2009 (5) TMI 345 - AT - Service Tax

Service Tax under the category of club and associations - Service Tax under the category of health club and fitness centre - In respect of the major amount confirmed under the category of club and association service, demand is made after including amount paid by members towards cost of plots - we are of the view that the amount collected towards cost of the plots which is to be allotted to the members on their options, is not connected with the normal services rendered by a club or association. Prima facie, the appellants have a strong case as far as this demand is concerned. As regards demand under the category of health club and fitness centre, appellant contending that service tax paid in all centers and all amounts billed not received stay granted partly

Summary

Issues:
1. Interpretation of service tax liability for club and association services.
2. Interpretation of service tax liability for health club and fitness center services.

Analysis:
1. The judgment addresses the issue of service tax liability for club and association services. The appellant was required to pre-deposit a significant sum under this category. The appellant's advocate argued that service tax should only be charged on amounts received from members for services, not for other purposes like the cost of plots. The lower authorities had included plot costs in the service tax calculation. The tribunal examined the legal provisions and concluded that the amount collected for plots, to be allotted to members, was not connected to the normal services of a club or association. The tribunal found merit in the appellant's case regarding this demand.

2. The judgment also dealt with the service tax liability for health club and fitness center services. The appellant had to pre-deposit a substantial amount under this category as well. The advocate highlighted that the appellant operated centers nationwide, fulfilling their service tax obligations in each location. The amount in question included sums received for constructing centers, with some amounts billed but not yet received. Specifically, for Hyderabad, a smaller liability had already been paid. The tribunal acknowledged the complexity of this demand and the need for detailed scrutiny. Consequently, they ordered a pre-deposit of Rs. 5 lakhs within three months, with the balance amount waived until the appeal's resolution. Compliance was set for a specific date in August 2009.

This judgment showcases a meticulous examination of the legal provisions and factual circumstances surrounding the service tax liabilities for club and association services, as well as health club and fitness center services. The tribunal's analysis reflects a balanced approach, considering the nuances of the appellant's arguments and the complexities involved in determining the correctness of the demands.