TMI Blog2004 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998 and a direction upon the respondents to act in accordance with law. Such writ petition was then formally entertained and interim order was granted by a Bench of this High Court. Directions for affidavits were also given. 2. Mr. R.N. Bajoria, learned Senior Counsel, with the able assistance of Mr. J.P. Khaitan, learned Counsel, contended before this Court that the petitioner club is a members' club but not a proprietary club. Therefore, it is not supposed to pay service tax for using the space as mandap as per requirement of the members. It is governed by its own Memorandum and Articles of Association as well as rules and bye-laws connected therewith. From the relevant clause under objects being Clause 3(a) of the Memorandum and Articles of Association is quoted hereunder : 3(a) To afford to its Members all the usual privileges, advantages, conveniences and accommodation of a Club and the promotion of Social Amusement and Entertainments, the Pursuit of Literature and the facilitation of Study in Languages and the Arts . The question of profit would also govern by Clause 86 of the Articles of Association under Chapter V which deals with financial part of it. Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that Section 66 therein is a charging Section made applicable in respect of Clauses (o) and (p) as above. Moreover, Section 67(o) gives an indication how the amount will be charged and recovered. Clause (o) is as follows : (o) in relation to service provided by mandap keeper to a client, shall be the gross amount charged by such keeper from the client for the use of mandap including the facilities provided to the client in relation to such use and also the charges for catering, if any . 9. Now it is duty incumbent upon the Court to understand whether service tax as per the Act can be levied upon the club in using the space as mandap or not. 10. He cited various judgments in support of his contentions. From 1970 (XXVI) Sales Tax Cases 241 ( Harbour Division-II, Madras v. Young Men's Indian Association Madras, and Ors .) it has been found that the six Judges' Bench of the Supreme Court held that if a members' club even though a distinct legal entity acts only as an agent for its members in the matter of the supply of various preparations and articles to them no sale would be involved as the element of transfer would be completely absent. Members are joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation cannot be treated as rent and the income cannot be regarded as income from the house property under the Income-tax Act. In 1997 (226) I.T.R. 97 ( Commissioner of Income-tax v. Bankipur Club Ltd. ) it was held by the Supreme Court that there must be complete identity between contributors and participators if this requirement is fulfilled. It is immaterial what particular form the association takes. Trading between persons associating together in this way does not give rise to profits which are chargeable to tax. Facilities were offered only as a matter of convenience for the use of the members. It was further held in 2000 (243) ITR 89 ( Chelmsford Club v. Commissioner of Income-tax ) that the surplus from the activities of the club is excluded from the levy of the income-tax. 11. Mr. Dipak Shome, learned Counsel, with able assistance of Mr. Biswanath Samaddar, learned Counsel, contended before this Court that providing 'mandap' by a club as a 'mandap keeper' cannot be the usual course of business activities under the objects of the Memorandum of Association of the club. He called upon to show clause 86 of the Articles of Association as above. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y carried out by a club being different from income-tax and sales tax. However, these two answers become the sheet anchor of the reply of Mr. Bajoria. He immediately got hold all these two points by showing symmetrical stands on both the points. Firstly, he contended that it is nobody's case that if any outside 'mandap keeper' is carrying out a business in a premises of another he is supposed to pay service tax and will raise a bill along with the service tax upon the owner. There is no dispute to that extent. But here the case is different. In the instant case, whether there should be collection of service tax by a owner of the property if he voluntarily allows any of his known persons to use his premises for the purpose of carrying out the marriage or other ceremony or not. There cannot be any applicability of service tax in between themselves since there is no question of transfer of property amongst them. So far as the second point is concerned he said there is no difference among all the three types of taxes principally. Thereby the ratio of the judgments cited by him will be applicable in the present case. 16. According to me, I have no much of say as against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e will be challenged. In such circumstances, when available cause is apparent immediate step is to be taken by the Writ Court by intervention without waiting for the future. Totality says that the Writ Court was rightly invoked to avoid the perpetuity of the illegality and there is no bar upon the Writ Court in entertaining the same. So far as the merit is concerned, law is well-settled by now that in between the principal and agent when there is no transfer of property available question of imposition of service tax cannot be made available. It is true to say that there is a clear distinction between the 'members' club' and 'proprietary club'. No argument has been put forward by the respondents to indicate that the club is 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 his own member to do so who is, by virtue of his position, principal of the club. If any outside agency is called upon to do the needful it may raise a bill along with the servi ..... 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