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TMI Blog2009 (8) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... are basically engaged in promoting different sports, are liable to pay service tax on the services rendered by it to its members is the issue that has come up for our consideration in these petitions. 2. The petitioners are companies registered under the provisions of the Companies Act, 1956, having its registered office at Ahmedabad, Gujarat. The main object of the petitioners is to promote different games and sports in the State of Gujarat and to afford to its members all the usual privileges, conveniences and accommodation of a residential club. The petitioners also provide various facilities and amenities, including space as a venue for holding social, commercial and business functions, meeting and gatherings. In legal parlance, the element of mutuality in the affairs and dealing of the club exists. 3. The petitioners were served with Notices dated 1st July, 1997, issued by the office of the Commissioner of Central Excise & Customs, Service Tax Cell, respondent no.2 herein, calling upon them to fill in the Application Form ST -I and to get themselves registered under the Service Tax Act, 1997 [hereinafter referred to as "the Act" for short]. It was further communic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that it allows temporary occupation of its facilities like banquet halls, lawns, etc. owned by it for organizing social, official or business functions. 7.1 Learned Sr. counsel has contented that the services offered by the petitioners were only as a matter of convenience for the use by its members and the invitees, which is one of the object of the clubs. Therefore, the facilities extended by the petitioners to its members cannot be classified as a trading activity. 7.2 Learned Sr. counsel has further submitted that there is no element of transfer of property from one to the other when the Clubs arrange for the supply of services to member/s since the property continues to be of its members. When the club provides its facilities to its members for official, social or business functions, there is no letting-out of its immoveable property for any consideration. Hence, no ingredients of Clauses (19) or (20) of Section 65 of the Finance Act, 1994 get attracted. Moreover, no element of transfer is involved between the member and the club when the club provides its members the facility to use its property for any function. Therefore, under no circumstances, the petitioners can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel has submitted that the services rendered by the clubs in the form of temporary occupation of its premises, viz. the banquet halls, lawns, etc., to its members, their families and guests, are charged for a consideration and that the same are being paid by the members. Hence, the services rendered by the clubs of allowing its members temporary occupation of its premises will attract the levy of service tax. The tax on the services rendered by the clubs is in pith and substance a tax on the services. The clubs are already exempted from the levy of income-tax and therefore, it would not be proper to grant them exemption even under the Service Tax Act. Hence, no interference is called for from this Court in these petitions. 8.3 Learned counsel for the respondents has relied upon a decision of the Apex Court in the case of Tamil Nadu Kalyana Mandapam Assn. v. Union of India reported in 2004 (167) E.L.T. 3 (S.C.), wherein, it has been held that service tax on catering services does not amount to tax on sale and purchase of goods and that for a tax to amount to a tax on sale of goods, it must amount to a sale according to the established concept of a sale. It has been further he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of Property Act, 1882 and which also includes any furniture, fixtures, light fittings and floor coverings therein, let out for consideration, for organizing any official, social or business function, in any manner, falls under the category of taxable service. 13. In other words, for a service/s to fall under the category of "taxable service", within the provisions of the Finance Act, 1994 the requirement is that it must be provided by a person, who allows temporary occupation of any immoveable property, as defined under the provisions of the Transfer of Property Act, 1882 and includes such facilities attached thereto, let out for consideration for the purpose of organizing any official, social or business function to a client. The words let out for consideration employed in the definition of mandap clearly intend the element of use by any person, including the third party, of an immoveable property as well as the furniture, fixtures and light fittings given by the landlord on consideration. Therefore, the meaning and definition of letting-out inheres transaction of commercial character, rather trading. Similarly, from the definition of "mandap keeper" it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a question of law or commits his cause to his management in prosecuting a claim or defending him against a suit in a court of justice; one who retains the attorney who is responsible to him for his fees and to whom the attorney is responsible for the management of the suit; one who communicates facts to an attorney expecting professional advice". 16. The definition of the term client clearly shows that an element of agency is implicit between a person and the agency providing service to him. A client is one who applies for service or advice or who retains a solicitor in the management of his suit. A member of a club is not a client of the club. 17. It is a well-settled law that in between the principal and agent when there is no transfer of property available, the question of imposition of service tax cannot be made available. The petitioners herein are a members club and not a proprietary club. It is not even the case of the respondents that the petitioners are a proprietary club. Therefore, if the club space is allowed to be occupied by any member or his family members or by his guest, for a function, by constructing a "mandap", the club cannot be called as & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party is allowed to participate in the same. Even, the facilities and amenities of the clubs are not extended to any third party who, of course, may come as a guest and / or invitee of the members. The above exclusiveness is given for a limited period and for a specific purpose and therefore, in any case, it cannot be termed as "lease" or "hire". Thus, it is clear from the activities of the clubs, as stipulated in its bye-laws and the relevant rules and regulations that the "mandap keeper", in this case, are the members collectively. Hence, we are of the opinion that the understanding of the respondents about the petitioners" dealing is fallacious, for they mean the word "client", relying on the dictionary expression, instead of reading and understanding the correct meaning. 23. Service tax is recoverable from the "mandap keeper", who is having a different and distinct separate legal and physical entity and who lets-out the "mandap" with a commercial and trading object. Here, the members have formed the club to serve themselves mutually and for this purpose, the members are paying for such user and any amount of re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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