By TIOL News Service

MUMBAI, JAN 23, 2016: THE appellant is an association established in 1947 of various banks as its Members and provides various activities to the member banks like organizing meetings with Finance Minister, Chief Executives of various banks, intervening in court cases and representing the banking industry, issuing periodical newsletter/bulletin, giving publicity, negotiates wages between the employees union and banks. For conducting this activity, the appellant charges its member banks an amount towards subscription and also charges some processing fees for empanelment of various service providers.

The CST, Mumbai wanted the appellant to pay Service tax on the charges so collected under the category of Club or Association Services and Convention Services.

The demand was confirmed along with interest and penalties galore.

The appellant submitted that the issue is no more res integra as the Tribunal in a similarly placed assessee's case, in the case of Federation of Indian Chambers of Commerce and Industry vs. Commissioner of Service Tax & Electronics and Computer Software Export Promotion Council vs. Commissioner of Service Tax reported in - 2014-TIOL-701-CESTAT-DEL has held that the services rendered would not fall under the category of taxable services as the members cannot be categorised as clients to whom services are provided.

The AR reiterated the findings of CST, Mumbai.

The Bench observed -

+ The adjudicating authority has relied upon the definition of Club and Association Services to hold against the appellant and also on the ground that the appellant is not providing any charitable services as they are charging fees for legal and administrative services provided to the members and the entire amount is shown as income in the Income and Expenditure Account. We do not agree with the findings recorded by the adjudicating authority for more than one reason.

+ Firstly, it is seen from the records that the services which are rendered by the appellant are for their own member banks. The services which are rendered are more or less in consonance with the Rules of the appellant as published from time-to-time.

+ Secondly, the learned counsel was correct in bringing to our notice that in a similarly placed case, Federation of Indian Chamber of Commerce and Industry, were served with a show cause notice by the authorities which reached the Tribunal, which was decided on 28/04/2014 (in favour of FICCI).

The Tribunal also adverted to the decision in Matunga Gymkhana - 2015-TIOL-108-CESTAT-MUM (which relied on the decisions in Ranchi Club - 2012-TIOL-1031-HC-JHARKHAND-ST & Sports Club of Gujarat - 2013-TIOL-528-HC-AHM-ST) wherein it is held that an association cannot be said to provide services to its own members.

The order was set aside and the appeal was allowed with consequential relief.

(See 2016-TIOL-247-CESTAT-MUM)