2016 (12) TMI 1697 - AT - Service Tax

Appellate tribunal quashes service tax liability for 'Club or Association Service' period, citing legal precedents.

The appellate tribunal set aside the order confirming service tax liability against the appellant for the period 16.06.2005 to 31.03.2011 under the ... Liability of service tax - Club or Association Service - transaction is between the club and members of the said club - Held that: - The tax liability of the appellant during the impugned period cannot be legally sustained - reliance placed in the case of SPORTS CLUB OF GUJARAT LTD Versus UNION OF INDIA & 3 [2013 (7) TMI 510 - GUJARAT HIGH COURT], where it was held that Section 65(25a), Section 65(105) (zzze) and Section 66 as incorporated / amended to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, to be ultra vires - appeal allowed - decided in favor of appellant. Issues:1. Service tax liability of the appellant under the category of 'Club or Association Service' for the period 16.06.2005 to 31.03.2011.2. Applicability of Service Tax when the transaction is between the club and members of the said club.3. Legal sustainability of the tax liability based on High Court decisions.4. The impact of pending matters before the Honorable Supreme Court on the case.Analysis:1. The appeal addressed the service tax liability of the appellant under the category of 'Club or Association Service' for the period between 16.06.2005 to 31.03.2011. The original authority confirmed the service tax liability against the appellant and imposed penalties based on seven different show cause notices.2. The appellant's counsel argued that there should be no Service Tax when the transaction occurs between the club and its members. This argument was supported by decisions from various High Courts, including the Sports Club of Gujarat Limited case, Ranchi Club Ltd case, Green Environment Services Coop Society Ltd case, Federation of Indian Chambers of Commerce & Industry case, and NASSCOM case.3. The appellate tribunal considered the legal sustainability of the tax liability in light of the decisions from the Honorable High Courts of Jharkhand and Gujarat. The tribunal noted that the pronouncements of these High Courts, along with the Tribunal's decision in the NASSCOM case, established a precedent that the tax liability during the impugned period could not be legally sustained.4. The Department argued that the matter was pending before the Honorable Supreme Court, but no stay was reported. Despite this, the tribunal, after hearing both sides and reviewing the appeal records, concluded that the impugned order could not be sustained based on the settled legal decisions. Therefore, the tribunal set aside the order and allowed the appeal, following the precedents set by the High Courts and the Tribunal.