2014 (5) TMI 875 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Mandap Keeper services provided to members - period April 2008 to September 2010 - Held that - there is no dispute that the applicant collected the subscription charges from their members - Gujarat High Court in the case of Sports Club of Gujarat Ltd. (supra) declared that Section 65 (25a), Section 65 (105) (zzze) and Section 66 of the Finance (No.2) Act, 1994 as incorporated/amended by the Finance Act, 2005 to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, to be ultra vires. - Following decision of Sports Club of Gujarat ltd. Vs UOI 2013 (7) TMI 510 - GUJARAT HIGH COURT - Stay granted.

Summary

Issues:
Tax demand on subscription collected by applicant under the category of Club or Association - Contesting tax demand on merit and limitation - Applicability of decisions by Hon'ble Jharkhand High Court and Hon'ble Gujarat High Court on similar cases.

Analysis:
The judgment by the Appellate Tribunal CESTAT Chennai involved a case where the applicant, registered under 'Mandap Keeper Service,' faced a tax demand on subscriptions collected from members categorized under Club or Association. The adjudicating authority confirmed a tax demand of Rs.7,89,181/- for the period April 2008 to September 2010. The applicant contested the tax demand on merit and limitation, citing the decisions of the Hon'ble Jharkhand High Court in the case of Ranchi Club Ltd. and the Hon'ble Gujarat High Court in the case of Sports Club of Gujarat Ltd.

Upon hearing both sides and reviewing the records, the Tribunal noted that the applicant had indeed collected subscription charges from their members. Referring to the decision of the Hon'ble Jharkhand High Court in the case of Ranchi Club Ltd., the Tribunal highlighted the distinction between sale and service transactions, emphasizing the necessity of two parties in both scenarios. The court concluded that in cases of mutual activities within a club where no transfer of property occurs, the service provided to members does not constitute a taxable service under the Finance Act, 1994.

Similarly, the Tribunal referenced the decision of the Hon'ble Gujarat High Court in the case of Sports Club of Gujarat Ltd., which declared certain provisions of the Finance Act, 1994 as ultra vires concerning the levy of service tax on services provided by a club to its members. Based on these precedents, the Tribunal found that the present case fell within the purview of the decisions by the High Courts, leading to the waiver of predeposit of tax, interest, and penalty. The recovery of the tax amount was stayed pending the disposal of the appeal, as per the Tribunal's decision.

In conclusion, the judgment highlighted the significance of legal precedents set by the Hon'ble High Courts in determining the tax liability on services provided by clubs to their members. The decision provided clarity on the taxability of subscription charges collected by the applicant under the category of Club or Association, aligning with the interpretations and rulings established in the referenced cases.