No Service Tax Leviable on Services to Members by Society prior to 2012: CESTAT deletes Penalty [Read Order]

No - Service - Tax - Leviable - on - Services - to - Members - by - Society - prior - to - 2012 - CESTAT - deletes - Penalty - TAXSCAN

The Mumbai Bench of Customs Excise and Service Tax Appellate Tribunal (CESTAT) held that service taxes are not leviable on the service provided by the society to its members prior to 2012 and deleted the penalty imposed on the appellant for delayed filing of tax return.

In the instant case an appeal was filed by Prabhadevi Himgiri CHSL, a Co-operative Housing Society before Customs Excise and Service Tax Appellate Tribunal (CESTAT) challenging the order of the Commissioner of appeals on the enhancing penalty for delayed tax return filing.

Proceedings under Section 70 of the Service Tax Act read with Rule 7 of the Finance Act, 1994 was initiated against appellant for not filing Service Tax Returns for the period of 2009-2011 and 2011-2012. The adjudicating authority imposed a penalty of Rs. 16,100/- under the Section 70 of the Service Tax Act read with Rule 7 of the Finance Act. The Commissioner of Appeals, on the appeal of the revenue enhanced the penalty to Rs. 83,100/-

N.S. Patel, who appeared for the appellant submitted that appellant was not liable to pay the service tax as the clubs or associations were not included in the Service Tax prior to July 1st of 2012 and appellant was asked to file tax return prior to that period. Hence the appellant-housing society who provided service to its members itself would not be liable to service tax

He also submitted that they were not liable to file any return although they had filed the tax return belatedly. He further contended that the penalty imposed for delayed filing of tax return was therefore unlawful.

The Tribunal Bench of Judicial Member Ajay Sharma allowed the appeal, holding that the appellant was not liable to file any tax return as the clubs or societies were not liable to pay the service tax for services to its members prior to July 1st 2012. 

It was also clarified that they were not liable to file any tax return. In addition, the Tribunal deleted the whole penalty imposed on the appellant.

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