2016 (9) TMI 1366 - AT - Service Tax

Clubs or Association Service - The appellant rebutted the allegation in the show cause notice on the ground that the nature of activities undertaken by the appellant is in the nature of charitable purposes and in view of the constitution of the club, it cannot be treated as different from the members and there would not be two persons to provide and receive service - Held that - the appellant is a Members Club and not a Proprietary Club and in a Members Club there is no question of two sides, Members and Club, both are same entity. There should be existence of two sides/entities for having transaction as against consideration - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order rejecting appellant's appeal under 'Clubs or Association Service' category for short payment of service tax; Appellant's contention on nature of activities being charitable and in the principles of mutuality; Consideration of precedent decisions by High Courts and Tribunal; Department's appeal against relied-upon decisions.

Analysis:
The appellant, a club registered under a specific act, appealed against the rejection of their appeal for short payment of service tax under 'Clubs or Association Service' category. The appellant argued that their activities were charitable and based on the principles of mutuality. The Joint Commissioner confirmed the demand, which was upheld by the Commissioner. The appellant then approached the Tribunal, highlighting the issue of whether the activities could be treated as charitable and part of the principles of mutuality. The appellant cited various decisions by High Courts and the Tribunal to support their case, emphasizing that in a Members Club, there is no distinction between Members and the Club as two separate entities for transaction purposes.

The appellant's counsel contended that the impugned order lacked legal sustainability as it did not consider precedent decisions by the Hon'ble Jharkhand High Court and the Gujarat High Court, along with Tribunal decisions. The counsel argued that the issue had been settled in favor of the appellant by previous decisions. The learned AR, representing the Department, opposed the appellant's submissions, stating that the issue was not finalized, and the Department had filed appeals against the decisions relied upon by the appellant. Despite the Department's position, the Apex Court had not granted any stay in their favor.

After considering the arguments from both parties and reviewing the judgments cited by the appellant's counsel, the Tribunal concluded that the impugned order was not legally sustainable. Consequently, the Tribunal set aside the order, allowing the appeal with any consequential relief. The decision was pronounced in open court, providing relief to the appellant in this matter.