Cce-Kanpur vs M/S. Firozabad Club

[Arising out of order-in-appeal no. 89-CE/APPL/KNP/2009 dated 23.04.2009 passed by CCE-Kanpur]

1. Whether Press Reporter 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?

CCE-Kanpur Appellant

Vs.

M/s. Firozabad Club Respondent

Appearance: Smt. Suchitra Sharma, (Commr) AR for the appellant.

None for the respondent.

Coram: Honble Shri R.K. Singh, Member (Technical)

Honble Shri Ashok Jindal, Member (Judicial)

Final Order No. 52024/2015

Per: R.K. Singh

Revenue has filed this appeal against order-in-appeal dated 23/04/2009 which upheld the order-in-original dated 28/11/2008 (in terms of which service tax demand of Rs. 10,81,703/- was confirmed along with interest and penalties) except to the extent that the penalty under Section 78 of the Finance Act, 1994 was reduced to Rs. 25,000/-. The demand was confirmed under club or association service, Madap Keeper service and health and fitness service on the ground that the respondent had provided these services to its members and others but had not paid service tax.

2. In its appeal, Revenue has contended that-(i) The Commissioner (Appeals) has observed in the impugned order that final figures on which service tax was to be levied needed to be worked out and that in spite of having so observed, he upheld the demand without recalculating the same or remanding the case to the original adjudicating authority.

(ii) the mandatory penalty under Section 78 cannot be reduced while the Commissioner (appeals) did so. Revenue has prayed that the order-in-original dated 28/11/2008 should be upheld.

3. In its memorandum of cross objections ,the respondents stated that there has been no suppression or wilful misstatement on their part and even earlier, a demand against it under Mandap keeper service was confirmed vide order-in-original No. 558/2004-05 dated 31/10/2004 and thus, Revenue was well aware about the services rendered by it.

4. We have considered the contentions of both sides though when the case was called on 12/06/2015 no one appeared on behalf of respondent. We find that in the impugned order, the Commissioner (Appeals) has indeed observed that the final figures need to be worked out. However, the Commissioner (appeals) has upheld the impugned demand, and therefore, Revenue cannot have any grievance on that count because the demand could not have been increased beyond the impugned amount which is equal to the amount demanded in the show cause notice even if the service tax leviable on the final (worked-out) figures would have amounted to more than the impugned demand.

5. As regards the Revenues contention that the mandatory penalty under Section 78 ibid could not be reduced by Commissioner (Appeals), we find the contention sustainable because penalty under Section 78 ibid is the mandatory penalty equal to the service tax short levied or short paid or erroneously refunded. It has been so held by Honble Supreme Court also in the case of Union of India versus Dharmendra Textile Processor 2008 (231)ELT 03 (SC). However, the respondent in the cross objections has contended that there was no wilful misstatement or suppression on its part and that even in the past a show cause notice was issued to it for providing Mandap Keeper service and the same was adjudicated vide order-in-original dated 31/10/2004. In these circumstances, it is hard to sustain the allegation of wilful misstatement or suppression of facts. Further, as per the judgement of Jharkhand High Court in the case of Ranchi Club Ltd versus Chief Commissioner 2012 (026) SDR 0401, in view of mutuality, a club providing any service to its members is not a service by one legal entity to another and is not liable to service tax. In the wake of the said judgement of Ranchi High Court, the impugned demand in respect of amount collected from the respondents members for services provided to them would not even be liable to service tax.

4. In the light of the foregoing and having regard to the overall and special circumstances as analysed above, we do not find sufficient ground to interfere with the impugned order. Revenues appeal is accordingly dismissed. Cross objections also stand disposed of.

(R.K. Singh)

Member (Technical)

(Ashok Jindal)

Member (Judicial)

Ritu

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