2012 (6) TMI 636 - JHARKHAND HIGH COURT

Denial of liability to pay service tax under "Mandap Keeper's Services" or under the 'Club or Association Services" by assessee, i.e.Club - The petitioner is giving service to its members but the club is formed on the principle of mutuality - Held that:- As considered by the Hon'ble Supreme Court in the case of Joint Commercial Tax Officer, Harbour Division, II-Madras v. The Young Men's Indian Association[1970 (2) TMI 87 (SC)]that in spite of the definition contained in Section 2(n)of the Madras General Sales Tax Act, 1959 read with Explanation I of the Act if there is no transfer of property from one to another there is no sale which would be exigible to tax. If the club even though a distinct legal entity is only acting as an agent for its members in matter of supply of various preparations to them no sale would be involved as the element of transfer would be completely absent. This position has been rightly accepted even in the previous decision of this Court.

Members' clubs to which category the clubs in the present case belong cannot be made subject to the provisions of the Licensing Acts concerning sale because the members are joint owners of all the club property including the excisable liquor. The supply of liquor to a member at a fixed price by the club cannot be regarded to be a sale - Where such a club has all the characteristics of a members' club consistent with its incorporation, where every member is a shareholder and every shareholder is a member, no licence need to be taken out if liquor is supplied only to the members.

sale and service are different but the basic feature common in both transaction requires existence of the two parties - 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 as foundational facts of existence of two legal entities in such transaction is missing - in favour of assessee.