Case Law Details
Rajasthan Co-operative Dairy Federation Limited Vs Commissioner, Central Excise (CESTAT Delhi)
Facts- M/s Rajasthan Cooperative Dairy Federation Limited is registered as an Apex Society under the Rajasthan Co-operative Societies Act, 2001 for implementation of ‘Operation Milk Flood’ in the State. The District Milk Cooperative Societies and the milk unions formed under the same Act are members of the appellant Apex Society. The appellant is responsible for planning policies, financial resource mobilization and management, liaison with agencies of the State and Central Government, financing institutions, imparting training and orientation to daily cooperative members, advising and assisting milk unions, etc. It charges an amount @ 1.25% of the annual turnover of milk unions to manage their finances and other services and this amount is called by the appellant as Rajasthan Cooperative Dairy Federation Cess (RCDF Cess).
The appellant’s records were audited and an audit report No. 862/2014 dated 23.03.2015 was issued to it stating that it had started paying service tax on RCDF cess from July 2012 but had not paid service tax before and that it was liable to pay service tax on the RCDF cess before June 2012 under the category of ‘business support services’ under Section 65(104c) of the Finance Act, 1994. At this stage, it would be pertinent to mention that Chapter V of the Finance Act, 1994 under which service tax is levied, had undergone a substantial change with effect from July 2012. Prior to this date, service tax could be levied only on specific taxable services indicated in the Act. From July 2012, service tax became payable on all the services except those which have been mentioned in the negative list. The appellant had paid service tax from July 2012 but had not paid service tax on the RCDF cess for the period prior to this date.
A show cause notice dated 20.04.2015 was issued to the appellant covering the period March 2010 to June 2012 demanding service tax along with interest and proposing to impose penalties upon the appellant. Adjudicating upon the show cause notice, the Commissioner passed the impugned order confirming service tax demand of Rs. 6,55,25,588/- along with interest under Section 75 of the Finance Act, 1994. He also imposed penalties under Section 78 and 77 upon the appellant. Aggrieved, the appellant filed the present appeal
Conclusion- The law laid down in Calcutta Club is that a club and its members are one and the same and the club is formed for the purpose for mutual benefit of its members. Therefore, any amount paid by the members to the club and the services rendered by the club to its members are self service and cannot be taxed. The fact that the club is incorporated as a separate legal entity makes no difference. We find no good reason not to apply the same principle to the appellant, which is also a cooperative federation of milk unions who are its members. Although the milk unions (district cooperative societies) and the appellant (apex society) are registered under the Cooperative Societies Act of the State and are, therefore, distinct legal entities, the nature of relationship between the appellant and the milk unions continues to that of club to its members. Therefore, no service tax is payable on the services rendered by the appellant to the milk unions.
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To ADD (going that extra mile, with a view to ensuring that the intent of the impersonal FEED input is not omitted to be made a prudent note of, suggest not to oversight the related comments earlier posted @ https://taxguru.in/goods-and-service-tax/gst-leviable-services-club-association-members.html/comment-page-1/ for THE COMMON GOOD !
Obligingly yours , as ever !!
INSTANT (:
The subject development , not for the first time of its kind, must be taken a conscious note of by one and all who have been claiming exemption from taxation (direct tax or indirect tax )relying on /invoking the OVERRIDING COMMON LAW PRINCIPLE OF MUTUALITY .
Of course, the other category of persons, who nonetheless, based on mainly external advice of any professional, out of over enthusiasm , volunteered to and conceded taxability, impudently so, -for instance, HOUSING ASSOCATIONS,- make for a different ‘kettle of fish’. For, strictly viewed, and to do some plain- speaking, those who have done so- who may be , according to information personally gathered, a mere minority, opted to , though avoidable, jumped into a kettle of boiling water. And, because of doing so, that must be regarded as a self-defeating thoughtless action; further, jeopardising the rights and interests of the rest in a majority, lawfully entitled to !?
All the more importantly, the following four crucial facts call for a special concerted noting:
1. The reported ORDER has ben passed by the CESTAT ; and
2. it has been delivered by the Appellate TRUIBUNAL on 09-05-2022;
3. in deciding the point of issue against the Revenue, the case law quoted as a PRECEDENT have been followed, with no qualms or reservation; and
4. last but not least , among the PRECEDENT so followed, are the court decisions in the cases of, –
…”b) Commissioner of Service Tax,Bangalore Vs. Sobha Developers
Ltd.
c) Ootacamund Club, Ootty Vs. Additional Commissioner,
Coimbatore;
d) Commissioner of Service Tax, DelhiIII Vs. Manufacturers Association
for Information Technology;…”
#development #law #tax #comment #pr #reference
Attention is yet again drawn to the related Pr, Posts wprt the Amendment of the GST law ; that too with retrospective effect from the date of coming into force of the GST Act.
For a quick reference , suggest to look up the related earlier posted comments of direct relevance.
KEY takeaway: Ootacamund Club, Ootty , as earlier pinpointed / shared, is a Club which has challenged the 2021 Amendment of the GST law as ultra vires the Constitution in a WRIT filed in the Madras H.C.. While there is so far NO information about its present status, going by one’s reasonable guess and honest expectation, similar steps might likewise have been taken by hundreds of those , not barring housing associations, who are impacted by the highly questionable/contestable amendment of the law.
Courtesy
(in the larger PUBLIC INTEREST- with a sincere intent to create an awareness among / alert the most gullible of the impacted lot)
(Unfinished; PENDING /INVITE to EDIT )