9911796707
TMI Blog2004 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... re being made available by the members for themselves, are extended to the third parties for any consideration whatsoever. The members of the club are allowed exclusively to participate in the services rendered by the club and the club fund, no third party is allowed to participate in the same. Even the facilities and amenities of the club are not extended to any third party who, of course, may come as a guest and/or invitee of the members. Therefore, it is clear from the activities of the club as stipulated in the bye-laws, rules and regulation, the mandap keeper in this case is the members collectively in the name of petitioner No. 1 and the mandap belonged to them in the name of the petitioner No. 1 again. In my view service taxes is recoverable from the mandap keeper who is having different and separate legal and physical entity and, let out mandap with commercial and trading object. Here the members have formed the petitioner No. 1 to serve themselves mutually and for this purpose members are paying for such user and any amount of receipt and expenditure of the club is enjoyed and/or participated and/or incurred by the members alone, not by third party. The Supreme Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the element of mutuality in the affairs and dealing of the club exists. The Club provides for various facilities and amenities including space as a venue for holding social, commercial and business functions, meetings and gatherings. 2. In 1994 by the aforesaid Act various services rendered by the traders and/or organizations were subjected to tax at a particular rate. In 1997 by way of amendment of the aforesaid Act the services rendered by 'mandap keeper' providing mandap to the clients were brought under exigibility to the Service Taxes. Pursuant to the aforesaid Act the petitioner got itself registered and filed returns. It is claimed that obtaining of registration followed by filing of returns under the aforesaid Act were by mistake. On discovery of legal position the present application has been taken out for the relief as quoted hereinabove. 3. The learned Senior Counsel Mr. J.P. Khaitan appearing for the petitioner contends going by the definition of Section 65 [Clause 4(i)] of the said Act that the petitioners' Club cannot be brought within the purview of the same. The said definition of taxable service is quoted below : "65. 4(i) "taxable service& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the club premises and invite large number of people to attend such gathering, no individual guest charges is paid and further register is maintained, recording each and every invitee in name of guests. 7. Therefore, going by the definition of 'client' as mentioned in the said Act and having regard to the meaning of the word 'client' as mentioned in Webster's Encyclopaedic Unabridged dictionary of English language the Members and their guests who are using the club premises as an invitee for social function and gatherings can be treated to be client. 8. Having considered contention of the petitioner as well as the respondent the point in this case is whether going by the definition of 'Mandap' and 'Mandap keeper' of the said Act the petitioner/club can be made liable to pay service taxes or not. Before I decide this issue the preliminary point taken by the respondent is to be addressed. It is contended the petitioner is estopped from making this application after having obtained registration certificate under the said Act and submitted returns for one year. It has now become elementary principle of law that question of estoppel cannot arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essarily presupposes that the mandap keeper must be letting out to any person on consideration. Now it has to be examined in the context of the aforesaid reading and meaning of the three definitions, whether the petitioner/club does come within the purview of the same or not. 11.Undeniably and undisputedly the petitioner club has been formed by a number of individuals and for the purpose of attaching apparently independent legal entity this body individuals have got this club registered under the West Bengal Societies Registration Act, 1961. Under the said Act this club cannot have any juristic entity rather the office-bearer of the same as provided under Section 19 of the said Act. Therefore all the members jointly own all the immovable properties as per definition of the mandap. In the bye-laws, rules and regulations of the Club I do not find there is any provision that the properties and the facilities those are being made available by the members for themselves, are extended to the third parties for any consideration whatsoever. The members of the club are allowed exclusively to participate in the services rendered by the club and the club fund, no third party is allowed to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as stated hereinabove, as part of the usual privileges, advantages and conveniences, attached to the membership of the club, cannot be said to be "a trading activity". The surplus - excess or receipts over the expenditure - as a result of mutual arrangement, cannot be said to be "income" for the purpose of the Act." 14.In the case of Chelmsford Club v. Commissioner of Income Tax (243 ITR 89) the Supreme Court while following the Bankipur Club case that it is not only the surplus from the activities of the business of the club that is excluded from the levy of income-tax even the annual value of the clubhouse as contemplated in Section 22 of the Act will be out side the purview of levy of income-tax". 15. The Supreme Court in the case of the Joint Commercial Tax Officer, Harbour Division v. Young Men's Indian Association Madras and Ors. While dealing with the problem of levy of sales tax in connection with a club after considering the various decisions of the Courts of this country as well as the English decision was pleased to observe as follows: "The essential question, in the present case, is whether the supply of the various preparatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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