2019 (8) TMI 1184 - AT - Service Tax

Club Membership - Doctrine of Mutuality - Levy of service tax - amounts collected by the appellants from its members such as Bar account collection charges, Bar sundry collection, Cards account collection charges, Bar dining collection charges, Guest House amenity charges etc. - HELD THAT - The ratio laid down by High Court of Jharkhand in RANCHI CLUB LTD. VERSUS CHIEF COMMISSIONER OF CENTRAL EXCISE SERVICE TAX 2012 (6) TMI 636 - JHARKHAND HIGH COURT and also by Hon ble High Court of Gujarat in SPORTS CLUB OF GUJARAT LTD VERSUS UNION OF INDIA 3 2013 (7) TMI 510 - GUJARAT HIGH COURT has not been stayed by the Hon ble Apex Court - It was held in the cases that Section 65(25a), Section 65(105) (zzze) and Section 66 as incorporated / amended 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. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over amounts collected by appellants from members for various charges including Bar account collection, Bar sundry collection, Cards account collection charges, Bar dining collection charges, and Guest House amenity charges.

Analysis:

Issue 1: Interpretation of legal precedent
The appellant relied on the judgment of the High Court of Jharkhand in Ranchi Club Ltd. Vs CCE & ST Ranchi and a decision by the Bench in a batch of cases involving Cosmopolitan Club & others. The appellant argued that these judgments supported their position regarding the amounts collected from members.

Issue 2: Applicability of Apex Court rulings
The respondent pointed out that the judgment of Ranchi Club had been appealed to the Apex Court and referred to a Larger Bench with related cases. The respondent cited the Apex Court judgment in Bangalore Club Vs CIT, emphasizing that the doctrine of mutuality was not applicable in that case, leading to the denial of an exemption claimed by the assessee.

Issue 3: Consideration of conflicting judgments
Despite the respondent's arguments, the Tribunal noted that the judgments from the High Court of Jharkhand in Ranchi Club and the High Court of Gujarat in Sports Club of Gujarat had not been stayed by the Apex Court. The Tribunal distinguished the Bangalore Club case, stating it was unrelated to the Finance Act, 1994, and pertained to income tax issues rather than the present matter.

Final Decision:
The Tribunal ruled in favor of the appellant, finding that the impugned order could not be sustained. Consequently, the order was set aside, and the appeal was allowed with any consequential benefits as per the law.

This comprehensive analysis highlights the legal arguments presented by both parties, the consideration of relevant legal precedents, and the ultimate decision reached by the Tribunal in favor of the appellant.