Order Date – 18 September 2023

Parties: M/s Indian Machine Tools Manufacturers Association Vs The Commissioner of Central Excise, Panchkula

Facts –

• The Appellant, M/s Indian Machine Tools Manufacturers Association, (IMTMA), are a registered society providing services under the category of “Business Exhibition Services”, “Sponsorship Services”, “Renting of Immovable Property Service” and “Scientific and Technical  Consultancy Services”.
• A show-cause notice dated 23.03.2010 was issued to the appellants demanding service tax on the membership collected, on fees charged from members for attending the functions, and on difference between ST-3 Returns and balance sheet.
• The demand was confirmed along with interest and penalty. Being aggrieved that appellant filed the appeal.

Issue –

• Whether the appellant is required to pay service tax on services mentioned in SCN?

Order –

• The Tribunal regarding the issue of membership fee collected, observed that the issue is no longer res integra having been decided by a number of judgments. Hon’ble Apex Court laid down the principle in the case of Calcutta Club and re-affirmed the same in the case of Rajasthan Co-operative Dairy Federation Ltd. held that Explanation 3(a) to Section 65B(44) does not apply to members’ clubs which are incorporated.
• It has been held in a number of judgments that the show cause notice is the foundation of the case and it is not open for the Adjudicating Authority to confirm a demand under some Heading whereas it was proposed to confirm the same under some other Heading.
• It is a settled principle of law that service tax can be levied only when there is a clear identification of service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed.
• Thus it is not open for the Department to raise demands on the basis of other statutory returns like Income Tax Returns or balance sheets without proving that such service has been rendered by the assessee and consideration thereof has been received. Similarly, no service tax demand can be raised and confirmed on the basis of notional income.
• Hence that the impugned order cannot be sustained and the appeal is allowed.