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M/s Avadh Infratech Ltd. Versus Commissioner of Central Excise Surat-II, Surat

2016 (9) TMI 145 - AUTHORITY FOR ADVANCE RULINGS

Taxability of club membership fee – scope of the term service u/s 65(44) - is money / contribution received in form of shares and contribution is taxable as service as per the provisions of the Finance Act, 1994? - Held that: - provision of “service” by one person (service provider) to another person (service receiver) for the purpose of Section 65B (44) of the Finance Act, 1994 read with Sections 66B, 66D and Section 66E of the Finance Act, 1994 and accordingly, the Membership fee, Annual fee a .....

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ous club, is taxable as service as per the provisions of the Finance Act, 1994 - However, refundable security deposit should not be subjected to Service Tax as per provisions of the Finance Act, 1994. - Ruling No. AAR/44/ST-I/ 29 /2016 in Application No. AAR/44/ST-1/10/2016 - Dated:- 12-8-2016 - V.S. Sirpurkar, Shri S.S.Rana and Shri R.S.Shukla, JJ. For The Applicant : Shri Avinash Poddar, CA For The Department : Shri Govind Krishna Dixit (AR) Ruling M/S Avadh Infratech (hereinafter also referre .....

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nt of a luxurious club. Hence membership shall be granted to only those persons who are shareholders of the company. The part of share subscription is towards equity share capital and remaining towards development contribution fund and will be treated as a deposit in the company. 2. Applicant has raised following question before this Authority; Whether the money/contribution received by company against shares and deposit from the prospective members for raising funds which can be used for achiev .....

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or another person then there shall be a consideration; that anything or transaction to be covered under the definition of service shall satisfy all the above three things, otherwise it cannot be termed as service; that in the light of the facts of the present case, there is no activity, since receiving an amount against the issuance of shares by a company cannot be said to be against an activity; that if there is no activity then the very first condition remains unsatisfied and hence it cannot c .....

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h the proposed company is not providing any services at present against such Share Subscriptions other than issuance of Share Certificates, but in future, it is explicitly intended to provide club service and would clearly be rendering such service; that this is further explicit from the definition of consideration which also covers promised future actions as valid consideration as mentioned in Section 2(d) of Indian Contract Act, 1872, which reads as When at the desire of the promisor, the prom .....

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ely and they are nothing but club services; that where a company provides membership only to those persons from whom the company receives the amount in whatever mode of payment, the relationship between the company and members of club, should be considered as service‟ by one person (service provider) to another person (service receiver) for the purpose of Section 65B (44) read with Section 66B, 66D and Section 66E of Finance Act, 1994, therefore, such charges are to be considered as member .....

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purpose of Section 65B (44) of the Finance Act, 1994 read with Sections 66B, 66D and Section 66E of the Finance Act, 1994 and accordingly, the Membership fee, Annual fee and other charges received from members from time to time liable for Service Tax. While arriving at above conclusion, it was observed that the term activity has very wide connotation and it could be active or passive. Further, it includes provision of a facility provided by the club. In the present case, applicant proposes to pr .....

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