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TMI Blog2020 (1) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon ble Supreme Court in the above cited case had not been pronounced. The Supreme Court has pronounced the above judgment only on 03.10.2019. It is therefore not necessary to deal with the counter filed by the respondent. The Hon ble Supreme Court has considered the provisions of the Finance Act, 1994, as it stood prior to and after passing of the Finance Act, 2005 and after 2012 after the advent of negative list with the introduction of the definition of service in section 65B (44) of the Finance Act, 1994 vide Finance Act, 2012 w.e.f. 01.07.2012 Following the above decision of the Hon ble Supreme Court in the above case, the present Writ Petition deserves to be allowed - Petition allowed - decided in favor of petitioner. X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed the present writ petition in view of the decision of the Gujarat High Court in Sports Club of Gujarat Ltd vs Union of India, 2013 (31) STR 645 and the Jharkhand High Court in Ranchi Club Ltd vs Chief CCE and ST, 2012 (26) STR 401. 11.These decisions had held that no service tax was payable for the services rendered by the "clubs or association" to its members applying the principle of mutuality. 12.In Sports Club of Gujarat Ltd vs Union of India, 2013 (31) STR 645, the Gujarat High Court declared Section 65 (25a) and Section 65(105)(zzzze) of the Finance Act, 1994 as incorporated/amended by Finance Act, 2005 ultra virus to the extent that it seeks to levy service tax in respect of services purportedly provided by the clubs/associations to its members. 13.The present writ petition came for admission on 07.03.2016 when notice was ordered. Thereafter, an interim order was passed by this Court on 15.04.2016 pending filing of counter affidavit by the respondent. The Respondent has also now filed its counter dated 14.03.2017 today i.e on 17.12.2019. 14.The learned counsel for the petitioner has filed a copy of the decision of the Hon'ble Supreme Court recently rendered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular paragraphs 12 and 17 therein), to the effect that a company incorporated under the Companies Act cannot be said to be "established" by that Act. What is missed, however, is the fact that a Company incorporated under the Companies Act or a cooperative society registered as a cooperative society under a State Act can certainly be said to be "constituted" under any law for the time being in force. In R.C. Mitter & Sons, Calcutta v. CIT, West Bengal, Calcutta, (1959) Supp. 2 SCR 641, this Court had occasion to construe what is meant by "constituted" under an instrument of partnership, which words occurred in Section 26A of the Income Tax Act, 1922. The Court held: "The word "constituted" does not necessarily mean "created" or "set up", though it may mean that also. It also includes the idea of clothing the agreement in a legal form. In the Oxford English Dictionary, Vol. II, at pp. 875 & 876, the word "constitute" is said to mean, inter alia, "to set up, establish, found (an institution, etc.)" and also "to give legal or official form or shape to (an assembly, etc.)". Thus the word in its wider significance, would include both, the idea of creating or establishing, and the id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clubs, there has to be an activity carried out by one person for another for consideration. We have seen how in the judgment relating to sales tax, the fact is that in members' clubs there is no sale by one person to another for consideration, as one cannot sell something to oneself. This would apply on all fours when we are to construe the definition of "service" under Section 65B(44) as well. 86.However, Explanation 3 has now been incorporated, under sub-clause (a) of which unincorporated associations or body of persons and their members are statutorily to be treated as distinct persons. 87.The explanation to Section 65, which was inserted by the Finance Act of 2006, reads as follows: "Explanation: For the purposes of this section, taxable service includes any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration:" 88.It will be noticed that the aforesaid explanation is in substantially the same terms as Article 366(29-A)(e) of the Constitution of India. Earlier in this judgment qua sales tax, we have already held that the expression "body o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Indira Balkrishna, (1960) 3 SCR 513 at page 519-520. The expression "as the case may be" would refer to different groups of individuals either bunched together in the form of an association also, or otherwise as a group of persons who come together with some common object in mind. Whichever way it is looked at, what is important is that the expression "body of persons" cannot possibly include within it bodies corporate. 93.We are therefore of the view that the Jharkhand High Court and the Gujarat High Court are correct in their view of the law in following Young Men's Indian Association (supra). We are also of the view that from 2005 onwards, the Finance Act of 1994 does not purport to levy service tax on members' clubs in the incorporated form. 94.The appeals of the Revenue are, therefore dismissed. Writ Petition (Civil) No. 321 of 2017 is allowed in terms of prayer (i) therein. Consequently, show-cause notices, demand notices and other action taken to levy and collect service tax from incorporated members' clubs are declared to be void and of no effect in law. 20.Respectfully following the above decision of the Hon'ble Supreme Court in the above case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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