Whether a service which is provided by a club to its members is liable to service tax?

We have been approached several times on the captioned issue citing the decisions of honorable tribunal (CESTAT) and Calcutta High court.

Honorable tribunal has held that any service provided to a member by a club or association us not liable to service tax, in the matter of M/s BREACH CANDY SWIMMING BATH TRUST versus COMMR.OF C. EX., MUMBAI-I reported in  2007 -TMI - 842 - CESTAT, MUMBAI.

Earlier in the matter of M/s Saturday Club Limited v. ACST - 2005 -TMI - 206 - HIGH COURT CALCUTTA, honorable Calcutta High Court has held that, Club is not liable to service tax as a "Mandap Keeper".

Here, It is pertinent to mention, with due respect, that all the decisions belong to the disputes prior to 16-06-2005. Therefore, with regards to the issues on or after 16-06-2005, the ratio of the above decisions may not help to get rid of service tax liability.

On or after 16-06-2005, the Finance Act, 2005 has amended the provisions of service to make services of club or association liable to service tax.

Also See: - Ready Reckoner on Service Tax and Membership of Club or Association

 

 

Club services taxability: amendment subjects services provided by clubs or associations to service tax, overriding prior precedents. The question is whether services provided by clubs or associations to members are subject to service tax. Earlier tribunal and high court rulings held such member services were not taxable, but those decisions predate a 2005 legislative amendment. The 2005 amendment brought services of club or association within the ambit of service tax for transactions arising after the amendment, thereby changing the tax treatment of member-provided services and overriding earlier precedents for post amendment cases.