2019 (2) TMI 1565 - AT - Service Tax

Liability of service tax - membership fees collected for the period from 16.06.2005 to 31.03.2006 - Held that - High Court of Gujarat in M/s. Sports Club of Gujarat Ltd. Vs. Union of India 2013 (7) TMI 510 - GUJARAT HIGH COURT , has held that there would be no service tax liability on the subscription amounts collected by a Club or Association from its members - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Service tax liability on membership fees collected by the appellant for the period from 16.06.2005 to 31.03.2006.

Analysis:

Issue 1: Service tax liability on membership fees
The dispute revolved around the service tax liability on membership fees collected by the appellant. The Department asserted that service tax was applicable under "Membership of Club Service" for the period in question. This led to proceedings resulting in an Order-in-Original confirming a demand of ?10,37,888/- along with interest and penalties under Sections 76 and 78 of the Finance Act, 1994. The Commissioner (Appeals) upheld this order, prompting the appellant to file an appeal.

Issue 2: Legal arguments and precedents
During the hearing, the appellant's advocate highlighted that the matter had been settled in previous cases, citing the decision of CESTAT, Chennai in Commissioner of Service Tax, Chennai Vs. M/s. The Madras Club. The advocate argued that based on this precedent and the rulings of the Hon'ble High Courts of Jharkhand and Gujarat, there should be no service tax liability on subscription amounts collected by clubs or associations from their members.

Issue 3: Tribunal's decision
After considering the arguments presented, the Tribunal agreed with the appellant's advocate, noting that the matter was no longer res integra. Relying on the precedents set by the High Courts of Jharkhand and Gujarat, the Tribunal concluded that there was no service tax liability on membership subscription amounts. The Tribunal found no compelling reasons to deviate from this established legal position and, therefore, allowed the appeal in favor of the appellant, granting any consequential benefits as per the law.

In conclusion, the appellate tribunal ruled in favor of the appellant, holding that there was no service tax liability on the membership fees collected, aligning with the established legal precedents and dismissing the Department's claim for tax payment on the subscription amounts.