TMI Blog2018 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... und and proper - The exclusion as provided under the said Notification is applicable irrespective of the category. This very Bench has considered a similar situation in the case of Karur Vysya Bank Ltd. Vs. Commissioner of Central Excise, Trichy [2015 (2) TMI 525 - CESTAT CHENNAI] held that interest on instalment is not includible as it cannot partake the character of consideration for the services provided - demand withheld. Securitization income - Held that:- An amount showed in the balance sheet could neither be an income nor a consideration nor a payment or the gross amount charged in terms of Section 67(a) and (c) and hence, it is nothing but a financial adjustment in the nature of book entry - Further, when a member cancels membership, there is nothing for the appellant to claim as receivable and hence, the same gets adjusted by this notional amount since there is nothing on record to suggest that the appellant received any amount towards cancellation fees. Hence, the securitization income is not liable under service tax. Rental Income - Held that:- The adjudicating authority/Commissioner (Appeals) records that the assessee-appellant has not submitted any document wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property and in this regard, they have relied on the decision of the Hon ble High Court of Kerala in W.P. (C.) No. 20728 of 2015 (M); and by this, therefore, the appellant claims that it cannot be classified as a Club/Association. The other common issues involved in the above cases are: I. Interest on instalments, II. Securitization income reflected in the P L account, III. Rental income, IV. Exchange fees; and V. Revenue from telephone and fax. 2. Canvassing on the above issues, appellant further submitted that the above items would not qualify to be included under the Club or Association up to 01.05.2011. 3. Heard Shri. S. Thirumalai, Advocate along with Shri. Harish Bindumadhavan, Advocate for the appellants and Shri Arjun Raghavendra, DC (AR) and Shri. K. P. Muralidharan, AC (AR) for the Revenue. 4.1 The Ld. Advocates for the appellants submit at the outset that the appellant has already paid service tax on all the amounts collected, i.e., gross amounts collected from its members or customers for the various services provided, which is as per the terms of agreement/contract entered into between the appellant and the service recipients. They con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -ST) II. Securitization Income : (i) The appellant contends that it is a notional income from securitization which is recorded in the Books of Accounts in the year of securitization of audits, as per the Accounting Standard 9, issued by the Institute of Chartered Accountants of India. (ii) The amount reflected in the appellant s book reflects only the difference between borrowing rate of interest and the rate of interest charged for the purpose of Equated Monthly Instalments (EMIs) for those members who have availed deferred payment facility, (iii) Securitization income does not arise out of any independent transaction between the appellant and its bankers which is shown as in come from securitization per se. (iv) The Ld. Counsel took us through the financials for the year 2009-10 to substantiate their above contentions, more particularly, to the Note No. 4 to the dated financials. (v) The above item is not connected, in any way, as regards any provision of service to its member under Club/Association service. (vi) The above item is the result of an independent arrangement between the appellant and its bankers, wherein there is no service provider or se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o even indicate that any such rentals were collected from any of the members. On the other hand such rentals are collected only in respect of non-members. (iii) Without prejudice to the above, room rental was brought in as a separate entity under short term accommodation services and, therefore, it cannot be charged up to 01.05.2011. IV. Exchange Services : (i) This relates to services rendered by RCI to the members of the appellant. (ii) There is no separate agreement between RCI and the members of the appellant. (iii) The appellant only facilitates the exchange for its members to avail the services provided by RCI. (iv) The consideration received, therefore, not being in specific entry, is not liable for service tax. V. Telephone and Fax : (i) The facility of providing telephone and fax is not included in the membership fees or the annual subscription fees. (ii) The same is collected separately based on actual usage and, therefore, is required to be classified under Telecommunication Services. (iii) Service tax is paid to the Telecom Operators under the above category and the appellants merely collect usage charges from its members. (iv) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relevant. (vi) With regard to telephone and fax revenue, this is also in the nature of any other amount received from its members in relation to facilities or advantages and therefore is taxable. (vii) The appellant is only making available the telecommunication facilities provided by the Telecom Operators which is qualified as a facility or advantage provided to its members by the appellant. (viii) The appellant, having chosen to classify under respective heads to avail the benefit of abatements, which is otherwise not available to a club or association, and therefore the revenue generated under Telephone and Fax from its members is taxable. (ix) With regard to room rentals, the appellant collects additional fees for accommodating additional guests of its members. (x) Even with regard to accommodating members, they are given restricted accommodation in terms of number of days and if the numbers increase, then they would be charged rentals. (xi) Complete details of room rentals were not furnished by the appellant and therefore there would be a possibility that the members might have paid even room rentals for overstaying or for accommodating their guests, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but which was detected only on the basis of intelligence received. (xxii) Further, the appellant, having registered itself under club or association service, should have included the above items in their taxable value, which the appellant having not done, the same amounts to suppression and, therefore, proviso to Section 73 (1) was invoked, demanding service tax for the extended period of limitation. 6. We have heard both sides, considered the rival contentions, perused the documents placed on record and have gone through the various decisions referred to during the course of hearing. 7.1 We find that there is no difference between a member being upfront and a member availing instalment facility and there is no finding from the lower authority that the benefits of membership accruing to either of the aforesaid members vary. We thus find that the interest on instalments is only a financial arrangement for the deferred payment which is only to set-off any financial loss on account of deferred payment and that this kind of interest is not a taxable entity under the tax net. Hence, we find that the denial and the reason attributed for denying applicability of Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts members, for a subscription or any other amount, but does not include (i) Any body established or constituted by or under any law for the time being in force; or (ii) Any person or body of persons engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry; or (iii) Any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature; or (iv) Any person or body of persons associated with press or media; ] [Emphasis added] 7.4 A perusal of the same makes it clear that the provision of services/facilities or advantages to members for a subscription or any other amount, should be read in ejusdem generis and hence, any other amount‛ can only be of the same class of subscription . A subscription is paid by all of the members, whereas any other amount not being paid by all but only by such members who opt for instalments and hence the logic or arguments of the Revenue cannot be accepted. 8.1 With regard to the securitization income, we are not able to subscribe to the findings of the lower authority or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant. We, therefore, set aside this issue to the file of adjudicating authority in the above terms. 10. With regard to the Exchange Services offered by the appellant for facilitating its members from availing services of RCI, we find that such facilitation is possible only in respect of members. In other words, the service of facilitation could be availed only by virtue of being a member and not if such person is an outsider. Hence, we find that this activity tantamounts to an activity of service provided to a member under mutuality concept and hence, not taxable, for which we draw support from the the judgments of the Hon ble High Court of Jharkhand in the case of Ranchi Club Ltd. Vs. Chief Commr. of C. Ex. S.T., Ranchi Zone reported in 2012 (26) S.T.R. 401 (Jhar.) and Hon ble High Court of Gujarat in the case of Sports Club of Gujarat Ltd. Vs. U.O.I. reported in 2013 (31) S.T.R. 645 (Guj.). The appeal on this score is therefore treated as allowed. 11.1 With regard to the provision of service of telephone and fax, admittedly the same is not included in the membership fees since it depends on the availment or otherwise of the above services. If the facility is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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