TaxTMI 
TaxTMI 
2020 (9) TMI 433
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....tion Act, 1860. It was incorporated to represent the Information and Communication Technology sector and professes to offer a wide range of programs and services to its members across the country such as organizing conferences, seminars, training sessions, events and workshop; policy representation; domestic and international marketing support; technology initiatives; publishing industry related information in targeted publications; networking opportunities; and many other industry- directed services. It is also registered as a charitable institution under section 12A of the Income Tax Act, 1961. 3. Two show cause notices dated April 22, 2013 and May 15, 2014 were issued to the respondent covering the period April 2007 to March 2012 and April 2013 to March 2013 respectively proposing to demand service tax under the category of 'club or association services' and 'business exhibition service' on various heads of income broadly categorized under sponsorship from members for seminars and workshops, sale of publications, grants received from Government and European Commission and miscellaneous receipts. The aforesaid two cause notices were adjudicated upon by a common order dated July....
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....ers due to the principle of neutrality; and iv. Service tax cannot be levied on every income reflecting in the financial statements of an assessee without satisfaction of the conditions mentioned in section 65B(44) of the Finance Act, 1994 [The Act]. 7. The submissions advanced by the learned Authorized Representative of the Department and the learned Counsel for the Respondent have been considered. 8. As noticed hereinabove, the periods involved in the two show cause notices are from April, 2007 to March, 2012 and April 2012 to March, 2013. 9. Section 65(25a) of the Act that was inserted w.e.f. June 16, 2005 defines 'club or association' and is as follows:- "65 (25a) 'club or association' means any person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include- (i) any body established or constituted by or under any law for the time being in force; or (ii) any person or body of persons engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry; or (iii) any person or body of persons engaged in any activity having objectives which are....
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....able. Instead two things have happened. First, the term "service" is defined whereas there was no definition of "service" in the Finance Act, 1994 which position remained till 2012. Earlier, each individual service on which tax was levied (known as taxable service) was defined. Secondly, the definition of "service" given now contains a negative list which is contained in Section 66-D of the Act. In other words, it specifically excludes certain transactions from the ambit of service. Thus, those transactions which are specifically excluded are not liable for service tax. Any other kind of service which qualifies the definition of "service" contained in the Act would be exigible to service tax." 15. The Supreme Court in Calcutta Club Ltd. examined the definition of 'club or association' as contained in section 65(25a) of the Act from June 16, 2005 up to July 1, 2012 and the relevant portion is reproduced below:- "72. The definition of "club or association" contained in section 65(25a) makes it plain that any person or body of persons providing services for a subscription or any other amount to its members would be within the tax net. However, what is of importance is that anybod....
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.... the form of a document. If we construe the word "constitute" in the larger sense, as indicated above, the difficulty in which the learned Chief Justice of the Calcutta High Court found himself, would be obviated inasmuch as the section would take in cases both of firms coming into existence by virtue of written documents as also those which may have initially come into existence by oral agreements, but which had subsequently been constituted under written deeds." 73. It is, thus, clear that companies and cooperative societies which are registered under the respective Acts, can certainly be said to be constituted under those Acts. This being the case, we accept the argument on behalf of the Respondents that incorporated clubs or associations or prior to 1st July, 2012 were not included in the service tax net." 16. The Supreme Court in the aforesaid decision in Calcutta Club Ltd also examined the definition of 'club or association' after July 1, 2012 and the relevant portion is reproduced. "75. It can be seen that the definition of "service" contained in section 65B(44) is very wide, as meaning any activity carried out by a person for another for consideration. "Person" is de....
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..... 81. When the scheme of service tax changed so as to introduce a negative list for the first-time post 2012, services were now taxable if they were carried out by "one person" for "another person" for consideration. "Person" is very widely defined by section 65B(37) as including individuals as well as all associations of persons or bodies of individuals, whether incorporated or not. Explanation 3 to section 65B(44), instead of using the expression "person" or the expression "an association of persons or bodies of individuals, whether incorporated or not", uses the expression "a body of persons" when juxtaposed with "an unincorporated association". 82. We have already seen how the expression "body of persons" occurring in the explanation to section 65 and occurring in section 65(25a) and (25aa) does not refer to an incorporated company or an incorporated cooperative society. As the same expression has been used in Explanation 3 post-2012 (as opposed to the wide definition of "person" contained in section 65B(37)), it may be assumed that the legislature has continued with the pre-2012 scheme of not taxing members' clubs when they are in the incorporated form. The expression "b....