2008 (9) TMI 199 - AT - Service Tax

Appellate Tribunal Grants Waiver of Pre-Deposit in Service Tax Case

The Appellate Tribunal granted waiver of pre-deposit and stay of recovery for the service tax, interest, and penalty demanded from the appellants. The ... Demand of service tax on the commission received by the race club from book makers – demand under head “Support services of business or commerce” - another part of the demand is on the amount collected by the club from its members for use of amenities provided by the club - demand is under the head “Club or association service’ - appellants have made out prima facie case – following the ‘doctrine of mutuality’, waiver of pre deposit and stay of recovery granted Issues Involved:1. Demand of service tax on commission received by the race club from bookmakers.2. Demand of service tax on charges collected by the club from its members for amenities.3. Demand of service tax on charges paid by members for food and beverages.Analysis:Issue 1: Demand of service tax on commission received by the race club from bookmakersThe Appellate Tribunal, after examining the records and arguments from both sides, noted that the lower authority had demanded service tax on the commission received by the race club from bookmakers. The demand was made under the category of 'Support services of business or commerce' as per section 65(104c) of the Finance Act, 1994. However, the tribunal observed that the nature of service provided by the race club to bookmakers, as evident from a judgment of the Hon'ble Supreme Court, did not seem to fit within the definition of support services of business or commerce. The tribunal acknowledged the prima facie case made by the appellants against the service tax demand on the commission received from bookmakers. Therefore, the tribunal granted waiver of pre-deposit and stay of recovery regarding the service tax, interest, and penalty imposed on the appellants in this regard.Issue 2: Demand of service tax on charges collected by the club from its members for amenitiesAnother part of the demand was related to charges collected by the club from its members for amenities provided. This demand fell under the category of 'Club or association service.' The appellants argued that services rendered by a club to its members were in the nature of self-service, invoking the 'doctrine of mutuality.' The tribunal found merit in this argument and granted waiver of pre-deposit and stay of recovery for the tax levied on charges collected from club members for amenities. Additionally, a minor portion of the demand was on charges paid by members for food and beverages, where the doctrine of mutuality was also invoked by the appellants. The tribunal noted that the JCDR's reference to a Board's letter did not support the main demand of service tax in this regard.In conclusion, the Appellate Tribunal granted waiver of pre-deposit and stay of recovery for the amounts of service tax, interest, and penalty demanded from the appellants, considering the prima facie case made against the service tax demands on commission from bookmakers and charges collected from club members for amenities and food and beverages.