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2009 (6) TMI 414 - HC - Central ExciseRefund - Submission that appellant club does not come within the definition of health and fitness service and club or association service - appellant club is registered under the provisions of Karnataka Societies Registration Act, providing various services to its members. It is also registered with the Service Tax Department under the category of Health and Fitness Service . It is charging, collecting and paying the service Tax for the period from October 2005 to March 2006. But they have filed a refund claim on the ground that they are registered under the Karnataka Societies Registration Act and providing service to its own members. - Employees for the purpose of rendering service, are paid remuneration from amount collected from the members. - in view of the definition any establishment occurred in Section 65(52) of the Finance Act, any establishment running health club and fitness centre covered under section65(52) of the Finance Act - The moment an establishment is running Health club and fitness centre under Section 65(52) of the Finance Act, 1994 service tax is applicable as there is no explanation of the word club under Section 65(52) and its inclusive definition including the appellant club and other similarly placed clubs and therefore the club is registered under the Service Tax Department charging and collecting from its members and therefore refund claim is not tenable.
Issues:
1. Challenge to the order of the Customs Excise & Service Tax Appellate Tribunal 2. Interpretation of provisions of the Finance Act, 1994 regarding health and fitness services 3. Constitutional validity of service tax on club services 4. Application of mutuality principle and Article 29 of the Constitution of India 5. Retrospective application of the explanation to Section 65 of the Finance Act, 1994 Issue 1: Challenge to Tribunal Order The appellant contested the order of the Customs Excise & Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, dated 25-8-2008, questioning its correctness. Various grounds were raised to support the questions of law framed, seeking to set aside the order by allowing the appeal in favor of the appellant. Issue 2: Interpretation of Finance Act Provisions The appellant argued that the club's services did not fall within the definition of health and fitness services under Sections 65(25a) and 65(51) of the Finance Act, 1994. The contention was that the show-cause notice issued by the Department was legally flawed. The court analyzed the definitions of "health and fitness service" and "health club and fitness center" under the Act to determine the applicability of service tax to the appellant club. Issue 3: Constitutional Validity of Service Tax A substantial question of law arose regarding the constitutional validity of applying service tax to club services. The appellant invoked the mutuality principle and Article 29 of the Constitution of India to argue against taxation. The court examined past judgments and constitutional provisions to assess the validity of taxing club activities retrospectively. Issue 4: Mutuality Principle and Constitutional Rights The court considered the mutuality principle and constitutional rights in the context of club services taxation. Reference was made to past judgments and constitutional provisions to evaluate whether the service tax on club activities violated the principle of mutuality and constitutional rights under Article 29. Issue 5: Retrospective Application of Explanation to Finance Act The appellant raised concerns about the retrospective application of the explanation to Section 65 of the Finance Act, 1994, regarding taxing club activities. The court examined past judgments and legal provisions to determine the applicability of the explanation retrospectively and its impact on taxing club services. In conclusion, the High Court of Karnataka affirmed the order of the Tribunal, dismissing the appeal. The court found that the appellant club's services fell within the definition of health and fitness services under the Finance Act, making them liable for service tax. The court rejected the appellant's legal contentions, affirming the validity of the Tribunal's decision based on the statutory provisions and factual findings.
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