2016 (9) TMI 1241 - AT - Service Tax

Club or Association services - Commissioner (Appeals), Cochin set aside the Order-in-Original on the ground that M/s. National Club (respondent) is a Members club and not a Proprietary Club and in a members club there is no question of two sides i.e. Members and Club, both are same entity - Revenue submitted that the impugned order is not sustainable in law because the issue involved in the present case has not attained the finality. The judgment of the Hon ble Jharkhand High Court at Ranchi and the Gujarat High Court at Ahmedabad relied upon by the Commissioner (Appeals) Cochin has been challenged before the Hon ble Apex Court and the matter is still pending. During the pendency of the appeal before the Supreme Court, the orders passed by the Commissioner is in jeopardy and cannot be considered as precedent. Held that - there is nothing wrong in the order passed by the Commissioner (Appeals) and we are not inclined to interfere in the same. - Decided against the Revenue

Summary

Issues:
Appeal against order demanding service tax from a club for providing taxable services without payment. Interpretation of whether a club is liable to pay service tax on services provided to its members. Validity of Commissioner's order setting aside the demand for service tax based on the club being a members club and not a proprietary club.

Analysis:
1. The Revenue filed an appeal against an order demanding service tax from a club for providing taxable services without payment. The investigation revealed that the club had not paid service tax for the period from 2005-06 to 2009-10. The Commissioner (Appeals) set aside the order, stating that the club was a members club and not a proprietary club, thus no liability for service tax. The Revenue appealed this decision.

2. The arguments presented were that the issue was not final as judgments relied upon by the Commissioner (Appeals) were challenged in higher courts. The Revenue contended that during such pendency, the Commissioner's orders were in jeopardy and could not serve as precedent. The respondent argued that the Commissioner's order was lawful, citing various judgments in favor of clubs in similar cases.

3. The Commissioner (Appeals) relied on judgments like Sports Club of Gujarat Ltd. Vs. Union of India, Ranchi Club Ltd. Vs. CCE & ST, Joint Commercial Tax Officer Vs. Young Men's Indian Association, Enchanted Wood Club Ltd. Vs. UOI, and Cricket Club of India Vs. CCE, Mumbai, to support the decision that a members club is not liable to pay service tax on services provided to its members. The Commissioner's observation emphasized that in a members club, there is no distinction between members and the club as two separate entities.

4. After considering the arguments and judgments cited, the Tribunal upheld the Commissioner's decision, stating that there was no error in the order passed. The Tribunal found no reason to interfere with the Commissioner's ruling and dismissed the Revenue's appeal, affirming the decision that the club, being a members club, was not liable to pay service tax on services provided to its members.