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Gondwana Club Versus Commissioner of Customs & Central Excise, Nagpur

2016 (3) TMI 900 - CESTAT MUMBAI

Demand of Service tax along with interest on the unpaid portion - Rendering of ‘business support services' and ‘club or association service - Appellant is in receipt of various amounts from its members and other persons for use of sporting, recreational and infrastructural facilities of the club in addition to entrance fees and periodical subscription for the period from April 2005 to September 2009 and sought to be taxed as ‘club or association service' as per section 65(105) (zzze) of Finance .....

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of the receipts as quid pro quo for an identified service, demand of tax on amount transferred from an individual to an entity merely because the individual happens to be a member, on the one hand, and the recipient happens to be club/association on the other, does not meet the test of having rendered taxable service. Also, interest, if any, on delayed payment shall be determined and paid. Penalty under Section 78 ibid is also modified to the amount of tax that is confirmed and penalty under Sec .....

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8377; 60,81,315/- as tax for rendering of business support services' and club or association service' along with interest on the unpaid portion besides imposition of penalty under section 76, 77 and 78 of Finance Act, 1994. 2. It appears that the appellant is in receipt of various amounts from its members and other persons for use of sporting, recreational and infrastructural facilities of the club in addition to entrance fees and periodical subscription amounting to ₹ 4,88,76,021/ .....

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5 (105) (zzzq) of Finance Act, 1994 as support services of business or commerce'. Yet another demand related to recoveries of ₹ 91,574/- from staff members who were provided with accommodation for the period from April 2005 to September 2009 that Revenue claims was liable to tax under section 65(105) (zzzz) of Finance Act, 1994 for rendering renting of immovable property service'. Appellant having registered themselves as provider of club or association service' paid ₹ 3, .....

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n amount of ₹ 27,787/-. 4. We notice from the record of proceedings that there is a disjointed approach in taxing the appellant. Tax demands should be characterized by a certainty which is found to be lacking in these proceedings; the attempt appears to have been to tax the receipts rather than demand taxes on taxable services. The nature of the transaction that is sought to be taxed does not appear to have been examined with reference to section 65 of Finance Act, 1994. Exacerbating this .....

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provider of club or association service' and, claiming that it was not rendering any taxable service other than that of using the caterers for making food facilities available to its members, paid tax on receipts under the head of club or association service'. The adjudicating authority, while determining that the entire receipts of the appellant were liable to tax, discovered that the consideration from different entities were attributable to multiple services. Notwithstanding this fin .....

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ax is not equitable. Moreover, learned Counsel for appellant has drawn attention to circular no. 58/07/2003-CX (ST) dated 20 th May 2003 of the Central Board of Excise & Customs instructing the field formations to be flexible in the matter of head of tax cited for remitting tax. Accordingly, in the light of this circular, reference to inappropriate accounting code cannot be held to the detriment of the appellant and due discharge of tax on the receipts from the catering contracts must be tak .....

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s provided by the appellant. The amount of tax that has been paid on these receipts is affirmed as being in accordance with the Finance ACt, 1994. 7. Some of the staff employed by the appellant have been subjected to recovery of amounts towards accommodation provided to them. It is on record that appellant rendered tax on the amounts collected by them during 2007-08 and, taking note of this, the impugned order has determined a small amount as taxable for the subsequent period. The contractual pr .....

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Union of India [2013 (31) STR 645 (Guj)] and Green Environment Services Co-op Society Ltd [2015 (37) STR 961 (Guj)] and of the Tribunal in Matunga Gymkhana v Commissioner of Service Tax, Mumbai [2015 (38) STR 407 (Tri-Mumbai)] to dispute the finding of tax liability on the receipts from its members. Drawing a distinction between members' clubs and proprietary clubs, these decisions have placed reliance on the exclusion from tax arising from mutuality' as enunciated by the Hon'ble Su .....

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e is a member. 9. We have heard the learned Counsel for appellant and the learned Authorized Representative. In view of the above cited decisions of the Hon'ble High Court of Gujarat, the demand of tax on receipts from members cannot sustain. We also find that the attempt in the proceedings before the lower authority has been to tax these receipts merely because appellant is a club and because of the existence of section 65 (105) (zzze) in Finance Act, 1994 which is as below: Taxable Service .....

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taxability can arise only to the extent that each transaction between the member and the club can meet the test of conformity with section 65(105)(zzze) supra. 10. A members' club, by its very composition, is a grouping of individuals who have chosen to be members of a particular club for fulfillment of certain human needs - social, sporting, recreational etc. - that cannot be fulfilled except in such organized collectives. Mere aggregation is not provisioning of a service. Access to such a .....

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assets that, upon the contingency of disaggregation, will devolve on its constituents. The entrance or joining fee represents merely the present value of such assets and not the consideration for service that the member of may obtain from the club. The founders of the institution have, assuredly, made financial contributions to bring it into being and those who join subsequently will, in equity, be required to make their contributions too. Pooling of finances in this manner for a common purpose .....

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