2019 (12) TMI 944 - AT - Service Tax

Club or Association Membership Services - appellant is an organization of persons engaged in providing common facilities - service tax payable for the period 1.6.2005 to 31.3.2007 - HELD THAT - The issue is settled by Hon ble Apex Court as cited by the appellants in the case of 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 where it was held that from 2005 onwards, the Finance Act of 1994 does not purport to levy service tax on members clubs in the incorporated form. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Demand for service tax on "Club or Association Membership Services".
2. Applicability of the Supreme Court's decision in the Ranchi Club Ltd. case.
3. Interpretation of "club or association" under various sections of the Finance Act.
4. Validity of the impugned order confirming the service tax demand and penalties.

Detailed Analysis:

1. Demand for service tax on "Club or Association Membership Services":
The appellant, an organization providing common facilities, received a show-cause notice from DGCEI dated 04/01/2008, demanding service tax amounting to ?1,33,37,884/- for the period from 1.6.2005 to 31.3.2007. The demand was based on the services rendered under "Club or Association Membership Services". The Commissioner of Service Tax, Bangalore, confirmed this demand and imposed penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

2. Applicability of the Supreme Court's decision in the Ranchi Club Ltd. case:
The appellant's counsel argued that the issue had been settled in favor of the appellant by the Supreme Court in the case of Chief Commissioner of Central Excise and Service Tax and Others vs. M/s. Ranchi Club Limited. The Supreme Court held that incorporated clubs or associations prior to 1st July 2012 were not included in the service tax net. This decision was cited as a precedent to argue that the impugned order should be set aside.

3. Interpretation of "club or association" under various sections of the Finance Act:
The Tribunal reviewed the definitions and provisions under the Finance Act, including Sections 65(25a), 65(105)(zze), 65(25aa), 65(105)(zzze), and 65B(37). It was noted that "club or association" was defined to include any person or body of persons providing services to its members for a subscription or any other amount, but excluded entities established or constituted under any law. The Supreme Court's interpretation in the Ranchi Club Ltd. case clarified that companies and cooperative societies registered under respective Acts were considered "constituted" under those Acts and thus were not subject to service tax prior to 1st July 2012.

4. Validity of the impugned order confirming the service tax demand and penalties:
The Tribunal found that the issue was settled in favor of the appellant based on the Supreme Court's judgment in the Ranchi Club Ltd. case. Consequently, the impugned order confirming the service tax demand and imposing penalties was deemed invalid. The Tribunal set aside the impugned order and allowed the appeal with consequential relief as per law. The cross-objection filed by the Revenue was also disposed of.

Conclusion:
The Tribunal concluded that the demand for service tax on "Club or Association Membership Services" was not applicable to the appellant based on the Supreme Court's decision in the Ranchi Club Ltd. case. The impugned order was set aside, and the appeal was allowed with consequential relief. The cross-objection by the Revenue was disposed of accordingly.