By TIOL News Service

BANGALORE, MAY 22, 2015 : THE appellant is an association of stevedores registered under the Societies Registration Act as a non-profitable association with an aim to solve the day-to-day problems of its members as regards providing of "gear boys" and "deck foremen". Revenue by entertaining a view that such activity of the appellant amounts to providing services falling under the category of 'Manpower Recruitment and Supply', raised the demand for the period April 2005 to March 2010, by invoking the longer period of limitation. The said demand stands confirmed to the tune of Rs.2,13,99,842/- (Rupees Two Crores Thirteen Lakhs Ninety Nine Thousand Eight Hundred and Forty Two only). There is a small demand of around Rs. 8,000/- (Rupees Eight Thousand approximately) under the category of Club or Association service.

The contention of the advocate appearing in support of the stay petition is that:

1. the appellant is not a commercial concern as envisaged under the 'Manpower Recruitment or Supply Agency' definition. They are an association of various stevedore members for the purpose of supply of various persons on the basis of intends raised by the members.

2. As such the entire activity is based upon the mutuality of interest between the assessees and its members and cannot be held to be an activity liable to service tax.

3. apart from supplying the gear boys and deck foremen to its members, they are not supplying any such persons to any other person who is not a member of the association.

4. As such by relying upon the Jharkhand High Court's decision in the case of Ranchi Club Ltd. Vs. Chief Commr. of C. EX. & S.T, Ranchi Zone - 2012-TIOL-1031-HC-JHARKHAND-ST as also by relying upon the Gujarat High Court's decision in the case of Sports Club of Gujarat Ltd. Vs. Union of India - 2013-TIOL-528-HC-AHM-ST, there is a mutuality of interest between the society's association and its members and services are being provided to the members only, the activity cannot be held exigible to service tax.

5. The latest decision of the Tribunal in the case of M/s. Federation of Indian Chambers of Commerce and Industry Vs. CST, Delhi - 2014-TIOL-701-CESTAT-DEL., wherein by taking note of the above 2 decisions of the Hon'ble High Courts, the Tribunal has held that where the services provided are in the nature of charitable services to its members, the consideration received from the members cannot be held liable to service tax.

6. even if they would have paid the service tax, the same was available as credit to the various stevedore members who could have utilized the same for payment of service tax by them. As such the entire situation is revenue neutral.

The advocate also assails the impugned order on the point of limitation. By submitting that the association was incorporated in 1959 and has been working since then by adopting the same methodology. Inasmuch as the issue was debatable, it cannot be said that the service tax was not paid by them with a malafide intention. He clarified that no service tax stands collected by the association from its individual members to whom service has been provided.

The Tribunal found that the issue is prima facie covered by the Gujarat High Court and Jharkhand High Court decisions as also by the Tribunal decision in the case of Federation of Indian Chambers of Commerce and Industry. Apart from that Tribunal also prima facie found favour in the appellant's contention that demand is barred by limitation. On this ground Tribunal was of the view that appellant has a good prima facie case in its favour so as to allow the stay petition unconditionally. Ordered accordingly.

(See 2015-TIOL-921-CESTAT-BANG)