TMI Blog2020 (9) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 65(25a) and 65(25aa) to mean any person or body or persons providing service. The expression body of persons cannot be possibly include persons who are incorporated entities, as such entities have been expressly excluded under sections 65(25a)(i) and 65(25aa)(i) as any body established or constituted by or under any law for the time being in force . Body of persons , therefore, would not include a body constituted under any law for the time being in force. Thus, companies and cooperative societies, prior to July 1, 2012, which were registered under respective Acts, would be constituted under those Acts. Incorporated clubs or associations, therefore, prior to July 1, 2012 which were registered under Acts, would be constituted under those Acts. Incorporated clubs or associations, therefore, prior to July 1, 2012 were not included in the service tax net. After July 1, 2012, also the situation does not change for the reason that Explanation 3 uses the same expression. It is not in dispute that in the present case the respondent has been incorporated under the provisions of the Societies Registration Act. Thus, even if the receipts under club or association serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were adjudicated upon by a common order dated July 10, 2015. The demand of service tax was confirmed only in relation to the income from the members on account of compilation, updating and printing of the directory under the head business auxiliary service . The demand on other receipts were dropped holding that the receipts from government and non- government grants were not in the nature of a consideration for providing any service to the grantors; the receipt from sale of publications was considered to be a sale transaction and so not susceptible to service tax and service tax could be levied on the receipt from sponsorship fee on a reverse charge mechanism from the sponsors. 4. The Department has filed this Appeal against that part of the order of the Principal Commissioner that drops the demand. 5. Shri Vivek Pandey, learned Authorized Representative of the Department made the following submissions: i. The Adjudicating Authority went beyond the show cause notice in confirming a portion of the demand under business auxiliary service instead of membership of club or association service ; ii. The Adjudicating Authority has not given reasons for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. 10. The taxable service under section 65(105)(zzze) of the Act means : 65(105) (zzze) taxable service means any service provided or to be provided to its member, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount. 11. The definition of club or association contained in section 65(25a) of the Act was amended w.e.f. May 1, 2011 and the amended definition is reproduced below:- 65(25aa) club or association means any person or body of persons providing services, facilities or advantages, primarily to its 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, horti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 and Ors. Etc. (2010) 4 SCC 378 (in particular paragraphs 10, 14 and 32 thereof) and CIT, Kanpur and Anr. 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 certainly be said to be constituted under any law for the time being in force. In R.C. Mitter Sons, Calcutta v. CIT, West Bengal, Calcutta (1959) Supp. 2 SCR 641, this Court had occasion to construe what is meant by constituted under an instrument of partnership, which words occurred in section 26A of the Income Tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 75. 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 sub-clauses, as also any association of persons or body of individuals whether incorporated or not. 76. 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 person to another for consideration, as one cannot sell something to oneself. This would apply on all fours when we are to construe the definition of service under section 65B(44) as well. 77. However, Explanation 3 has now been incorporated, under sub-clause (a) of which unincorporated associations or body of persons and their member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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. 83. 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 (1960) 3 SCR 513 at page 519-520. The expression as the case may be would refer to different groups of individuals either bunched together in the form of an association also, or otherwise as a group of persons who come together with some common object in mind. Whichever way it is looked at, what is important is that the expression body of persons cannot possibly include within it bodies corporate. 84. We are therefore of the view that the Jharkhand High Court and the Gujarat High Court are c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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