2017 (12) TMI 1537 - AT - Service Tax

Club or association services - The case of the department is that the respondents are liable to pay service tax on the subscription amount collected from its members - Held that - The Hon ble High Court of Jharkhand in the case of Ranchi Club Ltd. 2012 (6) TMI 636 - Jharkhand High Court had analyzed the issue and held that the club is formed on the principle of mutuality and therefore any transaction of the club with its members is not a transaction between two parties and therefore not subject to levy of service tax - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the subscription collected from members for club or association services is subject to service tax.
2. Validity of the order passed by the Commissioner (Appeals) setting aside the demand, interest, and penalties imposed by the original authority.

Analysis:
1. The department contended that the respondents, providing club or association services, collected subscription amounts from members but did not pay service tax on them. The Commissioner (Appeals) held that the services were not taxable, based on the definition of club or association under clause (25)(a) of section 65 of the Finance Act, 1994. The department argued that the Commissioner erred as the respondents fell under the category of club or association service, making them liable for service tax.

2. The respondent's counsel referenced decisions by the Hon'ble High Courts of Jharkhand and Gujarat, which held that subscription amounts collected from members for club services were not subject to service tax due to the principle of mutuality. The High Court of Jharkhand cited the case of Joint Commercial Tax officer Vs. The Young Men's Indian Association, supporting the non-taxable nature of transactions within clubs. Similar rulings in favor of respondents were noted in the case of Sports Club of Gujarat Ltd. and Saturday Club Ltd.

3. The Tribunal, after considering the arguments and precedents, upheld the Commissioner (Appeals)'s order setting aside the demand, interest, and penalties. The Tribunal concurred with the view that transactions within clubs based on mutuality principles were not subject to service tax. Citing the decisions from the Hon'ble High Courts and previous rulings, the Tribunal dismissed the appeal filed by the Revenue, affirming the non-taxable nature of the subscription amounts collected by the respondents for club or association services.

This detailed analysis highlights the key arguments, legal principles, and precedents considered in the judgment, leading to the dismissal of the Revenue's appeal and upholding the decision of the Commissioner (Appeals) in favor of the respondents.