TaxTMI 
TaxTMI 
2025 (6) TMI 188
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.... members. It claims that it mistakenly paid an amount as service tax under „club or association‟ services as defined under section 65(25aa) of the Finance Act, which tax was not payable on the basis of principle of mutuality of interest. Accordingly, a refund claim of Rs. 21,04,836/- was filed by the appellant. This refund claim was rejected by the Assistant Commissioner by order dated 17.07.2015 on merits and it was also held that the appellant would not be entitled to refund on the ground of unjust enrichment. 3. An appeal was filed by the appellant against this order before the Commissioner (Appeals), which appeal was rejected by the order dated 21.03.2018 as the refund claim was found to be not admissible on merits. The relevant portions of the order passed by the Commissioner (Appeals) are reproduced below: "6.1. Now, I examine the case of refund on merit. I find that the appellant has contended that the services rendered by a club to its members is covered by the principle of mutuality and so the same cannot be considered as provision of service from one legal entity to another, hence services rendered by a club to its members are not leviable to servi....
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....ed that company and members are two distinct person in terms of provisions of "service" and definition of "person" as defined under Section 65B(44) and 65B(37) as discussed above. Therefore, the principles of mutuality are not applicable to the present issue." (emphasis supplied) 4. To support the aforesaid view, the Commissioner (Appeals) placed reliance upon the decision of Authority for Advanced Ruling in Emerald Leisures Ltd. 2016 (41) S.T.R. 321 (A.A.R.) and Avadh Infratech Ltd 2016 (45) S.T.R. 580 (A.A.R.). 5. The Commissioner (Appeals) also distinguished the decisions relied upon by the appellant for the following reasons: "6.4 With regard to Tribunal‟s decisions passed in favour of appellant, I find that these are related to the activities undertaken by the appellant prior to period 30.06.2012 or before, whereas the definition of "service" and "person" as defined under Seciton 65B(44) and 65B(37) effective from 01.07.2012, it has substantially changed the scenario of service tax as discussed above and accordingly to new provisions, the company and member are different person and the activities undertaken in between them falls under the category....
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....vs. Commissioner of Central Excise, Kolkata-IV 2019 (368) E.L.T. 216 (S.C.) , the refund application could not have been entertained without the appellant having challenged the self-assessment order in appeal. 10. The submissions advanced by the learned chartered accountant appearing for the appellant and the learned authorized representative appearing for the department have been considered. 11. The only reason assigned by the Commissioner (Appeals) for holding that the appellant was not entitled to refund of service tax already paid by it is that the appellant was required to pay service tax with effect from 01.07.2012 in view of the provisions of the Finance Act. 12. It would, therefore, be necessary to examine the judgment of the Supreme Court in Calcutta Club wherein the Supreme Court examined whether service tax would be leviable on a club for the services rendered by it to its members both prior to 07.01.2012 and w.e.f. 01.07.2012. The relevant portions of the order passed by the Supreme Court in respect of the period prior to 01.07.2012 are reproduced below: "58. As was stated hereinabove, Service Tax was introduced for the first time by the Finance Act, 1....
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....te of 12% of the value of taxable services referred to in sub-clauses...(zzze) of clause (105) of Section 65, and collected in such manner as may be prescribed. 63. Under Section 67, where Service Tax is chargeable on any taxable service with reference to its value, it was stated: "67. Valuation of taxable services for charging Service Tax. - (1) Subject to the provisions of this Chapter, where Service Tax is chargeable on any taxable service with reference to its value, then such value shall,- (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of Service Tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for consideration which is not ascertainable. Be the amount as may be determined in the prescribed manner." 64. Likewise, under Section 68, it was stated: "68. Payment of Service Tax.- (1)....
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.... 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 cent. on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such ma....
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....ced that "club or association" was earlier defined under Sections 65(25a) and 65(25aa) to mean "any person" or "body of persons" providing service. In these definitions, the expression "body of persons" cannot possibly include persons who are incorporated entities, as such entities have been expressly excluded under Sections 65(25a)(i) and 65(25aa)(i) as "anybody established or constituted by or under any law for the time being in force". "Body of persons", therefore, would not, within these definitions, include a body constituted under any law for the time being in force. 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 juxta....
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....b to its members w.e.f. 01.07.2012 is not correct. Similarly, reliance placed by the Commissioner (Appeals) on the decisions rendered by the Authority for Advanced Ruling in Emerald Leisures Ltd. and Avadh Infratech Ltd. is mis-placed. 17. Though the Commissioner (Appeals) has not dealt with issue of unjust enrichment, but the Assistant Commissioner also introduced the theory of unjust enrichment, though without recording reasons. 18. In Karnavati Club Ltd. vs. Commissioner of Service Tax, Ahmedabad 2013 (31) S.T.R. 445 (Tri.-Ahmd.), the Tribunal examined whether the claim of unjust enrichment can be raised against a club when it provide services to its members. It was held that the principle of unjust enrichment would not be applicable. The relevant paragraphs of the decision are reproduced below: "11. It can be seen from the above reproduced paragraphs that their Lordships have come to a categorical conclusion that the members of the club cannot be seen separately as a client or customer and the mandap or the club is one and the same. Since the Service Tax is sought from the club and it has been set aside at the show cause notice stage, by the Hon'ble High Court, i....