TMI Blog2023 (9) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The income of the society is exempted under section 11 of the Income Tax Act 1961. The Hon ble Supreme Court examined the definition of religious denomination in the landmark judgment of THE COMMISSIONER, HINDU RELIGIOUS ENDOWMENTS, MADRAS VERSUS SRI LAKSHMINDRA THIRTHA SWAMIAR OF SRI SHIRUR MUTT. [ 1954 (4) TMI 29 - SUPREME COURT ]. It was held that a denomination is a collection of individuals, classed together under the same name; now almost always specifically, specially a religious sect or body having a common faith and organisation and designated by a distinctive name. The definition of a religious body has to be broader than that of a religious denomination . A religious denomination is a subgroup within a religion. Religious body can be a part of a religion or a religious denomination and established with the objective of propagating religion and primarily serving the members of its community. Religions are generally propagated and administered with the help of organizations within its domain that are closely integrated with society. These organisations are understood in common parlance to be religious bodies as distinct from religion per se or a relig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns. The services of renting of immovable property for use in the course or furtherance of business or commerce is liable to service tax under the category of Renting of Immovable Property service with effect from 1.6.2007 in terms of sec. 65(90a) of the Finance Act, 1994. A Show Cause Notice dated 16.9.2013 was issued proposing to demand service tax of Rs.87,96,460/- along with interest for the period from 1.4.2008 to 31.3.2013 and for imposing penalties. After due process of law, the adjudicating authority confirmed the demand as proposed in the Show Cause Notice along with interest and imposed equal penalty under sec. 78 besides penalty under section 77 of the Finance Act, 1994. Aggrieved by the impugned order, the appellant is before the Tribunal. 3. No cross-objection has been filed by the respondent-department. 4. We have learned counsel Shri M.N. Bharathi for the appellant and Shri Harendra Singh Pal, learned Assistant Commissioner (AR) for the Department. 4.1 Shri M.N. Bharathi, learned counsel for the appellant submitted that the appellant is registered under the Societies Registration Act, 1860 and is under the direct control of the Bishop of Tanjore. As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12AA of the Income Tax Act. He further stated that the question whether service tax under Section 65(105)(zzzz) of the Finance Act, 1994 on renting of immovable property or any other service in relation to such renting, for use in the course of or, for furtherance of, business or commerce is within the legislative competence of the Union Parliament is still before the Hon ble Supreme Court in the case of Union Of India vs UTV News Ltd., [2018 (13) GSTL 3 (SC)]. Therefore, the appellants were under the bonafide belief that the said activity would not attract tax liability. He submitted the following chart to trace the history of the legal developments regarding the impugned tax. Date Particulars 01.06.2007 Renting of Immovable Property Services' have been brought under the purview of Service tax with effect from 1.6.2007 with a view to tax the activity of renting of immovable property for use in the course or furtherance of business or commerce. 18.04.2009 Hon'ble High Court of Delhi, in the case of M/s Home Solution Retail India Ltd Others v UOI and Ors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er taxes on lands and buildings in List II Entry 49 of the Seventh Schedule to the Constitution contemplate a tax levied directly on the land as a unit having definite relationship with the land? wherein the Hon'ble Supreme Court referred the issue to a nine judge bench stating: 2 . However, in the present case, since prima facie there appears to be some conflict between the decision of this Court in State of W.B. u. Kesoram Industries Ltd. [(2004) 10 SCC 201] which decision has been delivered by a Bench of five Judges of this Court and the decision delivered by a seven-Judge Bench of this Court in India Cement Ltd. v. State of T.N. [(1990) 1 SCC 12], reference to the Bench of nine Judges is requested. The office is directed to place the matter on the administrative side before the Chief Justice for appropriate orders. 23.09.2011 Hon'ble High Court of Delhi in the case of M/s Home Solution Retail India Ltd Others v. UOI and Ors 2011 (24) STR 129 (Del) has upheld the constitutional validity of retrospective amendment by Finance Act, 2010 in definition of taxable service of commercial renting. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght under levy in terms of sec. 65(90a) of the Finance Act, 1994. He further reiterated the points given in the OIO. 5. We have carefully gone through the appeal and heard the rival parties. It is seen that the period covered by the impugned order relates to the period 1.4.2008 to 31.3.2013 and hence involves the period prior to and after 01/07/2012 when the negative list-based levy of service tax came into force. The appellant has not disputed their service tax liability from 01/07/2012. The impugned order also at para 13 agrees that renting of immovable property does not cover renting by a religious body. The whole issue boils down to whether the appellant is a religious body as contended by them and hence eligible to be exempt from tax till 01/07/2012 when the negative list-based levy came into force or whether they are a Public Charitable and Educational Society and not a religious body as claimed by Revenue and come under the levy in terms of sec. 65(90a) of the Finance Act, 1994 from 01/06/2007. Another question which is related and seeks an answer in the resolution of the dispute is whether a Public Charitable and Educational Society can also be a religious body . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pitfalls in attempting to define the phrase too narrowly due to the myriad variety of religions and religious practices, and the common understanding of the concept of religious bodies with changing religious and cultural norms in society over a period of time. The different contexts of law in which the usage may arise may also require it to be treated differently as in taxation law, charity law, trust law etc. 5.2 Paragraph 5 of the impugned order carries an abstract of the statement from Rev. Fr. L. Sahayaraj. Both the sides have not questioned any of the averments made in the statement and it can hence be helpful in understanding the status of the Diocese. The said para is reproduced below: 5. Therefore, a statement was recorded from Rev.Fr.L.Sahayaraj, Secretary of the Diocese of Tanjore Society who was authorized by Most Rev. Dr.M.Devadoss Ambrose, the President of the Society. In his statement dated 19.04.2013 deposed under Section 14 of Central Excise Act, 1944 read with Section 83 of Chapter V of the Finance Act, 1994, Shri. L. Sahayaraj has inter alia stated that,- i. The Diocese of Tanjore Society was registered under the Societies Registration Act, XXI of 1860 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Memorandum of Association as amended on 29/04/1985. Relevant portion is reproduced below: MEMORANDUM OF THE DIOCESE OF TANJORE SOCIETY (As Amended on 29-4-85) 1. Name of the Society: THE DIOCESE OF TANJORE SOCIETY 2. Address of the Society The address of the Society shall be BISHOP'S HOUSE, Trichy Road, Post Box No. 204, Thanjavur 613 007. 3. Area: The activities of the Society shall be confined to the Diocese of Thanjavur. 4. Objects: Inspired by the good News preached by Christ the objects or purposes for which the Society is established are the following:- (a) Religious and Educational: To promote the spiritual, educational, industrial, technical or agricultural and other interests of primarily the members of the Catholic Community but members of the other communities of the said Diocese of Thanjavur society are not excluded in the places noted above including all the religious, charitable, benevolent and eleemosynary works of the said Diocese in the said places. As regards Education and Educational Institutions they are primarily for Catholics and in addition for members of other communities without distinction of caste or creed. (b) Charit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks connected therewith and to take such steps for the securing of such contributions for the funds of the society from either Indian or foreign sources as may from time to time be deemed expedient. (i) To Alienate: By way of sale, mortgage. lease. release, loan, charge, hypothecation, pledge, exchange, hiring out, gift or otherwise, with or without security, properties or funds of the Society or any portion or portions there of including the making of contributions or assistance, pecuniary or otherwise to charitable, educational, benevolent, social welfare or other institutions, bodies, persons as from time to time may deem, necessary or appropriate. (j) To invest: To lay aside, deposit in banks or otherwise deal with the moneys or funds of the society not immediately required for the objects of the society and to subscribe for purchase, acquire, hold sell, endorse and negotiate in every way debentures, stocks, shares and securities of every description on the money market. (k) Funds: To borrow and to raise funds with or without security, manner the Society may think fit and to repay the same. (l) Grants: To negotiate with and to enter into arrangements with any Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India and Others, [1983 SCR (1) 729] the law was further elaborated. It was held that if a body has a: 1. Common Faith 2. Common Organisation 3. Distinctive Name; it categorises as a religious denomination. The appellant has referred to the definition of religious body as given in section 81 of the Equal Opportunity Act, 2010 which is extracted below: 81 Definition of religious body For the purposes of sections 82 and 83, religious body means (a) a body established for a religious purpose; or (b) an entity that establishes, or directs, controls or administers, an educational or other charitable entity that is intended to be, and is, conducted in accordance with religious doctrines, beliefs or principles. The Act being a foreign legislation is not applicable in India. 5.3 The definition of a religious body has to be broader than that of a religious denomination . A religious denomination is a subgroup within a religion. Religious body can be a part of a religion or a religious denomination and established with the objective of propagating religion and primarily serving the members of its community. Religions are generally propagated and adminis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the said contention and held that a society for religious purposes would ordinarily be a society for charitable purposes. A similar question arose before the Madras High Court in Khaji Muhammad Hussain Sahib v. Majiday Mahmood Jamait Managing Committee. A Division Bench consisting of Wadworth. and Venkataramana Rao, JJ. held that Act 21 of 1860 was passed in 1860 when according to English Law, a gift for the advancement of religion or promotion of religious worship was treated as a charitable purpose and, therefore, a society formed for such a purpose would be a charitable society under Act 21 of 1860. The only condition was that it should be for the benefit of the public. No doubt, in some statutes enacted subsequent to Act 21 of 1860, the Legislature used the words charitable and religious but the definition of these words was expressly stated to be for the. purposes of those, Acts. The subsequent legislation, the Madras High Court held, would not be helpful in interpreting the word charitable in Act 21 of 1860. The real question was: What did the term mean in 1860? We are in agreement with the view of the Allahabad and Madras High Courts. In fact, Lord McNaughten in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineral Area Development Authority and others vs. Steel Authority of India and others ((2011) 4 SCC 450) is decided. Therefore, the owners were under the bonafide belief that the said activity would not attract service tax liability. In a case where the constitutional validity of the levy is yet to be decided the dispute is interpretational in nature. We, agree with the appellant hence invocation of extended period is not justified. 6.1 Although the appellant has pleaded against the demand for interest on the duty due, it is seen that interest is necessarily linked to the duty payable, such liability arises automatically by operation of law. As per the Hon ble Supreme Court's judgment in Commissioner of Central Excise, Pune Vs M/s SKF India [2009-TIOL-82-SC-CX] interest is to be paid on delayed or deferred payment of duty for whatever reasons. 6.2 The demand and interest are hence to be restricted to the normal period and the penalties are to be set aside. 7. Based on the discussions above, we hold that the impugned order dated 10.01.2014 passed by the Commissioner of Central Excise and Service Tax, Trichy is partially modified as stated at para 5 above. The demand for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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