CESTAT, AHMEDABAD BENCH
Vapi Waste & Effluent Management Co.
Commissioner of Central Excise, Daman
FINAL ORDER NO.A/960/2012-wzb/AHD.
Appeal No. ST/168 OF 2008
JUNE 19, 2012
B.S.V. Murthy, Technical Member – The appellant company has been incorporated in the year 1997, consequent upon the order of the Hon’ble High Court of Gujarat for the purpose of taking over the responsibility of operation of Common Effluent Treatment Plant from Gujarat Industrial Development Corporation (GIDC) for the purpose of treating the effluent discharged by the industries located in the GIDC area, Vapi. The industrial units located in the Vapi industrial area discharging hazardous effluents are compulsorily required to become a member of the appellant association for the purpose of getting their hazardous effluents treated in their plant as per the norms prescribed by GPCB (Gujarat Pollution Control Board). Appellant charge one time payment for providing the service and also charge from industrial units on monthly basis on the estimated cost of operation of the effluent treatment facility.
2. On the ground that the applicant is an association of operating units of GIDC Vapi and the appellant association is providing services after charging subscription from the members is liable to pay service tax on the service provided by the appellant to the members under the category of club or association services, proceedings were initiated after detailed investigation and inquiry which has resulted in to the impugned order wherein demand of service tax of Rs. 3,26,39,335/- with interest have been confirmed and penalty equal to the amount of service tax demanded have been imposed under Section 78 of Finance Act, 1994.
3. The learned counsel for the appellant submitted that with the introduction of Section 145 in the Finance Act, 2012, the services provided by club or association in relation to common facilities set up for treatment and recycling effluent and solid waste with the financial assistance from the Central Government or State Government have been given exemption with retrospective effect from 16-6-2005. The period involved in the dispute is covered by the provision of Financial Act, 2012 and therefore the demand is not sustainable. Learned A.R. submitted that appellant is not an association but a limited company and therefore is not covered by the exemption with retrospective effect. Only club or association including registered co-operative society is covered. Therefore he submits that the impugned order has to be upheld.
4. We have considered the submissions made by both sides. The demand of service tax has been confirmed on the ground that the appellant is an association of industrial units in Vapi formed for the purpose of setting up and running common facility for treatment and recycling of effluent and solid waste discharged by the units who are required to become a member compulsorily and pay one time fee as well as monthly subscription.
5. The relevant definition of club or association of the taxable service are asunder :
“The “Club or association” is defined under Clause (25a) of Section 65 of the Finance Act, 1994 as amended by the Finance Act, 2005. The definition as on 16-6-2005 reads as under :-
“Club or association” means any person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include –
(i) Any body established or constituted by or under any law for the time being in force; or
(ii) Any person or body of persons engaged in the activity of trade unions, promotion of agriculture, horticulture or animal husbandry; or
(iii) Any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature; or
(iv) Any person or body of persons associated with press or media;
Clause 105(zzze) of Section 65 of the Finance Act, 1994 as 6.2 amended defines taxable service means any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount.”
6. In the show-cause notice, a view was also taken that a company or association that are formed for providing services of common facilities on payment of the subscription are liable to pay service tax. At the time when the impugned order was passed, there was no exemption notification for the services rendered by the appellant. Therefore they had submitted the activities in question were not covered by the club or association service. It was submitted by them that being a statutory body they are covered by the exclusion in the definition. Thereafter the appellant approached the Hon’ble High Court of Gujarat also and the petition filed by the appellant is still pending with the Hon’ble High Court who have directed the appellant to approach Central Government. Subsequently Notification No. 42/2011-S.T., dated 25-7-2011 was issued which exempted club or association service provided by an association of dyeing units for treatment and recycling of effluents and solid waste. Notification No. 1/2012-S.T., dated 17-3-2012, the words “of dyeing units” was omitted. Consequent upon amendment made by Notification No. 1/2012-S.T., club or association service provided by an association in relation to a common facility set up for treatment and recycling effluent or solid waste is exempted from the service tax. This notification has been given retrospective effect by Section 145 of Finance Act, 2012 from June, 2005.
7. The observations above show that the service tax was demanded from the appellant on the ground that appellant was an association and was collecting subscription from the members for running of common facility for treatment of effluents and solid waste for the benefit of members. Such services rendered by an association have been exempted and given retrospective effect from June, 2005 by Notification and the Finance Act, 2012 discussed above and therefore the appellant is squarely covered by the exemption Notification and the activities undertaken by them is not liable to Service Tax.
8. It was submitted by the learned A.R. that the appellant company being a limited company is not covered by the term association and exemption available is only to the association. However, it was pointed out by the learned counsel that the appellant is registered under Section 25 of the Companies Act, 1956 which provides that the word “limited” can be dispensed with in respect of an association formed as a limited company for promoting commerce, art, science, religion, charity or any other object. He submits that the appellant is registered as company under Section 25 only and the character of the company being an association does not change just because they are registered as a company. In any case, we find that the learned A.R. cannot take up this argument at this stage. Since the demand on appellant was confirmed on the ground that the appellant is an association of members and it was collecting subscription. In view of the clear cut stand taken by the Revenue and also in view of the submission about the statute made by the learned counsel, we hold that the appellant is an association for the purpose of liability of service tax and eligible for exemption. Since appellant is eligible for exemption on merits, the appeal and the impugned order confirming the demand of duty and imposition of penalty is set aside.