2014 (11) TMI 467 - HC - Service Tax

Club or Association service - Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in allowing appeal of the respondent with consequential relief by placing sole reliance on decision rendered by this Hon ble Court in the case of Sports Club of Gujarat Ltd. v. Union of India reported in 2013 (7) TMI 510 - GUJARAT HIGH COURT without recording comparative jurisdictional facts of both the cases and giving its finding thereon - Held that - It is true that the decision of the Tribunal is somewhat brief and it would have been desirable if the Tribunal had given more elaborate facts in order to apply the ratio of the decision of this Court in case of Sports Club of Gujarat ltd. v. Union of India(supra). However, that by itself would not permit or atleast in facts of this case, to overturn the decision of the Tribunal when undisputably the facts are similar. As noted above, even in case of the present assessees, the notice issued was for levy of service tax on the service provided by a club to its members. - Decided against Revenue.

Summary

Issues:
Levibility of service tax on services provided by a club to its members.

Analysis:
The appeals in this case revolve around the question of whether service tax is applicable to the services provided by a club to its members. The club in question had not registered itself as a service provider, and a show cause notice was issued to the club for not paying service tax on the taxable services provided. The issue reached the Tribunal, which allowed the appeal based on a previous decision of the High Court. The department filed an appeal against this decision.

The questions of law presented for consideration were whether the Tribunal erred in relying on the previous decision without comparing the facts of the present case and whether it failed to provide reasons for disagreeing with the findings of the appellate commissioner. The department argued that the decision of the High Court in the previous case only declared certain provisions of the Finance Act ultra vires for the petitioners in that case and not universally.

The Court opined that no substantial question of law arose in this case. While acknowledging that the Tribunal's decision was brief, the Court found that the facts were similar to the previous case where the High Court had declared certain provisions of the Finance Act ultra vires regarding the levy of service tax on services provided by a club to its members. Therefore, the Tribunal was justified in setting aside the demand for service tax.

The Court dismissed the contention that the previous decision applied only to the petitioners in that case, emphasizing that a declaration of unconstitutionality by the Court operates universally. The Court upheld the decision of the High Court in the previous case and dismissed all the appeals in the present matter, stating that they were bound by the ratio of the previous decision.