2018 (4) TMI 1933 - AT - Service Tax

Principle of mutuality - Club or Association services - appellant being a registered club is providing various services to its members - HELD THAT - On perusal of material available on record, it appears that the Hon ble Jurisdictional High Court in the case of SPORTS CLUB OF GUJARAT LTD VERSUS UNION OF INDIA 3 2013 (7) TMI 510 - GUJARAT HIGH COURT observed that Section 65 (25a), 65 (105)(zzze) and 66 are not applicable to the appellant as per the ratio laid down in the case of RANCHI CLUB LTD. VERSUS CHIEF COMMISSIONER OF CENTRAL EXCISE SERVICE TAX 2012 (6) TMI 636 - JHARKHAND HIGH COURT where it was observed that the relationship between the club members and club based on the principle of mutuality which attracts no service tax. There are no reason to interfere with the impugned order, the same is sustained along with the reasons mentioned therein - appeal dismissed - decided against Revenue.

Summary

Issues:
- Interpretation of the principle of mutuality in service tax liability for a registered club providing services to its members.

Analysis:
The appellant, a registered club providing services to its members, filed an appeal against the Order-in-appeal passed by the Commissioner of Central Excise, Customs, and Service Tax - Service Tax, Ahmedabad. The department had demanded service tax on the services provided by the club, but the Commissioner (Appeals) allowed the claim of the appellant by applying the principle of mutuality. The department, aggrieved by this decision, filed the present appeal challenging the exemption granted to the appellant based on the principle of mutuality.

During the hearing, both parties presented their arguments, with the Ld. Authorised Representative for the appellant/Department and the Ld. Chartered Accountant for the Respondent making their respective submissions. The Tribunal, after considering the arguments and examining the available material, referred to the judgment of the Hon'ble Jurisdictional High Court in the case of Sports Club of Gujarat Ltd. Vs. Union of India. The Tribunal noted that the High Court had held that certain sections of the law were not applicable to the appellant based on the principle of mutuality as established in the case of Ranchi Club Ltd. Vs. Chief Commissioner of Central Excise & Service Tax, Ranchi Zone.

Based on the precedents and the principle of mutuality established in the aforementioned judgments, the Tribunal concluded that the services provided by the club to its members were not subject to service tax. The Tribunal found no reason to interfere with the impugned order of the Commissioner (Appeals) and upheld the decision to dismiss the appeal filed by the Department. The Tribunal also disposed of the stay application accordingly, affirming the exemption from service tax for the club's services based on the principle of mutuality.