TaxTMI 
TaxTMI 
2024 (1) TMI 519
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....x, Hyderabad invoking extended period of limitation, wherein it was, inter alia, alleged that: i) The Appellant has been providing services as an association, to its members for a subscription or other amounts, which are the receipts of the Appellant during the relevant period; ii) All receipts of the Appellant are towards the provision of services as an association to its members, and the same is reflected as incomes in the Income and Expenditure Statements in each financial year; iii) In terms of Circular No.175/01/2014-ST dt.10.01.2014, all the amounts collected by the Appellant are liable to service tax, since the Appellant has collected amounts beyond the threshold prescribed in the Mega Exemption notifications, per member, per month. 3. Based on the above allegations, the Appellant was directed to show cause as to why an amount of Rs.53,25,891/- being the service tax amount for the period from 2011-12 to 2015-16 should not be demanded in terms of proviso to Sec 73(1) of the Finance Act with interest and further penalty was proposed under Sec 76, 78, 70, 77(2) of the Act. 4. The SCN was contested by the Appellant on various grounds by filing reply and thereafter, the A....
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....e tax law. 13. It is submitted that since the Appellant has been formed for the mutual benefit of its members, the service provided by the Appellant to its members cannot be treated as transaction between two different persons, in order to attract levy of service tax, during the period in dispute. This issue is no longer res integra in terms of the decision of the Hon'ble Supreme Court in the case of State of West Bengal vs Calcutta Club Ltd [2019 (29) GSTL 545 (SC)]. 14. Learned Counsel further urges that admittedly, there being element of mutuality and there being no commercial activity undertaken by the Appellant and the Appellant being under bonafide belief that their activity is not exigible to service tax, and there being no element of suppression or fraud, the extended period of limitation is not invokable and the Appeals are fit to be allowed on this score alone. It is evident on the face of record that the taxable category of "Club or Association service" had been introduced prior to the disputed period. However, Revenue has issued SCN only after issue of Circular No.175/01/2014-ST dt.10.01.2014 by the Board. Accordingly, he prays for allowing the Appeal with consequenti....
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....Etc., (2010) 4 SCC 378 (in particular paragraphs 10, 14 and 32 thereof) and CIT, Kanpur and Anr. v. Canara Bank, (2018) 9 SCC 322 (in particular paragraphs 12 and 17 therein), 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 s....
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....as Sales Tax is concerned applies on all fours to Service Tax; as, if the doctrine of agency, trust and mutuality is to be applied qua members' clubs, 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 subclause (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 te....