By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Whether co-operative society formed by retired Central/State Government employees is a “Commercial Concern”?
Facts:
The Appellant is a co-operative society of retired Central/State Government servants. Jaipur Vidyut Vitaran Nigam Ltd. (JVVNL) authorised the Appellant to collect electricity bills raised on its consumers and for such services commission was paid to the Appellant. The Appellant was not paying any service tax on such commission received. Revenue’s view was that the service rendered by the Appellant to JVVNL was taxable as business auxiliary service. Whereas the Appellant was not registered and did not pay service tax, the demand was confirmed and penalties were also levied. The Appellant contended that, during the period prior to 01-05-2006 only services rendered by a “commercial concern” was taxable under entry 65(105)(zzb) and the co-operative society formed by retired military personnel cannot be considered as commercial concern. They also contended that it provided services to JVVNL and not to the customers on behalf of JVVNL. Therefore, the activity cannot be classified within the clause “any customer care service provided on behalf of the client” or under the clause “provision of service on behalf of client” and therefore the activity was not taxable under Business Auxiliary Service. The Revenue relied on the decision in the case of Punjab Ex-servicemen Corporation vs. UOI 2012 (25) S.T.R. 122 (P & H) wherein the Hon. Court held that a co-operative society of ex-servicemen run without any profit motive had to be considered a commercial concern for the purpose of levy of service tax under the Finance Act, 1994.
Held:
It was held that in view of the decision in the case of Punjab Ex-servicemen Corporation (supra), Appellant could not get out of the tax net on pleading that they were not a commercial concern. The services provided was covered by the expressions “any customer care service provided on behalf of the client” and also under the clause “provision of service on behalf of client” and hence taxable. However, in view of the earlier Tribunal decision which was in favour of the Appellant for some time, it held that the extended period was not invokable and penalties also were deleted.
