2020 (3) TMI 152 - AT - Service Tax

Club membership subscriptions not subject to service tax under 'Club & Association Services' category

The Tribunal held that the appellant was not liable to pay service tax on membership subscriptions under the 'Club & Association Services' category. ... Club & Association Service - appellant was collecting membership subscription from its members but started paying service tax only w.e.f. 01.01.2009, but prior to that the membership subscription they have not paid service tax - demand of service tax - HELD THAT:- The issue has been dealt by the Hon’ble Gujarat High Court in the case of Federation of Surat Textile Traders Association vs. UOI [2015 (10) TMI 1582 - GUJARAT HIGH COURT] and in the case of Calcutta Club Limited [2019 (10) TMI 160 - SUPREME COURT] wherein it has been held that the services provided by the assessee to its members is not liable to pay service tax. As the issue has already settled that no service tax is payable on membership subscription paid by the members of the appellant for providing services by the appellant to its members - the appellant is not liable to pay service tax - appeal allowed - decided in favor of appellant. Issues:Appeal against service tax demand under 'Club & Association Service' category for the period 16.06.2005 to 31.12.2008.Analysis:1. Background:The appellant contested an order demanding service tax under the 'Club & Association Service' category for a specific period. The appellant had been providing various services and paying service tax on them. However, a discrepancy was found regarding the non-payment of service tax on membership subscriptions for the period 16.06.2005 to 31.12.2008, leading to the issuance of a show cause notice and subsequent demand confirmation.2. Appellant's Argument:The appellant argued that they should not be liable to pay service tax on membership subscriptions. They cited a judgment by the Hon'ble Apex Court in a relevant case, stating that services provided by the appellant to its members were not subject to service tax. Therefore, they sought the setting aside of the impugned order.3. Respondent's Position:On the contrary, the Learned Authorized Representative supported the impugned order demanding service tax on the membership subscriptions.4. Judicial Consideration:The core issue revolved around whether the membership subscriptions paid by the appellant's members should attract service tax under the 'Club & Association Services' category. This issue had been addressed by various High Courts and the Hon'ble Apex Court in different cases, including the Ranchi Club Ltd. case and the Federation of Surat Textile Traders Association case.5. Precedents and Observations:Notably, the Hon'ble Gujarat High Court and the Hon'ble Apex Court in the case of Calcutta Club Limited had previously ruled that services provided by clubs to their members were not subject to service tax. The judgment in the Calcutta Club Limited case emphasized that the Finance Act of 1994 did not intend to levy service tax on members' clubs in the incorporated form from 2005 onwards.6. Decision:Based on the settled legal position that no service tax was payable on membership subscriptions for services provided by the appellant to its members, the Tribunal held that the appellant was not liable to pay service tax. Consequently, the impugned order was deemed to have no merit and was set aside. The appeal was allowed with any consequential relief.This detailed analysis of the judgment showcases the legal intricacies involved in the case and the application of relevant precedents to arrive at a conclusive decision in favor of the appellant.