2022 (4) TMI 304 - AT - Service Tax

Levy of Service Tax - membership /admission / enrolment fee collected from the prospective members (applicants) who had applied for club membership - activity carried out by one person for another for consideration would come under the definition of service or not - mutuality of interest - Taxability of Guest Fee - applicability of N/N. 6/2005-ST dt. 01/03/2005 - HELD THAT - All the charges on which demand of service tax was confirmed is squarely covered by the judgment of the Hon ble Supreme Court in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. 2019 (10) TMI 160 - SUPREME COURT . Therefore, the issue is no longer res integra - It was held in the said case that there has to be an activity carried out by one person for another for consideration which would apply on all fours even in the context of definition of service. Therefore, the transaction between members and the club not amount of rendering of any service by the appellant to their members - Demand do not sustain as no service is taking place. Taxability - guest fee - HELD THAT - Without going into the issue of taxability, it is found that the appellant is clearly eligible for exemption Notification No.6/2005-ST. According to which, the appellant are entitled for the exemption when the value of taxable service is not exceeding ₹ 4 lakhs. In the present case, after excluding the value of all other services which are not taxable in view of the Hon ble Apex Court s judgment, the value remains well within the threshold limit of the exemption i.e. ₹ 4 lakhs. Therefore, the appellant is otherwise eligible for exemption under the Notification No.6/2005-ST. Accordingly, the guest fee even if taxable is exempted. The demand of service tax in both the appeals are not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of membership fee and donations received by the appellant.
2. Applicability of service tax on guest fee.
3. Eligibility for exemption under Notification No. 6/2005-ST.

Analysis:
1. The appellant, a registered society, faced an investigation by DGCEI regarding service tax on membership fees, donations, and other charges collected from prospective members. Show-cause notices were issued, leading to adjudication orders. The appellant contested the taxability of these amounts, citing a Supreme Court judgment stating that no service was rendered to the members. The appellant also relied on precedents like Cricket Club of India Ltd. and Karnataka Golf Association. The Revenue reiterated the findings of the impugned order.

2. The Tribunal examined the submissions and records, noting that the charges in question were covered by the Supreme Court judgment in the Calcutta Club Ltd. case. Regarding the taxability of guest fees, the Tribunal found the appellant eligible for exemption under Notification No. 6/2005-ST. The exemption applied when the value of taxable service did not exceed ?4 lakhs. Considering the non-taxable services as per the Supreme Court's judgment, the value remained within the exemption limit. Therefore, even if the guest fee was taxable, it was exempted under the notification.

3. Based on the analysis, the Tribunal concluded that the demand for service tax in both appeals was not sustainable. Consequently, the impugned orders were set aside, and the appeals were allowed. The judgment was pronounced in open court on 30/03/2022.