2024 (5) TMI 1340 - AT - Service Tax

Non-payment of appropriate Service Tax - Club or Association Membership Services - Supply of Tangible Goods Services, Business Auxiliary Services and Renting of Immovable Property Services -No service provider and service recipient relationship between the association and its members. Club or Association Services - HELD THAT - The said taxable service is defined u/s 65(105)(zzze) of the Finance Act, 1994 to read as any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount . The said definition was amended w.e.f. 16.05.2011 and reads as any service provided or to be provided to its members, or any other person, by any clubs or association membership service in relation to provision of services, facilities or advantages for a subscription of any other amount . The relationship of a member with its association and vice versa is hit by the doctrine of mutuality. There is no service provider and service recipient relationship . The issue as to whether the subscription / entrance fees collected by the association from its members can be subjected to levy of service tax under the said category was considered by the Tribunal in the case of M/s. Ranchi Club Ltd 2012 (6) TMI 636 - JHARKHAND HIGH COURT The Apex Court in the case of State of West Bengal Vs. Calcutta Club Limited 2019 (10) TMI 160 - SUPREME COURT has also held that the demand of service tax cannot sustain. Following these decisions, we are of the view that the demand under this heading cannot sustain and requires to be set aside. Ordered accordingly. Supply of Tangible Goods Services - Appellant has provided transportation of goods to the oil companies. It cannot be considered as Supply of Tangible Goods Services. Even in the books, they have accounted the amount received by them as lorry freight. This indicates that the appellant has received freight charges for transportation and not hire charges. Further, the freight charges have been subject to service tax under the category of GTA services at the hands of the service recipients / oil companies. The Tribunal in the case of M/s. Erode Lorry Owners Association 2019 (3) TMI 43 - CESTAT CHENNAI had considered the very same issue and held that the demand under Supply of Tangible Goods Services cannot sustain. Thus, we are of the view that the demand under Supply of Tangible Goods Services cannot sustain and requires to be set aside. Ordered accordingly. Business Auxiliary Services - The appellant is merely engaged in providing transportation of goods for the oil companies. The Show Cause Notice is not clear as to how this amount is to be treated as commission. We find that the demand under BAS cannot sustain and requires to be set aside. Ordered accordingly. Renting of Immovable Property Services - For the reason of the taxable value under this category falls below the threshold limit is to be examined by the Adjudicating Authority. This issue is remanded to the Adjudicating Authority for the limited purpose of verification. In case, the amount is above the threshold limit, the appellant is liable to pay the service tax along with interest, and also the penalties in this regard for the respective period. Thus, the impugned order is modified to the extent of setting aside of the demand of service tax, interest and penalties under Club or Association Services, Supply of Tangible Goods Services and Business Auxiliary Services. The issue with respect to Renting of Immovable Property Services is remanded to the Adjudicating Authority for verification as discussed above. Appeal is partly allowed.

Summary

Issues:
Demand under Club or Association Services, Demand under Supply of Tangible Goods Services, Demand under Business Auxiliary Services, Demand under Renting of Immovable Property Services

Analysis:
The judgment involves an appeal by a trade body registered under the Society Registration Act against a Show Cause Notice alleging non-payment of appropriate Service Tax under various categories. The Original Authority confirmed the demand, interest, and penalties, which was upheld by the Commissioner (Appeals), leading to this appeal.

1. Club or Association Services:
The appellant argued that the demand on membership fees collected from members is unjustified as there is no service provider and recipient relationship. Citing precedents like M/s. Ranchi Club Ltd., the Tribunal held that the demand cannot sustain due to the doctrine of mutuality. Referring to the decision in the case of State of West Bengal Vs. Calcutta Club Limited, the demand was set aside.

2. Supply of Tangible Goods Services:
The appellant contended that they only provided transportation services to oil companies and did not supply tangible goods. The Tribunal agreed, noting that the freight charges were subjected to service tax by the oil companies under GTA services. Citing the case of M/s. Erode Lorry Owners Association, the demand under this category was set aside.

3. Business Auxiliary Services:
The appellant argued that they were not engaged in purchasing or selling goods but only provided transportation services. The Tribunal found that the demand under BAS was unjustified, as the appellant incurred expenses for vehicle verification, not for purchase or sale of goods. The demand under this category was set aside.

4. Renting of Immovable Property Services:
The appellant argued that the demand was below the threshold limit and should not sustain. The Tribunal remanded this issue to the Adjudicating Authority for verification. If the amount exceeded the threshold, the appellant would be liable to pay service tax, interest, and penalties.

In conclusion, the Tribunal modified the impugned order by setting aside the demands under Club or Association Services, Supply of Tangible Goods Services, and Business Auxiliary Services. The issue regarding Renting of Immovable Property Services was remanded for further examination. The appeal was partly allowed with consequential reliefs as per law.