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2015 (10) TMI 1857 - CESTAT MUMBAI

2015 (10) TMI 1857 - CESTAT MUMBAI - 2015 (40) S.T.R. 957 (Tri. - Mumbai) - Club membership service - co-operative society - service tax liability on the various fees collected by them from the members in respect of the functioning of the Society - activit of accepting deposits and giving loans to members - Levy of Penalty Held That:- the appellant assessee is functioning as a co-operative Society for their members and welfare of their members only. They do not extend any loan or accept any de .....

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ided by the petitioner club to its members, to be ultra vires. Rule is made absolute with no order as to costs - Appeal of revenue rejected and that of assessee is accepted Decided in favour of assessee. - Appeal No. ST/381/11 And Appeal No. ST/66/12 - Final Order Nos. A/3392-3394/2015-WZB/STB - Dated:- 30-9-2015 - Mr. M.V. Ravindran, Member (Judicial) And Mr. C.J. Mathew, Member (Technical) For the Petitioner : Shri V.B. Gaikwad, Advocate For the Respondent : Shri S.R. Nair, E.O. (AR) ORDER P .....

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ccepting deposits, lending and operation of the accounts. After an investigation, it was noticed that the appellant had not discharged the service tax liability on the various fees collected by them from the members in respect of the functioning of the Society. Accordingly a show cause notice was issued demanding differential tax liability with interest and also proposing for imposition of penalties. Appellant assessee contested the show cause notice on merits as well as on limitation. The adjud .....

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reof and upholding penalties under section 77 and 78 but set aside the penalties imposed under section 76 of the finance act 1994. Appellant assessee is aggrieved by the confirmation of demand and the consequences thereof, while revenue is aggrieved by the impugned order on the ground that the first appellate authority should have upheld the order in original in total. 3. At this juncture, learned Counsel submits that an identical issue of the very same assessee in appeal number ST/66/12 is list .....

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appellant assessee accepts deposits from its own members and distributes the said amount as a loan to its own members and is not extending loan to outsiders and not functioning as a financial institution engaged in financial activities towards general public. He would submit that they being a Co-operative Society run by members, question of service tax does not arise on any charges collected from their members. He would draw our attention to the case law as decided by the Honourable High Court .....

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110. 5. Learned departmental representative would draw our attention to the findings recorded by the lower authorities. It is his submission that the appellant had registered under the provisions of Finance Act, 1994, and did not discharge the service tax liability on the various charges collected by them from their members. He would reiterate the findings of the lower authorities. As regards the appeal filed by the revenue, it is his submission that the first appellate authority has erred in re .....

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ed of. 6.2 Undisputed facts that transpires from the records are that appellant assessee is a society of members formed for the welfare of its members; they are accepting deposits from their members and interest is paid on the said deposits; members are given loan to tide over their financial difficulty; charged interest from the members. In order to process such loan applications, appellant assessee charges amounts as incurred for stationary, other expenses. These amounts, according to revenue, .....

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s undisputed. We find that the learned Counsel was correct in placing reliance on the judgement of the Honourable High Court of Gujarat in the case of Green Environment Services Co-op. Soc. Ltd. (supra). The entire judgement is reproduced as we find that the said judgement lays down a ratio in respect of the tax liability on the members of the Society. Petitioners have challenged the vires of Section 65(25a) and also 65(105)(zzze) of the Finance Act, 1994 as amended by Finance Act, 2005 to the e .....

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ty registered under the Gujarat Cooperative Societies Act and is engaged in the activity of maintaining a common effluent treatment plant at Vatva Industrial Estate, Ahmedabad. The petitioner No. 1 provides the facility of common effluent treatment to its members through the medium of cooperative society. The case of the petitioners is that such society was created solely with a purpose of providing effluent treatment facility commonly to its members who were the industrial establishments locate .....

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uty demand with penalty and interest as mentioned above. The petitioners have, therefore, separately challenged such order-in-original. 3. Learned counsel, Shri Shelat for the petitioners pointed out that initially the show cause notice was issued basing the recoveries on Section 65(19) of the Finance Act, 1994 however, realizing that such demand would not be maintainable under said provision, separate show cause notice was issued why the services provided by the petitioner No.1 society to its m .....

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services as defined under section 65(2Sa) of the Finance Act, 1994 from 16-6-05 onwards, a notice was issued to M/s. GES on 7-8-07 asking them to show cause as to why the service provided by them should not be categorized accordingly and service tax recovered thereon. In their written reply as well as during personal hearing, M/s. GES have made only two counter submissions viz. 1. The society does not have any independent existence or identity of its own. The members have come together for the .....

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lub or association service in the Finance Act, 1994 implies that a distinction is made between a club or association and its members. For legal purposes they are two separate entities. As far as their submission that clubs or associations as defined under the Finance Act, 1994 cover only recreational or social associations, 1 find no such restriction. 1, therefore, hold that the service provided by M/s. GES is actually a club or association service which is taxable from 16-6-2005. The Service T .....

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d. v. Union of India and Others reported in (2013) 64 VST 191 = 2013 (31) S.T.R. 645 (Guj.) The Court held as under : The learned advocate Mr. Ravani appearing for the Authorities i.e. Union of India, Commissioner of Central Excise, and Deputy Commissioner/Assistant Commissioner, Service Tax Cell, vehemently opposed the petitions and submitted that the Department has not accepted the aforesaid judgment. Learned advocate submitted that the Department has filed SLP before the Honble Apex Court an .....

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d that there is no question of mutuality because the club is a legal entity as it is incorporated under the Companies Act. This Court is unable to accept the submissions made by learned advocate for the Department because they were the very facts before the Division Bench for consideration and learned advocate for the Department could not set out any convincing grounds on which this Court should not follow the decision of the Division Bench of Jharkhand High Court. In the result, these petitions .....

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