2019 (12) TMI 643 - AT - Service Tax

Levy of service tax - Restaurant Service - service provider and service recipient relationship - HELD THAT - The Apex Court in STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. 2019 (10) TMI 160 - SUPREME COURT has held that the services rendered to the members of the club is not subject to levy of service tax as there is no service provider and service recipient relationship. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Demand of service tax under the category of 'Restaurant Service'
- Applicability of service tax on services rendered by a club to its members

Analysis:
1. Demand of service tax under the category of 'Restaurant Service': The appellants were issued a Show Cause Notice for demanding service tax under the category of 'Restaurant Service' for a specific period. The original authority confirmed the demand, interest, and imposed a penalty, which was upheld by the Commissioner (Appeals). In the appeal, the issue was raised regarding the applicability of service tax on the services provided by the club to its members.

2. Applicability of service tax on services rendered by a club to its members: During the hearing, the appellant's counsel referred to a decision of the Hon'ble Supreme Court in the case of State of West Bengal & Ors. Vs. Calcutta Club Ltd., where it was held that services rendered to the members of a club are not subject to the levy of service tax due to the absence of a service provider and service recipient relationship. Relying on this precedent, the appellate tribunal concluded that the demand for service tax could not be sustained. Consequently, the impugned order confirming the demand, interest, and penalty was set aside, and the appeal was allowed with any consequential relief deemed necessary.

This judgment highlights the importance of legal precedents in determining the applicability of service tax and the significance of the service provider and service recipient relationship in such cases. The decision of the Hon'ble Supreme Court served as a pivotal factor in resolving the issue at hand, emphasizing the need for a clear understanding of legal principles and precedents in tax matters.