2017 (2) TMI 899 - HC - Service Tax

Club - club allows its space especially its Mandap Keeper on hire for functions to its members - principle of mutuality - whether the activity amounts to rendering of services or not? - Held that - it seems to be no impediment to the application of principle of mutuality relied upon - the activity does not amount to rendering of services and is not taxable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Applicability of principle of mutuality in service tax case involving a club renting out space for functions.

Analysis:
The High Court judgment pertains to an appeal by the revenue challenging the decision of CESTAT regarding the taxability of services provided by a club. The Assistant Commissioner of Service Tax issued a show cause notice alleging duty evasion and suppression of facts. The respondent club invoked the principle of mutuality in defense. The adjudicating authority upheld the notice, demanding a substantial amount as service tax and imposing a penalty. However, CESTAT overturned this decision, citing a previous ruling by the High Court. The revenue argued that the principle of mutuality was inapplicable as the club rented out space to both members and outsiders. The court disagreed, emphasizing that the show cause notice specifically referred to the hiring out of space to club members. Without a finding based on the notice's allegations, the revenue's argument lacked merit. Therefore, the court upheld the principle of mutuality and dismissed the appeal, including any pending applications.