Service tax on club services rejected as the court upheld reliance on an earlier ruling and treated unconstitutionality as operating in rem.

Service tax was not leviable on club services provided to members under the relevant Finance Act provisions, because the factual matrix matched the earlier ruling on the same taxability issue and the Tribunal was justified in applying that ratio. The Court also stated that a declaration of unconstitutionality operates in rem, not merely inter partes, so the earlier finding on invalidity could be relied on beyond the original litigants. On that basis, the Tribunal's order setting aside the departmental demand was upheld.

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Issues: Whether service tax was leviable on services provided by a club to its members, and whether the Tribunal was justified in relying on the earlier judgment holding the relevant provisions ultra vires.

Analysis: The dispute concerned levy under Section 73(1) of the Finance Act, 1994 on club services falling within Section 65(25a) and Section 65(105)(zzze) of the Finance Act, 1994. The Court held that the factual background was similar to the earlier decision on the same taxability question, and that the Tribunal was justified in applying that ratio. It further held that a declaration of unconstitutionality operates in rem and not merely between the parties before the court.

Conclusion: Service tax was not leviable on the club services in question, and the Tribunal's order setting aside the departmental demand was upheld.

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