TaxTMI 
TaxTMI 
2021 (8) TMI 1311
X X X X Extracts X X X X
X X X X Extracts X X X X
....t functions on a no profit no loss basis and the events organized are only open to the members of the club. The Appellant club is established on mutuality concept and therefore any transaction between the club and the members cannot be construed to be between two different parties and hence no Service Tax can be levied on the said transactions. 3. The Appellant states that an investigation proceeding was conducted by the officers of the Anti-Evasion wing of the Service Tax Department as regards alleged nonpayment of Service Tax on the 'club or association services' being provided by the Appellant to its members. Accordingly, two Show Cause Notices for the period from 2006-07 to 2008-09 and from 2009-10 to 2010-11 were issued to the Appellant demanding the Service Tax on the income as reflected in the audited financial statements submitted by the Appellant to the Department. The Appellant contested the same on the grounds of mutuality as well as decisions of various High Courts regarding non applicability of Service Tax on members only club. However, the demand was confirmed by the Adjudicating authority along with interest and penalty for the period covered in the SCN's by a com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....subscription or any other amount." 60. With effect from 1st May, 2011, "club or association" was defined by Section 65(25aa) as follows: "club or association" means any person or body of persons providing services, facilities or advantages, primarily to its members for a subscription or any other amount but does not include- (i) anybody established or constituted by or under any law for the time being in force, or (ii) any person or body of person engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry, or (iii) any person or body of person engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature, or (iv) any person or body of persons associated with press or media. 61. Likewise, in Section 65(105)(zzze), the expression "or any other person" was added after the expression "to its members", thus making it clear that the tax net had now been widened so as to include non-members of clubs or associations as well. 62. Under Section 66, it was stated that there shall be levied the tax (refer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods, which is deemed to be sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. xxx xxx xxx Explanation 3. For the purposes of this Chapter;- (a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons; (b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons." 67. A new Section 66B was then introduced, which states as follows: "66B. Charge of service tax on and after Finance Act, 2012 There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen per ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 2008 w.e.f. 16-5-2008, introduced 6 new services. Further, the Finance (No. 2) Act, 2009 w.e.f. 1-9-2009 introduced 3 new services. Likewise, the Finance Act, 2010 w.e.f. 1-7-2010 vide Notification No. 24/2010-ST, dated 22-6-2010 introduced 8 new services. By the Finance Act, 2011 w.e.f. 1-5-2011 vide Notification No. 29/2011-ST dated 25-4-2011, 2 new services were brought within its net and at the same time, health service was exempted w.e.f. 1-5- 2011 by Notification No. 30/2011-ST dated 25-4- 2011. Thus, the service tax was on a total of 115 services. 20. Thus, right from 1994 till 2011, the mode adopted was to specify those services on which it was intended to levy service tax. However, Parliament by the Finance Act, 2012 w.e.f. 1-7-2012 has introduced altogether new system of taxation of services by making a paradigm shift. Now, the scheme of taxation of services is based on negative list of services. Therefore, earlier list of taxable services is no longer applicable. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the effect that a company incorporated under the Companies Act cannot be said to be "established" by that Act. What is missed, however, is the fact that a Company incorporated under the Companies Act or a cooperative society registered as a cooperative society under a State Act can certainly be said to be "constituted" under any law for the time being in force. In R.C. Mitter & Sons, Calcutta v. CIT, West Bengal, Calcutta (1959) Supp. 2 SCR 641, this Court had occasion to construe what is meant by "constituted" under an instrument of partnership, which words occurred in Section 26A of the Income Tax Act, 1922. The Court held: "The word "constituted" does not necessarily mean "created" or "set up", though it may mean that also. It also includes the idea of clothing the agreement in a legal form. In the Oxford English Dictionary, Vol. II, at pp. 875 & 876, the word "constitute" is said to mean, inter alia, "to set up, establish, found (an institution, etc.)" and also "to give legal or official form or shape to (an assembly, etc.)". Thus the word in its wider significance, would include both, the idea of creating or establishing, and the idea of giving a legal form to, a p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubs, there has to be an activity carried out by one person for another for consideration. We have seen how in the judgment relating to sales tax, the fact is that in members' clubs there is no sale by one person to another for consideration, as one cannot sell something to oneself. This would apply on all fours when we are to construe the definition of "service" under Section 65B(44) as well. 77. However, Explanation 3 has now been incorporated, under sub-clause (a) of which unincorporated associations or body of persons and their members are statutorily to be treated as distinct persons. 78. The explanation to Section 65, which was inserted by the Finance Act of 2006, reads as follows: "Explanation: For the purposes of this section, taxable service includes any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration:" 79. It will be noticed that the aforesaid explanation is in substantially the same terms as Article 366(29-A)(e) of the Constitution of India. Earlier in this judgment qua sales tax, we have already held that ....