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TMI Blog2021 (8) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... er concerning taxability between the members of the club and the club itself. Appeal allowed - decided in favor of appellant. - Service Tax Appeal No.75246 of 2015 - FINAL ORDER NO. 75658/2021 - Dated:- 23-8-2021 - SHRI P.K. CHOUDHARY, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) Shri Nihar Dasgupta, Advocate for the Appellant (s) Shri H.S.Abedin, Authorized Representative for the Respondent (s) ORDER The present appeal has been filed by the Appellant being aggrieved with the Order-in-Appeal dated 25th September 2014 passed by the learned Commissioner (Appeals), Guwahati whereby the demand of Service Tax of Rs.23,19,837/- (including Cess) has been confirmed for the period from 2006-07 to 2010-11, along with interest and penalty as proposed in the Show Cause Notices (SCN) dated 20 th October 2011 for the period from 2006-07 to 2008-09 and dated 27 th February 2012 for the period from 2009-10 to 2010-11. 2. Briefly stated, the facts of the case are that the Appellant is a member only club incorporated under the provisions of the Indian Companies Act 1913. The Appellant functions on a no profit no loss basis and the events organized are only open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Act applied to taxable services as defined, with effect from 16th June, 2005. Under Section 65(25a), club or association was defined as follows: club or association means any person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include- (i) anybody established or constituted by or under any law for the time being in force, or (ii) any person or body of person engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry, or (iii) any person or body of person engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature, or (iv) any person or body of persons associated with press or media. 59 . Under Section 65(105)(zze), taxable service was defined as follows: Taxable service means any service provided- (zze) to its members by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount. 60 . With effect from 1st May, 2011, club or association was de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 66 in such manner and within such period as may be prescribed. 65 . With effect from 1st July, 2012, Sections 65 and 65A were made inapplicable, and a new Section 65B introduced, in which under Section 65B(37), the term person was defined as follows: (37) person includes,- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a society, (v) a limited liability partnership (vi) a firm, (vii) an association of persons or body of individuals, whether incorporated or not, (viii) Government, (ix) a local authority, or (x) every artificial juridical person, not falling within any of the preceding sub-clauses; 66. Under Section 65B(44), service was defined as follows: (44) service means any activity carried out by a person for another for consideration and includes a declared service but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods, which is deemed to be sale within the meaning of clause (29A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one more service by the Finance Act, 2000. Its scope was further widened by the Finance Act, 2001 when service tax was extended to include fifteen more services. The Finance Act, 2002 further levied service tax on ten more services. The Finance Act, 2003 brought 8 new services within the ambit of service tax. Further, the Finance (No. 2) Act, 2004 brought 13 new services under service tax which included reintroduction of service tax on 3 services and also made applicable service tax on risk cover in life insurance under the life insurance service, whereas this service was introduced in the year 2002. The Finance Act, 2005 brought 9 new services under the service tax net. The Finance Act, 2006 brought 15 new services under the service tax net. The Finance Act, 2007 brought 7 new services under the service tax net and six telecom related services were omitted and merged into one new category of taxable service. Further, the Finance Act, 2008 w.e.f. 16-5-2008, introduced 6 new services. Further, the Finance (No. 2) Act, 2009 w.e.f. 1-9-2009 introduced 3 new services. Likewise, the Finance Act, 2010 w.e.f. 1-7-2010 vide Notification No. 24/2010-ST, dated 22-6-2010 introduced 8 new ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rliament has legislative competence to levy service tax under Entry 97 List I of the Constitution of India. 71 . With this background, it is important now to examine the Finance Act as it obtained, firstly from 16th June, 2005 uptil 1st July, 2012. 72 . The definition of club or association contained in Section 65(25a) makes it plain that any person or body of persons providing services for a subscription or any other amount to its members would be within the tax net. However, what is of importance is that anybody established or constituted by or under any law for the time being in force, is not included. Shri Dhruv Agarwal laid great emphasis on the judgments in DALCO Engineering Private Limited v. Satish Prabhakar Padhye and Ors. Etc. (2010) 4 SCC 378 (in particular paragraphs 10, 14 and 32 thereof) and CIT, Kanpur and Anr. v. Canara Bank (2018) 9 SCC 322 (in particular 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, we accept the argument on behalf of the Respondents that incorporated clubs or associations or prior to 1st July, 2012 were not included in the service tax net. 74 . The next question that arises is - was any difference made to this position post 1st July, 2012? 75 . It can be seen that the definition of service contained in Section 65B(44) is very wide, as meaning any activity carried out by a person for another for consideration. Person is defined in Section 65B(37) as including, inter alia, a company, a society and every artificial juridical person not falling in any of the preceding sub-clauses, as also any association of persons or body of individuals whether incorporated or not. 76 . What has been stated in the present judgment so far as sales tax is concerned applies on all fours to service tax; as, if the doctrine of agency, trust and mutuality is to be applied qua members 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 somethi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y seen how the expression body of persons occurring in the explanation to Section 65 and occurring in Section 65(25a) and (25aa) does not refer to an incorporated company or an incorporated cooperative society. As the same expression has been used in Explanation 3 post-2012 (as opposed to the wide definition of person contained in Section 65B(37)), it may be assumed that the legislature has continued with the pre-2012 scheme of not taxing members clubs when they are in the incorporated form. The expression body of persons may subsume within it persons who come together for a common purpose, but cannot possibly include a company or a registered cooperative society. Thus, Explanation 3(a) to Section 65B(44) does not apply to members clubs which are incorporated. 83 . The expression unincorporated associations would include persons who join together in some common purpose or common action see ICT, Bombay North, Kutch and Saurashtra, Ahmedabad 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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