TaxTMI 
TaxTMI 
2009 (9) TMI 561
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....lities exclusively for its members and their guests and recoups expenses. The petitioner is therefore, a mutual undertaking which does not earn any profit as understood in commercial parlance and does not carry on any trade or business. In legal parlance, the element of mutuality in the affairs and dealing of the club exists. The petitioner club is having open lawn (space) and the said lawn of the club is provided for marriage ceremonies and other social functions to the members on charges. 3. The service tax has been imposed upon the service rendered by the 'Mandap Keeper' to its clients and as insisted upon by the officers of the respondent No. 1 the petitioner has got themselves registered under provision of Finance Act, 1994 for the purpose of making the payment of service tax as 'Mandap Keeper' provided by the petitioner to its members and started payment of service tax as per the provisions of Finance Act, 1994. 4. The petitioner challenges the action of the respondents in holding the petitioner club liable to pay service tax beign a 'Mandeep Keeper within the contents of provision of the Finance Act, 1994. 5. Mr. Nanavati learned Sr. counsel for ....
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.... Government has also amended the Finance Act, by introducing the Finance (Amendment) Act, 2005, which came into force w.e.f. 16.06.2005. Therefore, the submissions canvassed by the petitioners have been indirectly endorsed by the Union Government as well. Hence, the impugned action of the respondents is illegal and bad in the eyes of law and deserves to be quashed and set aside. 7. Mr. Y. N. Ravani, learned standing counsel appearing on behalf of the respondent-Central Government, has submitted that the Memorandum of Association of the petitioners include the leasing or hiring of any movable or immovable property as one of its object. The kind and scope of services, which attract service tax levy, have been well-defined in the service tax legislation. The petitioners provide services in relation to the use of its lawns, etc. to its members and therefore, it is covered by the scope of 'taxable service' provided by a 'mandap keeper' within the meaning of Section 65(20) of the Act. 7.1 Learned counsel has further submitted that the terms 'mandap' and 'mandap keeper', as defined in the Finance Act, 1994 describe the scope and nature of levy, the ta....
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.... amended by the Finance Act, 1997 the service provider is expected to collect tax from the client utilizing its services. Amongst other services, the Finance Act, 1997 made the services rendered by mandap keepers liable to service tax. 10. Looking to the facts of the case, a reference to some of the amended provisions of Section 65 of the Finance Act, 1994 are required to be considered. It reads as under; (19) "Mandap" means any immoveable property as defined in Section 3 of the Transfer of Property Act, 1882 and includes any furniture, fixtures, light fittings and floor coverings therein let out for consideration for organizing any official, social or business function; (20) "Mandap Keeper" means a person who allows temporary occupation of a mandap for consideration for organizing any official, social or business function. (41)(p) "Taxable Service" means any service provided to a client, by a mandap-keeper in relation to the use of a mandap in any manner including the facilities provided to the client in relation to such use and also the services, if any, rendered as a caterer." 11. A conjoint reading of the above provisions of law goes to show that the services pro....
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....ourt is as to whether the members of the clubs fall under the definition of client or not so as to attract levy of tax under the provisions of the Act. 14. To decide the same, we shall refer to the meaning of the term client as defined in some of the leading dictionaries. In Concise Oxford Dictionary, the word client is defined as a person using the services of a lawyer, architect, social worker or other professional person. Wharton's Law Lexicon, 1976 Edn. Defines client as a person who seeks advice of a lawyer or commits his cause to the management of one, either in prosecuting a claim, or defending a suit in a Court of justice. In the English Solicitors Act, 1870, (S.3) client is defined as Client includes any person who, as a principal or on behalf of another person, retains or employs, or is about to retain or employ, a solicitor; and any person who is or may be liable to pay the solicitors Bill of costs, for any services, fees, costs, charges, or disbursements. In Stroud's Judicial Dictionary, it is defined as any person who, as a principal or on behalf of another person, retains or employs or is about to retain or employ, a solicitor. In Corpus Juris Secondum, it....
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....user of the premises along with the service tax. Therefore, it cannot be held that the members club is covered by the Finance Act, 1994 for imposition of service tax to use its space as mandap. 19. For the applicability of service tax, there should be existence of two sides/entities, viz. transaction as against consideration. In a members club there is no question of two sides. Members and Club both are the same entity. One may be called as principal when the other may be called as agent. Therefore, such transaction, in between themselves, cannot be recorded as income, sale or service. 20. By relying upon the bye-laws of the clubs, a ground is sought to be raised that since the clubs also take on lease or hire moveable or immoveable property for its different purposes, they are liable to pay service tax. We have gone through the bye-laws and also the relevant rules and regulations of the Clubs and do not find any provision that the properties and/or the facilities, those are being made available by the members to themselves could be extended to third parties for any consideration whatsoever. 21. The members of the clubs are allowed exclusively to participate in the service....