By TIOL News Service

MUMBAI, JAN 14, 2015: THERE are three appellants and issue involved in all the appeals is the same.

The appellants are Matunga Gymkhana, Tahnee Heights Co-op Hsg. Soc. Ltd. & Mittal Tower Premises Co-operative Society.

Alleging that the appellants had provided taxable ‘Club or Association' service specified in Section 65 (105)(zzze) of the FA, 1994, tax demands were raised and confirmed against them by the lower authorities.

Facts:

++ M/s Matunga Gymkhana runs a club for their members. The activities carried out by them relate to Sports, Yoga etc. According to them, their objective is charitable as per the constitution of the Gymkhana. They are a Public Charitable Trust registered under the Mumbai Public Trust Act. Their objective is for promotion of physical well-being and most of the sports facilities are utilized by the members and their children. According to them, Section 65 (25a) of the Finance Act, 1994 states that club or association means any body or body of persons providing services facilities for a subscription but does not include any body engaged in activities having objectives which are in the nature of public service and are of charitable, religious or political nature.

Revenue was of the view that the activities are not charitable in nature as they are chargeable and neither are they in the nature of public service. According to Revenue, the appellant does not come within the purview of the exclusion clause under Section 65(25a) ibid. Therefore, the demand of service tax against the appellant was confirmed, appropriate interest ordered and penalties imposed under Sections 76, 77 & 78 of the Act.

++ M/s. Tahnee Heights Co-operative Housing Society formed a society in which all the members are shareholders. The society is registered under the Maharashtra Co-operative Societies Act. Charges are collected from the members for maintenance, repair, beautification etc. According to the appellant, they offer services to self and, therefore, would not be covered under service tax. In their view they are covered by the exclusion clause under Section 65(25a) which excludes anybody established or constituted by or under any law from the coverage of ‘club or association'. The appellant had however, paid service tax on persuasion by the department. Later they filed refund claims which were rejected on merits.

Revenue took a view that the exclusion clause only refers to bodies which are established or constituted under a Statute and not bodies which are formed and registered under a statute. Therefore, the refund claims were rejected on merits without going into the aspects of unjust enrichment.

++ M/s. Mittal Tower Premises Co-operative Society - facts are similar to the second appellant M/s. Tahnee Heights Co-operative Housing Society. Here also, the appellants were managing and maintaining the land and building belonging to the society formed amongst members of the premises. They collected expenses from the members towards water charges, security charges, repair expenses, lift repairs etc. They are also registered under the Maharashtra Co-operative Housing Societies Act. In their case also the service tax had been paid initially and later refund was claimed. The refund claims were rejected on merits without going into the aspect of unjust enrichment.

Before the CESTAT the appellant relied on the following decisions in support of their contention that they are not liable to service tax -

(i) Ranchi Club vs. Chief Commr. Of C. Exc. & ST, Ranchi - 2012-TIOL-1031-HC-JHARKHAND-ST [held that in view of the mutuality and in view of the activities of the club, if club provides any service to its members may be in any form including as mandap keeper, then it is not a service by one to another]

(ii) Sports Club of Gujarat vs. Union of India - 2013-TIOL-528-HC-AHM-ST [it is hereby declared that Section 65(25a), Section 65(105) (zzze) and Section 66 of the Finance (No.2) Act, 1994 as incorporated / amended by the Finance Act, 2005 to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, to be ultra vires.]

(iii) M/s. Federation of Indian Chambers of Commerce & Industry vs. Commissioner of Service Tax, Delhi - 2014-TIOL-701-CESTAT-DEL. [there are no operative legislative provisions of the Act legitimizing the levy and collection of service tax from the appellants, for providing "club or association" service, in so far as these relate to any services provided to members of these appellants - services provided to non-members fall outside the ambit of "club or association" service prior to 01.05.2011 and subsequent to this date there is no specific allegation that the services provided to non-members fall within the expanded scope of this taxable service

The AR supported the order of the lower authorities.

The Bench adverted to the decisions relied upon by the appellant(s) and observed that in view of the judgments the issue at hand is no more res integra. Inasmuch as the appellants were not liable to service tax.

Holding so, the orders were set aside and the appeals were allowed with consequential relief.

(See 2015-TIOL-108-CESTAT-MUM)