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2022 (5) TMI 482 - AT - Service TaxLevy of Service Tax - Club and association services - appellant is an association of its members - applicability of principles of mutuality - time limitation - whether the services provided by the appellant to its own members (who are also separate legal entities) can be considered as service provided by one entity to another? - HELD THAT:- The Constitution Bench of the Supreme Court has in STATE OF WEST BENGAL AND OTHERS VERSUS CALCUTTA CLUB LIMITED AND ANOTHER [2008 (2) TMI 837 - CALCUTTA HIGH COURT] discussed at length the doctrine of mutuality under Article 366 (29A) (e) of the Constitution and held that doctrine of mutuality continues to be applicable to incorporated and unincorporated members’ clubs after the 46th Amendment to the Constitution and, therefore, no sales tax is payable to the State by the Calcutta Club. It was further held that the same logic applies to service tax levied on members’ clubs. The law laid down in Calcutta Club is that a club and its members are one and the same and the club is formed for the purpose for mutual benefit of its members. Therefore, any amount paid by the members to the club and the services rendered by the club to its members are self service and cannot be taxed. The fact that the club is incorporated as a separate legal entity makes no difference. There are no good reason not to apply the same principle to the appellant, which is also a cooperative federation of milk unions who are its members. Although the milk unions (district cooperative societies) and the appellant (apex society) are registered under the Cooperative Societies Act of the State and are, therefore, distinct legal entities, the nature of relationship between the appellant and the milk unions continues to that of club to its members. Therefore, no service tax is payable on the services rendered by the appellant to the milk unions. Thus, in view of the judgment of the Constitution Bench of the Supreme Court in Calcutta Club, it has to be held that no service tax was payable by the appellant for the services rendered to its members - the interest on the demand and the penalties imposed also need to be set aside and are set aside - appeal allowed - decided in favor of appellant.
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