2015 (11) TMI 1663 - AT - Service Tax

Club and association service - department entertained the view that such amount collected by assessee would fall within the ambit of any other amount as defined under Section 65(105)(zzze) read with Section 65(25a) of the Finance Act, 1994 - Held that - the issue whether the services of a club or association to its members is taxable is now settled by judgments of various High Courts and the Tribunal - reliance placed in the case of Ranchi Club Ltd. vs. CCE, 2012 (6) TMI 636 - Jharkhand High Court , where it was held that in view of the mutuality and in view of the activities of the club, if club provides any service to its members may be in any form including as mandap keeper, then it is not a service by one to another, as foundational facts of existence of two legal entities in such transaction is missing - the impugned order is not sustainable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand of service tax on various services provided by the assessee.
2. Disputed services for which service tax demand was confirmed.
3. Legal interpretation regarding the taxability of services provided by a club to its members.
4. Applicability of relevant legal provisions and previous judgments on the case.

Analysis:

1. The judgment involved two appeals filed by the Revenue and the Assessee arising from the same order-in-original. The Assessee, a service provider, was found to have collected charges for various services from club members but failed to pay service tax on those amounts. The Revenue issued a show cause notice, leading to the confirmation of service tax demand for specific services. The Assessee challenged this demand in their appeal (ST/629/2009).

2. The Commissioner dropped the demand for certain services like Rental-Golf operations, Cart fee, and Membership Transfer fee, totaling to a specific amount. The Revenue, aggrieved by this decision, filed a separate appeal (ST/664/2009) challenging the dropping of service tax demand on these specific services.

3. The legal interpretation regarding the taxability of services provided by a club to its members was a crucial aspect of the case. The Assessee's counsel relied on judgments like Ranchi Club Ltd. and Sports Club of Gujarat Ltd., which emphasized the principle of mutuality. These judgments held that services provided by clubs to their members do not fall within the taxable category, and the relevant provisions of the Finance Act, 1994 were declared ultra vires in this context.

4. The CESTAT, considering the precedents and legal principles established in previous judgments, concluded that services provided by the Assessee to its members were not subject to service tax. The impugned order confirming the service tax demand was set aside, and the Assessee's appeal was allowed. The Revenue's appeal, challenging the dropping of service tax demand on specific services, was dismissed based on the legal interpretation and precedents cited.

This comprehensive analysis of the judgment highlights the key issues, legal interpretations, and outcomes of the case, providing a detailed understanding of the decision rendered by the Appellate Tribunal CESTAT, New Delhi.