2014 (3) TMI 902 - AT - Service Tax

Waiver of pre-deposit of tax - Membership of Club or Association Service - Mandap Keeper Service - Held that - Applicant has made out a prima facie case for waiver of pre-deposit in respect of the demand of service tax on the fees paid by members to a Club or Association - prima facie, the applicant is liable to pay tax on the Mandap Keeper Service used by outsiders. The applicant already paid a sum of Rs.1,11,638/-. Accordingly, we direct the applicant to deposit a further amount of Rs.1,00,000 within a period of six weeks from today - Conditional stay granted.

Summary

Issues:
1. Waiver of pre-deposit of tax on "Membership of Club or Association Service"
2. Tax liability on "Mandap Keeper Service" used by members and outsiders

Analysis:

Issue 1: Waiver of pre-deposit of tax on "Membership of Club or Association Service"
The applicant sought waiver of pre-deposit of tax amounting to Rs.8,61,125/- along with interest and penalty. The demand was based on two categories - Rs.4,20,498/- for "Membership of Club or Association Service" and Rs.4,41,027/- for "Mandap Keeper Service." Reference was made to the decision of the Hon'ble Jharkand High Court in the case of Ranchi Club Ltd. and the Hon'ble Gujarat High Court in the case of Sports Club of Gujarat Ltd. Both courts held that service tax is not applicable if a club provides services to its members due to the principle of mutuality. The Tribunal found that the applicant had a prima facie case for waiver of pre-deposit concerning the demand of service tax on fees paid by members to a "Club or Association."

Issue 2: Tax liability on "Mandap Keeper Service" used by members and outsiders
Regarding the "Mandap Keeper Service," it was noted that the service was utilized by both members and outsiders. The original authority identified specific non-member entities availing the service. The Tribunal opined that the applicant is liable to pay tax on the "Mandap Keeper Service" utilized by outsiders. The applicant had already paid a portion of the amount demanded. Therefore, the Tribunal directed the applicant to deposit an additional sum of Rs.1,00,000/- within six weeks for the service used by outsiders. Upon compliance, the balance adjudged amount would be waived, and recovery stayed pending the appeal's disposal.

In conclusion, the Tribunal granted the waiver of pre-deposit for the tax on "Membership of Club or Association Service" but directed the applicant to deposit a further amount for the tax liability on the "Mandap Keeper Service" used by outsiders. Compliance was required within a specified timeframe, with further proceedings scheduled accordingly.