Case Law Details

Case Name : Indian Pharmaceutical Association Vs Commissioner of Central GST & Central Excise (CESTAT Mumbai)
Appeal Number : Service Tax Appeal No: 87214 of 2018
Date of Judgement/Order : 11/11/2019
Related Assessment Year :
Courts : All CESTAT (899) CESTAT Mumbai (178)

Indian Pharmaceutical Association Vs Commissioner of Central GST & Central Excise (CESTAT Mumbai)

The appellant does not offer ‘convention services’ but gets events organised by professionals and, by collecting fees which are transmitted to such organisers, enables its members to participate in them. There is no allegation that any part of the fees charged by convention organisers is retained by the appellant. Thus, the activity is beyond the purview of taxability under section 65 (105) (zc) of Finance Act, 1994.

FULL TEXT OF THE CESTAT JUDGEMENT

Two notices, for the period from 2006-07 to 2009-10 and for 2010-11, seeking recovery of ₹ 46,35,019 and ₹ 7,13,157 respectively, along with applicable interest thereon, for imposition of penalty were issued to M/s Indian Pharmaceutical Association on the receipts from members for providing ‘club or association service’ and ‘convention service’ which, having been adjudicated against them and upheld in appeal of theirs, is now impugned before us.

2. Learned Counsel submits that the appellant is national professional body of qualified pharmacists and, besides ensuring compliance with the highest standards, is engaged in improving the quality of their service. According to him, tax under section 65 (105) (zzze) of Finance Act 1994 is not leviable from them, a registered charitable organisation, that retrospective exemption for the period from 16th June 2005 and 31st March 2008 was provided by section 96 of Finance Act, 1994, and that the decision of Hon’ble High of Jharkhand Court in Ranchi Club v. Chief Commissioner of Central Excise & Service Tax, Ranchi Zone [2012 (26) STR 401 (Jhar)] and of the Hon’ble High Court of Gujarat in Sports Club of Gujarat Ltd v. Union of India [2013 (31) STR 645 (Guj)] settles the issue in their favour. It is also submitted by Learned Counsel that, insofar as organising of programs for training and imparting knowledge is concerned, the appellant merely acts as an agent for recovery of the costs charged by professional convention organisers and that the service liable to taxation under section 65(105)(zc) of Finance Act, 1994 is not within the scope of their activity.

3. We have heard Learned Authorised Representative.

4. It is seen that the decision of the Hon’ble High Court of Jharkhand has held that

‘18. However, learned counsel for the petitioner submits that sale and service are different. It is true that sale and service are two different and distinct transaction. The sale entails transfer of property whereas in service, there is no transfer of property. However, the basic feature common in both transaction requires existence of the two parties; in the matter of sale, the seller and buyer, and in the matter of service, service provider and service receiver. Since the issue whether there are two persons or two legal entity in the activities of the members’ club has been already considered and decided by the Hon’ble Supreme Court as well as by the Full Bench of this Court in the cases referred above, therefore, this issue is no more res integra and issue is to be answered in favour of the writ petitioner and it can be held that in view of the mutuality and in view of the activities of the club, if club provides any service to its members may be in any form including as mandap keeper, then it is not a service by one to another in the light of the decisions referred above as foundational facts of existence of two legal entities in such transaction is missing. However, so far as services by the club to other than members, learned counsel for the petitioner submitted that they are paying the tax.’

and the submission before the Hon’ble High Court of Gujarat that

‘7. Learned Advocate Mr. Ravani appearing for the Authorities i.e. Union of India, Commissioner of Central Excise, and Deputy Commissioner/Assistant Commissioner, Service Tax Cell, vehemently opposed the petitions and submitted that the Department has not accepted the aforesaid judgment. Learned advocate submitted that the Department has filed SLP before the Hon’ble Apex Court and the judgment is under challenge. Merely because the judgment is not accepted by the Department, its persuasive value is not lost and it can always be considered by this Court for its persuasive value, more particularly when the said judgment has relied upon a decision of the Full Bench of Patna High Court in the matter of Commissioner of Income-tax v. Ranchi Club Ltd., 1992 (1) PLJR 252 (Pat) (FB), which is referred to by the Division Bench.

7.1   Learned advocate for the Department also submitted that there is no question of mutuality because the club is a legal entity as it is incorporated under the Companies Act. This Court is unable to accept the submissions made by learned advocate for the Department because they were the very facts before the Division Bench for consideration and learned advocate for the Department could not set out any convincing grounds on which this Court should not follow the decision of the Division Bench of Jharkhand High Court.’

pertaining to clubs incorporated as companies should be applicable, with even more authority, to professional bodies, such as the appellant, whose membership comprises qualified pharmacists. The demand in relation to tax as provider of ‘club or association service’ fails.

5. The appellant does not offer ‘convention services’ but gets events organised by professionals and, by collecting fees which are transmitted to such organisers, enables its members to participate in them. There is no allegation that any part of the fees charged by convention organisers is retained by the appellant. Thus, the activity is beyond the purview of taxability under section 65 (105) (zc) of Finance Act, 1994.

6. In view of the above, we find that the impugned order must be set aside and appeal allowed.

(Order pronounced in the open court on 11/11/2019)

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