2024 (12) TMI 155 - AT - Service Tax

Club membership contributions exempt from service tax as members are not service recipients under established precedent

The Gujarat Institute of Housing & Estate Developers Versus C.S.T. – Ahmedabad

CESTAT Ahmedabad allowed the appeal partially, setting aside service tax demands under Club or Association Services and Event Management Services. The ... Levy of service tax - Event Management Services - Club or Association Services - Sponsorship Services - time limitation. Club or Association Services - HELD THAT:- With respect to demand of service tax of Rs. 14,40,514/- that the issue is squarely covered by the our own decision in case of THE SUMEL BUSINESS PARK 3 CO OPERATIVE SERVICE SOCIETY LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [2023 (10) TMI 740 - CESTAT AHMEDABAD] following the decision of Hon”ble Supreme Court in case of STATE OF WEST BENGAL & ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE & ORS. VERSUS M/S. RANCHI CLUB LTD. [2019 (10) TMI 160 - SUPREME COURT]. It is found from the facts appearing from the show cause notice and impugned order that the demand is in respect of the membership contributions received from the members of the appellant - the service tax demanded under the category of “Club or Association Services” is not tenable and liable to be set aside. Event Management Services - HELD THAT:- It is found from the facts of the case records in light of the submissions made by the appellant and findings and contentions of adjudicating authority contained in the impugned order that the issue is limited to the scope of the applicability of definition of event management services given in section 65 of the Act whereas it is unequivocal that the appellant is a host and not the service provider to the event host - Since the appellant is the host and not the event manager, the issue of the appellant is squarely covered by the above referred circular and accordingly the demand made by the revenue under the category of “Event Management” is not tenable - the demand under the category of “Event Management” is unsustainable and liable to be dropped. Demand confirmed u/s 73A in relation to sponsorship services - HELD THAT:- The same is not examined since the appellant has not pressed the ground effectively. Time limitation - HELD THAT:- There are great force in the challenge made by the appellant on limitation. Since the demands confirmed in impugned order under the category of “Club or Association Services” and “Event Management Services” are found unsustainable it is not required to enter further into this aspect. Impugned order is modified accordingly and the appeal filed by the appellant is partly allowed. Issues Involved:1. Demand of service tax under 'Club or Association Services.'2. Demand of service tax under 'Event Management Services.'3. Demand of service tax under 'Sponsorship Services' and section 73A.4. Challenge to the show cause notice on the ground of limitation.Issue-wise Detailed Analysis:1. Demand of service tax under 'Club or Association Services':The appellant contested the demand of Rs. 14,40,514/- under 'Club or Association Services,' arguing that as an incorporated body, it falls outside the scope of such services. The tribunal agreed, citing the decision in the case of 'State of West Bengal v. Calcutta Club Limited' and 'Sumel Business Park 2 Co-Operative Service Society v. CST.' It was established that the appellant, being an incorporated society, is excluded from the definition of 'Club or Association' under section 65(25a) read with section 65(105)(zzze) of the Finance Act, 1994. The tribunal highlighted the doctrine of mutuality, emphasizing that there is no service provision by one person to another, as the cooperative society and its members are considered one entity. Consequently, the demand under this category was set aside.2. Demand of service tax under 'Event Management Services':The appellant argued against the demand of Rs. 60,22,377/- under 'Event Management Services,' asserting that they were the event host and not the service provider. The tribunal referred to Circular No. 68/17/2003-ST, which clarifies that service tax is levied on the service provided for managing an event, not on the event itself. Since the appellant was the host and not the event manager, the tribunal found the demand unsustainable. The tribunal also relied on its decision in the case of 'CCE v. Saurashtra Cricket Association,' where a similar demand was rejected. Thus, the demand under this category was dropped.3. Demand of service tax under 'Sponsorship Services' and section 73A:The tribunal did not examine the demand under this category as the appellant did not effectively press the ground. Consequently, the demand of Rs. 11,65,440/- under section 73A was not interfered with and was to be adjusted against the payment made by the appellant, as referred to in the show cause notice.4. Challenge to the show cause notice on the ground of limitation:The appellant challenged the show cause notice on the ground of limitation. The tribunal recognized the merit in this challenge but did not delve further into this aspect, as the demands under 'Club or Association Services' and 'Event Management Services' were already found unsustainable.Conclusion:The tribunal set aside the demands of service tax under 'Club or Association Services' and 'Event Management Services,' along with the associated interest and penalties. However, it did not interfere with the demand under 'Sponsorship Services' and section 73A. The appeal was partly allowed, modifying the impugned order accordingly.