13,83,616/- has been worked out accordingly. We find that the year- wise value of taxable service adopted by the Department for the amount received under Lorry stand parking rent and amount received under building rent are as under :
Sl. Year Amount received on Lorry Amount received on Building No Stand Parking rent (Renting rent (Renting of Immovable of Immovable Property Property) Service) (in Rs.) (in Rs.)
1. 2008-09 0 35,600/-
2. 2009-10 2,28,800/- 1,06,250/-
3. 2010-11 5,28,360/- 2,22,880/-
4. 2011-12 3,10,625/- 2,21,400/-
5. 2012-13 2,13,600/- 1,97,400/-
8.2 From the above table, it is clear that the amounts received by the appellants under the renting category are very much under the 7 threshold limits in each of the years. This being so, in view of the demands earlier set aside, i.e., demand under Club/Association Service and Supply of Tangible Goods Service, there cannot be any further demand under renting since the total amount received would be within the threshold limit. In the circumstances, the demand under renting will also require to be set aside. So ordered.
9. The appeal is allowed in toto, with consequential benefits, if any, as per law.
(Dictated and pronounced in open court) (Madhu Mohan Damodhar) (Sulekha Beevi C.S.) Member (Technical) Member (Judicial) Sdd