9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (3) TMI 1245 - AT - Service TaxLiability of service tax - club membership fee/entrance fee and other services such as health club and fitness facilities business auxiliary service etc. Levy of service tax on club membership fee - HELD THAT - The issue regarding club membership fee is no longer res integra in as much as the issue stands settled in favour of the appellant in their own case by this Tribunal vide Final Order No. 21721/2018 dated 12.11.2018 2018 (11) TMI 979 - CESTAT BANGALORE . The issue is also stand settled by the Hon ble Supreme Court in the case of STATE OF WEST BENGAL Vs. CALCUTTA CLUB LIMITED 2019 (10) TMI 160 - SUPREME COURT wherein the apex court has observed that from 2005 onwards the Finance Act of 1994 does not purport to levy Service Tax on members clubs in the incorporated form. - The demand against the appellant on Club or Association service cannot be sustained for the relevant period. Levy of service tax on Entertainment fee/Cultural program fee - HELD THAT - The admission fee/entrance fee are also the amounts collected from individuals who are likely to become members for which service tax has been demanded under the category of Club or Association service . The service tax on residential facilities (chamber service) provided by the appellant the Commissioner in the impugned order states that it is meant for the members of the club and same is charged under Club or Association Service . The Health and Fitness services which is also meant for the members of the club the demand is on these services in the Club or Association Services . All the above services are meant only for the members and in view of the apex court decision in the case of STATE OF WEST BENGAL Vs. CALCUTTA CLUB LIMITED 2019 (10) TMI 160 - SUPREME COURT the demands cannot be sustained. Levy of service tax on Business Support Services with regard to Outlet handling charges - HELD THAT - It has been observed by the Commissioner that the assessee is providing necessary infrastructure support to the business or commerce being done by various entities to promote / sell their products in their premises of their club and hence this activity is clearly classifiable under the category of Business Support Service . It is further observed that the appellant has received huge amounts from various entities like M/s. Balajee Hotels and Real Estates M/s. Bangalore Cold Storage M/s. Life Style Services Pvt. Ltd. for providing infrastructural facilities to these organisations which is rightly classifiable under Business Support Services . Since these services are in the nature of Business Support Services and they are not meant for the club members but various outside organizations it is found that the Commissioner has rightly confirmed these demands. Commission received from UTI Bank towards the credit cards swiping charges - HELD THAT - The commission earned by providing services to the clients of an entity is clearly taxable under the Business Auxiliary Services and hence the assessee is liable to pay the service tax on the said commission received for providing the service. With regards to the contention of the assessee that every business entity allowing the swiping of the cards should come under the purview of the tax the same is agreed with. Several entities receiving the said commission are paying service tax after crossing the exemption limit of commission amount of Rs.10 lakhs received during a financial year. In view of this there are no reason to disagree with the impugned order hence the same is being upheld. Conclusion - i) The doctrine of mutuality applies to club membership fees exempting them from service tax. ii) Charges deemed as penalties or subject to state entertainment tax do not attract service tax. iii) Outlet handling charges are taxable under Business Support Services and commissions from banks are taxable under Business Auxiliary Services. iv) The extended period of limitation is not applicable and penalties are not warranted. Appeal disposed off.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Club Membership Fees and Doctrine of Mutuality The Court considered the applicability of the doctrine of mutuality, which was upheld by the Supreme Court in the case of State of West Bengal Vs. Calcutta Club Limited. The doctrine posits that there can be no service by a club to its members due to the identity of interest, as members are essentially providing services to themselves. This principle was applied to determine that club membership fees are not subject to service tax. 2. Other Services and Charges The Court examined various charges such as delayed payment charges, cover charges, and banquet cancellation charges. These were argued to be in the nature of penalties and not for services rendered, thus not attracting service tax. Similarly, entertainment fees, being subject to entertainment tax under the State List, were held not liable for service tax. 3. Outlet Handling Charges and Business Support Services The outlet handling charges were classified under Business Support Services, as they involved providing infrastructure support to various entities for business purposes. The Court upheld the classification and taxability under this category, noting that these services were provided to external organizations, not club members. 4. Commission from Banks and Business Auxiliary Services The commission received from banks for credit card swiping facilities was classified under Business Auxiliary Services. The Court agreed with the lower authority's view that such commissions are taxable, as they involve providing services to the bank's customers. 5. Extended Period of Limitation and Penalties The Court found that the invocation of the extended period of limitation was not justified, as the issues had been previously adjudicated in the appellant's favor, and the department was aware of the facts. Consequently, penalties under various sections of the Finance Act, 1994, were set aside. SIGNIFICANT HOLDINGS The Court held that:
Verbatim excerpts from the judgment include: "The expression 'body of persons' cannot possibly include within it bodies corporate... Explanation 3(a) to Section 65B(44) does not apply to members' clubs which are incorporated." "In view of our discussion above, we are of the considered view that as far as service tax on subscription / membership fee is concerned, the issue has been decided in favour of the appellant in view of the various decisions cited supra." The appeals were disposed of with these findings, confirming demands only for Business Support Services and Business Auxiliary Services provided to non-members, and setting aside penalties.
|
