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TMI Blog2024 (12) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] wherein it was held that 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. Consequently, the Hon ble Supreme Court concluded that companies and cooperative societies and like which are registered under the respective Acts, can certainly be said to be constituted under those Acts, and therefore incorporated clubs or associations constituted prior to 1st July, 2012 are not included in the service tax net. In the instant case, the appellant was an industry specific body of persons registered under the Trade Union Act, 1926. The main objectives, inter alia, to regulate the relationship between workmen and employers; to promote and regulate and consider all questions affecting them, make representations to local/State/Central government authorities on any matter connected them etc., falling within the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 65(105) and a demand of Rs. 10,82,057/- was proposed against the appellant. However, on other activities like Tour receipts, Circular income, Contribution from News Letter, Advertisement Income, Sale of Publication, the demand of Rs. 12,12,961/-was confirmed under the category of Club or Association services as specified under Section 65 (25a) read with Section 65(105) (zzze) of the Finance Act. Thereafter, for the subsequent periods i.e., 2012-13 to 2014-15, three more show cause notices were issued. The Adjudicating Authority after considering the submissions made dropped the entire demand vide order dated 29.01.2016. Being aggrieved of the said adjudication order, the department preferred an appeal before the Commissioner (Appeals), who allowed the appeal of the department and confirmed the demand proposed in the show cause notices against the appellant vide the impugned Order-in-Appeal dated 09.11.2016. Aggrieved by the said order, the appellant has filed the present appeal. 3. Learned counsel for the appellant submitted that the appellant has organized seminars for their member and charges Delegation Fee for the Seminar . The department has alleged the said amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal entity, is only acting as an agent for its members. The applicant transacts with its members based on principle of Mutuality and therefore, the services provided by the appellant to its members are notable to service under the category of Club or Association services . Agreeing with the contentions of the appellant, the Adjudicating Authority rightly dropped the demand considering the transaction involved is based on Principle of Mutuality. However, the Commissioner (Appeals) while passing the impugned Order, did not dispute that the services provided are covered under the Principle of Mutuality, but, proceeded to confirm the demand stating that the cases referred by the appellant has not attained finality and has been challenged and pending before the Hon'ble Supreme Court. It is now well settled that service tax is not leviable on the transactions between the club or association with its members being done under the Principle of Mutuality. The law has been settled by the Hon'ble Supreme Court only. In support of his submission, Ld. Counsel for the appellant has relied upon the following judgments:- State of West Bengal Vs. Calcutta Club Limited [2019 (19) G.S.T.L. 545 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy or an advertising consultant. Moreover, the demand in this respect also comes under the principle of mutuality, hence, would not be liable to Service Tax. Also, the service of advertisement cannot be taxed under the category of Club or Association. Post Negative List, the services provided would he covered under clause (g) of the Negative List and hence, not taxable. Similarly, the activity carried on by the appellant in the post negative list period, would not be liable to Service Tax. 3.4 Ld. counsel further submitted that it is settled law that when the assessee has duly disclosed and recorded the information in its books which is a public document and accesible to the revenue authorities, it cannot be said the facts have been concealed suppressed by the Assessee. In support of his submission, he relied upon the following judgements:- Commissioner of Service Tax, New Delhi Vs. Jitender Lalwani [2017 (51) S.T.R. 312 (Tri.-Del.)] Shri Balaji Industrial Products Ltd. Vs. Commissioner of Cus. C. Ex, Jaipur [2019 (370) E.LT. 280 (Tri Del.)] 3.5 Learned counsel further submitted that it is well settled that when there is confusion about the taxability of any activity and different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (105) (zzze) of the Act , are not exempt from the levy of service tax. 5. We have heard the Ld Counsel for the appellant and the Ld AR for the department. The admitted facts of the instant case are as follows: i. The Appellant is registered with the Service Tax department under Club or Association Services. ii. The appellant is also registered under Trade Union Act, 1926 with the objective to regulate the relationship between workmen and workmen industries, amongst others. iii. The appellant is an association of its Members as has been defined in the show cause notice. iv. The appellant organises seminars for their members and charges Delegation Fees from them. v. Some of the said seminars held were for effluent treatment allied matters, Water conservation Distillery Effluent treatment technologies for zero discharge etc. 6. We proceed to examine the said matter in the light of the above facts. The impugned order has classified the service of conduction seminars and charging delegate fees under Convention Service, which is defined under Section 65(32) of the Finance Act, 1994 as: Convention means a formal meeting or assembly which is not open to the general public, and does not inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 defined by Section 65(25aa) as follows: club or association means any person or body of persons providing services, facilities or advantages, primarily to its members for a subscription or any other amount 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 idea of giving a legal form to, a partnership. The Bench of the Calcutta High Court in the case of R.C. Mitter and Sons v. CIT [(1955) 28 ITR 698, 704, 705] under examination now, was not, therefore, right in restricting the word constitute to mean only to create , when clearly it could also mean putting a thing in a legal shape. The Bombay High Court, therefore, in the case of Dwarkadas Khetan and Co. v. CIT [(1956) 29 ITR 903, 907] , was right in holding that the section could not be restricted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons and their members are statutorily to be treated as distinct persons. 78. 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: 79. 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 of persons will not include an incorporated company, nor will it include any other form of incorporation including an incorporated co-operative society. 80. It will be noticed that club or association was earlier defined under Section 65(25a) and 65(25aa) to mean any person or body of persons providing service. In these definitions, the expression body of persons cannot possibly include persons who are incorporated entities, as such entities have been expressly excluded under Section 65(25a)(i) and 65(25aa)(i) as anybody establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that from 2005 onwards, the Finance Act of 1994 does not purport to levy service tax on members clubs in the incorporated form and the said decisions squarely cover the facts of the present case. 8. In the instant case, we note that the appellant was an industry specific body of persons registered under the Trade Union Act, 1926. The main objectives, inter alia, to regulate the relationship between workmen and employers; to promote and regulate and consider all questions affecting them, make representations to local/State/Central government authorities on any matter connected them etc., falling within the parameters defined by the Hon ble Supreme Court (supra). Consequently, we hold that the holding of seminars/workshops by the appellant does not fall within the ambit of Convention Services on the basis of the principle of mutuality. Consequently, the charging of Delegation Fee is not leviable to service tax. In this context, we also take note of the Tribunal s decision in the case of M/s CII vs Commissioner, Chandigarh {2023(7) TMI -57 CESTAT Chandigarh] wherein it was held that when meetings/seminars are held for the Members, the charging of delegation fee is not exigible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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