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TMI Blog2009 (8) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... l and business functions, meeting and gatherings. In legal parlance, the element of mutuality in the affairs and dealing of the club exists. 3. The petitioners were served with Notices dated 1st July, 1997, issued by the office of the Commissioner of Central Excise & Customs, Service Tax Cell, respondent no.2 herein, calling upon them to fill in the Application Form ST -I and to get themselves registered under the Service Tax Act, 1997 [hereinafter referred to as "the Act" for short]. It was further communicated by the said Notices that the petitioners would be liable to pay Service Tax @ 5% for the services rendered by the club as "mandap keepers" within the meaning of the provisions of Section 65(20) of the said Act. 4. Pursuant to the issuance of the said Notices, the petitioner in S.C.A. No.2016/1999 got itself registered as "mandap keeper" and also paid service tax for the years 1997-1998. However, it has resisted the payment of service tax for the years subsequent thereto, i.e. 1998-1999. 5. So far as the petitioner in S.C.A. No.1691/1999 is concerned, a reply was submitted to the said Notice inter alia stating that it is not covered under the definition of "mandap keeper" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des its facilities to its members for official, social or business functions, there is no letting-out of its immoveable property for any consideration. Hence, no ingredients of Clauses (19) or (20) of Section 65 of the Finance Act, 1994 get attracted. Moreover, no element of transfer is involved between the member and the club when the club provides its members the facility to use its property for any function. Therefore, under no circumstances, the petitioners can be classified as "mandap keepers". 7.3 Learned Sr. counsel has relied upon a decision of the Calcutta High Court in the case of Dalhousie Institute v. Assistant Commissioner, Service Tax Cell reported in 2005 (180) E.L.T. 18 (Cal.), wherein, it has been held that the members of a club are allowed exclusively to participate in the services rendered by the club and its fund and that providing such facility to the members by its club cannot be termed to be a letting-out nor the members using the facility of any portion of the premises for any function can be termed to be a client. Similar principle is also laid down in another decision of the Calcutta High Court in the case of Saturday Club Ltd. v. Asst. Commissioner, Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents has relied upon a decision of the Apex Court in the case of Tamil Nadu Kalyana Mandapam Assn. v. Union of India reported in 2004 (167) E.L.T. 3 (S.C.), wherein, it has been held that service tax on catering services does not amount to tax on sale and purchase of goods and that for a tax to amount to a tax on sale of goods, it must amount to a sale according to the established concept of a sale. It has been further held therein that the operative words of Article 366(29A)(f) of the Constitution of India is supply of goods and only supply of food and drinks and other articles for human consumption, is deemed to be sale or purchase of goods. 9. Having considered the rival submissions raised by the respective parties, the point is whether going by the definition of "mandap" and "mandap keeper", as defined in the Finance Act, 1994, the petitioners/clubs can be made liable to pay service tax or not. Service Tax was introduced in India vide the Finance Act, 1994. It is legislated by the Parliament under the residuary entry, i.e. Entry 97 of List I of the Seventh Schedule of the Constitution of India. It is an indirect tax and is to be paid on all the services notified by the Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the element of use by any person, including the third party, of an immoveable property as well as the furniture, fixtures and light fittings given by the landlord on consideration. Therefore, the meaning and definition of letting-out inheres transaction of commercial character, rather trading. Similarly, from the definition of "mandap keeper" it is clear that a person allows temporary occupation of a mandap for consideration, meaning thereby temporary parting with the possession to a third party for consideration. Thus, it is obvious that legislature intended this transaction must be for commercial purposes. Again, the words, provided to a client used in the definition of "taxable service" necessarily presupposes that the "mandap keeper" must be letting out an immoveable property to any person on consideration. 14. Now, it has to be examined in the context of the aforesaid reading and meaning of the three definitions as to whether the petitioners/Clubs does come within the purview of the same or not. One of the criteria is that such service must be provided to a client. If such service is not provided to a client, then it would not attract levy under the provisions of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the respondents that the petitioners are a proprietary club. Therefore, if the club space is allowed to be occupied by any member or his family members or by his guest, for a function, by constructing a "mandap", the club cannot be called as "mandap keeper" because the club is allowing its own member to do so, who is, by virtue of his position, a principal of the club. If any outside agency is called upon to do the needful, it may raise a bill along with the service tax upon the club and the club as an agent of the members, is supposed to pay the same. 18. The authority cannot impose service tax twice; once upon the people carrying out the business of "mandap keeper" and then upon the members club for the purpose of using the space for constructing or using it as a "mandap". Therefore, apart from any other question, the possibility of double taxation cannot be ruled out. 19. If, in a given case, a person, being an owner of a house, allows another to occupy the house for the purpose of carrying out any function in that house, then it will not be construed as transfer of property. But, if such person calls upon a third party, a "mandap keeper", to construct a "mandap" in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose, the members are paying for such user and any amount of receipt and expenditure of the clubs is enjoyed and / or incurred by the members alone and not by third party. 24. The principle of mutuality is squarely applicable in this case as going by the definitions of "mandap", "mandap keeper" and "taxable service", as reproduced herein above, the facility of use of the premises and/or the facilities attached thereto, by the members of the clubs cannot be termed to be letting-out nor the members of the club using the facility/s or any portion of the premises for any function can be termed to be client/s. The services rendered by any person to his client pre-suppose the element of commerciality and obviously this transaction must be involved with a third party, as opposed to the members of the Club. 25. Merely because the clubs are exempted from the levy of income-tax, the respondents could not impose service tax, unless and until the same is permissible under the law. It has now become an elementary principle of law that the question of estoppel cannot arise nor the principle thereof can be applied as against the provisions of law. If it is found that a particular statute is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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