2019 (2) TMI 1795 - AT - Service Tax

Levy of service tax - Club or Association Services - extended period of limitation - HELD THAT - The assessee relied upon the Hon ble Jharkhand High Court s decision in the case of Ranchi Club Ltd. Versus Commissioner of Customs, Central Excise Service Tax, Ranchi Zone Others 2012 (6) TMI 636 - JHARKHAND HIGH COURT and contended that the Club Association Service has been held to be ultra-vires by the Hon ble High Court - The Appellate Authority distinguished the said decision of the Hon ble High Court of Jharkhand by observing that the Club before the High Court was Member s Club whereas the appellant in the present case is running a propriety club and as such the declaration of law by the Jharkhand High Court would not be applicable to them. The appellant also assailed the demand on the point of limitation by submitting that there was no suppression on their part and the issue involved was a bona-fide legal issue of interpretation. The Commissioner (Appeals) did not agree with the said plea of the assessee and upheld the order - the appeal cannot be disposed on the point of limitation itself, inasmuch as, the demand stands raised by invoking the extended limitation period. The disputed issue was an interpretational issue and in the light of the Hon ble Jharkhand High Court s order the assessee could have entertained a bona-fide belief that the activity is not taxable, the entire figures were collected by the Revenue from the records maintained by the assessee. The demand is hopelessly barred by limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of Service Tax on providing swimming pool facilities.
2. Interpretation of legal issues regarding Club or Association Services.
3. Point of limitation in raising demand for Service Tax.

Analysis:
1. The appellant, operating a luxury hotel, provided swimming pool facilities to members on monthly subscriptions. The Revenue contended that this activity falls under "Club or Association Services" category, necessitating the payment of Service Tax. Proceedings were initiated against the appellant, raising a demand of ?2,37,009 for the period 01/04/2008 to 31/03/2012.

2. The appellant cited a decision of the Hon'ble Jharkhand High Court regarding Club & Association Services being ultra-vires, but the Appellate Authority distinguished it, stating it was not applicable as the appellant ran a proprietary club. The appellant also challenged the demand on the grounds of limitation, claiming no suppression and a bona-fide legal interpretation issue. However, the Commissioner (Appeals) upheld the order, leading to the appeal.

3. The Tribunal found that the demand could not be disposed of based on limitation alone, considering the extended period invoked for raising the demand. Given the interpretational nature of the issue and the appellant's belief based on the Jharkhand High Court's order, the Tribunal concluded that the demand was barred by limitation. The Revenue collected all figures from the appellant's records, indicating no malafide intent to evade Service Tax. Consequently, the demand was set aside, and the appeal allowed in favor of the appellant.