The Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) of Kolkata has exempted the Indian Tea Association from paying Service Tax on the contributions collected from its members to cover security charges during the period from 2004-05 to 2007-08.
The bench of R. Muralidhar (Judicial member) and Rajeev Tandon (Technical member) observed that “As per the evidence provided by the Appellant, we find that though they are registered as society they are primarily representing the industry or commerce pertaining to tea industry. Therefore, they are fully covered by the above exemption granted by the Govt. of India.”
The association, registered under the West Bengal Registration of Societies Act, 1961, had collected Rs. 3.17 crore from its members to pay for security services provided by Assam Task Force, part of the Government of Assam.
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The tax authorities had treated this amount as taxable consideration and raised a demand of Rs. 37.36 lakh in Service Tax. The demand was upheld by the Adjudicating Authority and further confirmed by the Commissioner (Appeals).
The Indian Tea Association argued that it is an organisation formed for the welfare of the tea industry and should be exempt from Service Tax under Section 19(6)(J) of the Finance Act, 2011.
It presented its Memorandum and bye-laws, which outline its objectives, including promoting the interests of the tea industry and contributing to the growth of the Indian economy.
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The Government of India had also issued a specific exemption from Service Tax for membership fees collected by clubs or associations formed to represent industry or commerce during the relevant period (16.07.2005 to 31.03.2008), submitted the appellant. The CESTAT agreed with the appellant’s contentions, noting that the Indian Tea Association, although registered as a society, primarily represents the tea industry’s interests and is therefore covered by the exemption. The Tribunal set aside the demand order
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