By TIOL News Service

MUMBAI, APRIL 24, 2017: SERVICE TAX demands of Rs.38,08,336/- [Club or association service], Rs 8,97,204/- [Mandap keeper service] and Rs.4,23,485/- [Renting of immovable property service] were confirmed against the appellant.

The matter is before the CESTAT.

Submissions of the appellant/AR and the findings of the Tribunal are as below -

Club or Association Service:

++ Tribunal has set aside the demands raised on 'Clubs or association' by going beyond the principle of mutuality to examine taxability of contribution of members for common cause or a common objective can merely owing to existence as a club or association without being conductor for rendering of a service. For a service to be taxable, it is necessary that the service has to be rendered and by one person to another; without a perceived service, money contribution cannot be held to be a consideration that is liable to tax. [ Cricket Club of India - 2015-TIOL-2062-CESTAT-MUM, Gondwana Club - 2016-TIOL-661-CESTAT-MUM and Indian Performing Rights Society Ltd .- 2017-TIOL-1070-CESTAT-MUM.]

++ Contention of AR that the membership of appellant organisation comprises shareholders as well as non-shareholders with the mutuality principle not applying to the latter is also not tenable as the levy of tax does not distinguish the various categories of membership.

Held: It is now well settled by decisions of High Courts and of this Tribunal that the leviability of tax as provider of 'Club or association service' to its members lacks legal validity. [Sports Club of Gujarat - 2013-TIOL-528-HC-AHM-ST and Ranchi Club Ltd. - 2012-TIOL-1031-HC-JHARKHAND-ST.]

Mandap keeper:

++ It is the contention of the appellant that the service rendered to its members is not anyway different from other facilities enjoyed by club members and, therefore, in accordance with the decision of the various High Courts that have invalidated the levy of tax thereon, received from members for conducting function is also not tenable.

Renting of immovable property:

++ Payment to the decorators are made directly by the members and that the receipts from decorators are essentially in the nature of 'Renting of immovable property' which was not taxable during the period in dispute. The demand for tax on renting of immovable property for the period from 2005-06 to 2009 till the imposition of tax on renting of immovable property is also not sustainable in law. The appellant has admitted to tax liability for the period 2009-10 and relies upon the decision of the Tribunal in Jindal Vegetable Properties Ltd - 2013-TIOL-315-CESTAT-DEL to contend that the confusion and doubts relating to renting of immovable property service would detract from the allegation that there was misrepresentation or suppression of fact with intent to evade tax.

Held:

+ The demand for service tax under the head 'Mandap keeper service' is not sustainable in law. We also find that invoking of the extended period in relation to renting of immovable property is not justifiable. The demand is, therefore, confirmed pertaining to that portion which lies within the normal period.

Appeal was allowed in the above terms.

(See 2017-TIOL-1362-CESTAT-MUM)