The Delhi CESTAT has held that failure of assessee to include ‘convention services’ and ‘sponsorship services’ in registration certificate demonstrates tax evasion.
The appellant is registered with the Service Tax Department and is providing services viz. “Management Consultancy” and “Scientific and Technical Consultancy” covered under Section 65(105)(r ) and (105) (za) of the Finance Act, 1994.
During the scrutiny of half yearly ST-3 Service Tax Returns, Balance Sheet and figures provided by the appellant for the period 2007-2008 to 2010-2011, it was observed that the appellant had not paid service tax on the gross receipts under the Head “Quality Conclave” and “Seminar Receipts” taxable under the category of “Convention Service” and also on the expenditure incurred on the “Sponsorship Service” under RCM as well as on the Grants/Contribution received from the Government, which were taxable under the category of ‘Event Management Service’.
The show cause notice dated 19.10.2012 was issued in respect of the said three services falling under Section 65 (105)(zc), 65(105)(zzzn) and 65(105)(zu) of the Act.
The show cause notice was adjudicated by the impugned order, where the learned Commissioner held that during the period 2007-2008 and 2008- 2009, there was no income from ‘Quality Conclave’ and ‘Seminar receipts’ and hence the demand for the said period was dropped. However, during the FY 2009-2010 to 2011-2012, income of Rs.1,65,18,639/- was received under the said heading, which was leviable to service tax.
Similarly, for the service tax liability under the category of ‘Sponsorship Service’, the Adjudicating Authority held that the details submitted by the noticee were not supported by the documentary evidence and the explanation given is an after-thought so as to compress the taxable value of the services.
The demand in respect of the third category of ‘Event Management Service’ was dropped on the ground that the appellant cannot be termed as ‘Event Manager’ and the activities performed by them do not fall under that category.
The CESTAT ruled that as per the definition of ‘Sponsorship Service’, as given under Section 65(105)(zzzn), the same needs to be provided to ‘anybody corporate’ or ‘Firm’, whereas the appellant does not qualify to be a ‘Body Corporate’, as they are a ‘Society’, registered under the ‘Societies Registration Act’. The learned Counsel citing the decisions of the Tribunal and the Apex Court contended that the impugned order is a non-speaking order and, therefore, needs to be set aside.
Case Title: M/s. Quality Council of India V/s Commissioner of Central Tax