TMI Blog2020 (1) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... he above judgment only on 03.10.2019. It is therefore not necessary to deal with the counter filed by the respondent. The Hon'ble Supreme Court has considered the provisions of the Finance Act, 1994, as it stood prior to and after passing of the Finance Act, 2005 and after 2012 after the advent of negative list with the introduction of the definition of service in section 65B (44) of the Finance Act, 1994 vide Finance Act, 2012 w.e.f. 01.07.2012 Following the above decision of the Hon'ble Supreme Court in the above case, the present Writ Petition deserves to be allowed - Petition allowed - decided in favor of petitioner. - W.P.No.8246 of 2016 And W.M.P.No.7351 of 2016 - - - Dated:- 17-12-2019 - Mr. Justice C. Saravanan For the Petitioner : Mr.Suhrith Parthasarathy For the Respondent : Mr.A.N.R.Jaya Prathap Senior Standing Counsel ORDER Heard learned counsel for the petitioner and the respondent. 2.The petitioner was issued with the following two Show Cause Notices:- Sl. No Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.On the other hand, the clubs contented that there was no provision of service by applying principle of mutuality. Since the department kept insisting on payment of service tax, the petitioner obtained service of registration and started to collect the service of tax for the use of its rooms alone from July 2005 and continued until 31.03.2014 and paid service tax. 9. Since no service tax was paid for the services provided to its members, the petitioner was issued the aforementioned two Show Cause Notices. These Show Cause Notice culminated in the impugned order. 10.Instead of filing an appeal before the Appellate Commissioner, the petitioner has filed the present writ petition in view of the decision of the Gujarat High Court in Sports Club of Gujarat Ltd vs Union of India, 2013 (31) STR 645 and the Jharkhand High Court in Ranchi Club Ltd vs Chief CCE and ST, 2012 (26) STR 401. 11.These decisions had held that no service tax was payable for the services rendered by the clubs or association to its members applying the principle of mutuality. 12.In Sports Club of Gujarat Ltd vs Union of India, 2013 (31) STR 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble Supreme Court is reproduced below for reference:- 80. With this background, it is important now to examine the Finance Act as it obtained, firstly from 16th June, 2005 uptil 1st July, 2012. 81. The definition of club or association contained in Section 65(25a) makes it plain that any person or body of persons providing services for a subscription or any other amount to its members would be within the tax net. However, what is of importance is that anybody established or constituted by or under any law for the time being in force, is not included. Shri Dhruv Agarwal laid great emphasis on the judgments in DALCO Engineering Private Limited v. Satish Prabhakar Padhye , (2010) 4 SCC 378 (in particular paragraphs 10, 14 and 32 thereof) and CIT, Kanpur v. Canara Bank , (2018) 9 SCC 322 (in particular paragraphs 12 and 17 therein), to the effect that a company incorporated under the Companies Act cannot be said to be established by that Act. What is missed, however, is the fact that a Company incorporated under the Companies Act or a cooperative society registered as a cooperative society under a State Act can cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is being the case, we accept the argument on behalf of the Respondents that incorporated clubs or associations or prior to 1st July, 2012 were not included in the service tax net. 83. The next question that arises is - was any difference made to this position post 1st July, 2012? 84. It can be seen that the definition of service contained in Section 65B(44) is very wide, as meaning any activity carried out by a person for another for consideration. Person is defined in Section 65B(37) as including, inter alia , a company, a society and every artificial juridical person not falling in any of the preceding subclauses, as also any association of persons or body of individuals whether incorporated or not. 85. What has been stated in the present judgment so far as sales tax is concerned applies on all fours to service tax; as, if the doctrine of agency, trust and mutuality is to be applied qua members' clubs, there has to be an activity carried out by one person for another for consideration. We have seen how in the judgment relating to sales tax, the fact is that in members' clubs there is no sale by one per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether incorporated or not , uses the expression a body of persons when juxtaposed with an unincorporated association . 91. We have already seen how the expression body of persons occurring in the explanation to Section 65 and occurring in Section 65(25a) and (25aa) does not refer to an incorporated company or an incorporated cooperative society. As the same expression has been used in Explanation 3 post-2012 (as opposed to the wide definition of person contained in Section 65B(37)), it may be assumed that the legislature has continued with the pre-2012 scheme of not taxing members' clubs when they are in the incorporated form. The expression body of persons may subsume within it persons who come together for a common purpose, but cannot possibly include a company or a registered cooperative society. Thus, Explanation 3(a) to Section 65B(44) does not apply to members' clubs which are incorporated. 92. The expression unincorporated associations would include persons who join together in some common purpose or common action see ICT, Bombay North, Kutch and Saurashtra, Ahmedabad v. Indira Balkrishna , (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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