Case Details: Commissioner Of Service Tax, Ahmedabad Versus Rajpath Club Ltd. (2025) 31 Centax 213 (Tri.-Ahmd)
Judiciary and Counsel Details
- S/Shri Somesh Arora, Member (J) & Satendra Vikram Signh, Member (T)
- Shri Mohit Agarwal, Commissioner (AR), for the Appellant.
- S/Shri Bishan R. Shah, Chartered Accountant & Jagrat Shah, Adv., for the Respondent.
Facts of the Case
The Appellant, a club, was subjected to Service Tax on services provided to its members. The Department relied on Section 65(105)(zzze), Section 65(25aa), and Section 66 of the Finance Act, 1994, contending that the services rendered by a club or association to its members constituted a taxable service. The Appellant contended that it operated on the principle of mutuality, whereby the club and its members were not distinct persons, and hence no service could be said to exist.
It was submitted that even after 01-07-2012, with the introduction of the negative list regime and Explanation 3(a) to Section 65B(44) of the Finance Act, 1994, the definition of ‘service’ continued to accommodate the doctrine of mutuality in the case of incorporated clubs. The Appellant asserted that there could be no service between the club and its members, as the members collectively constituted the club. The matter was accordingly placed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
CESTAT Held
The CESTAT held that the club was not liable to pay Service Tax on services provided to its members, as there could be no service between the club and its members who were not distinct entities. The Tribunal observed that the definition of “service” under Section 65B(44) of the Finance Act, 1994, even after the insertion of Explanation 3(a) with effect from 01-07-2012, was wide enough to preserve the application of the doctrine of mutuality in relation to incorporated clubs or associations. It held that there cannot be a service, and therefore no levy, between a club and its members inter se, as the members collectively constitute the club itself. Accordingly, it was concluded that no Service Tax was payable on such transactions.
List of Cases Cited
- Agra Club Ltd. v. Commissioner — 2018 (7) TMI 2359-AT — Referred [Para 3.3]
- Bangalore Club v. Commissioner of Income Tax — 2013 (1) TMI 343-SC — Referred [Para 3.3]
- Bharti Airtel Ltd. v. State of Karnataka — 2012 (25) S.T.R. 514 (Kar.) — Referred [Para 2.28]
- Chief Commissioner v. Ranchi Club Ltd. — 2012 (26) S.T.R. 401 (Jhar.) — Referred [Para 2.22]
- Collector v. Alnoori Tobacco Products — 2004 (170) E.L.T. 135 (S.C.) — Referred [Para 2.27]
- Commissioner of Income Tax v. Ranchi Club Ltd. — Patna High Court — Referred [Para 3.2]
- Commissioner of Income Tax v. Tvs Lean Logistics Ltd. — by Madras High Court — Referred [Para 2.27]
- Commissioner of Income-Tax v. Bankipur Club Ltd. — 1997 (5) TMI 392-SC — Referred [Para 3.3]
- Commissioner v. Dilip Kumar and Company — 2018 (361) E.L.T. 577 (S.C.) — Referred [Para 2.27]
- Commissioner v. Grasim Industries — 2015 (318) E.L.T. 594 (S.C.) — Relied on [Para 5.1]
- Commissioner v. Karnavati Club — Service Tax Appeal No. 12428/2018, dated 29-11-2024 by CESTAT, Ahmedabad — Referred [Paras 3.3, 5]
- Commissioner v. Rajpath Club Ltd. — Service Tax Appeal No. 12846/2018, dated 28-6-2024 by CESTAT, Ahmedabad — Referred [Para 3.2]
- Commissioner v. Young Men’s Christian Association — 2024 (10) TMI 679-Annexure — Referred [Paras 3.2, 3.3]
- Emerald Leisures Ltd. — 2016 (41) S.T.R. 321 (A.A.R.) — Referred [Para 2.17]
- Escorts Ltd. v. Commissioner — 2004 (173) E.L.T. 113 (S.C.) — Referred [Para 2.27]
- Heavy Engineering Mazdoor Union v. State of Bihar — AIR 1970 SC 82 — Referred [Para 2.10]
- J.K. Synthetics Ltd. v. Union of India — 1981 (8) E.L.T. 328 (Del.) — Referred [Para 3.3]
- Joint Commercial Tax Officer v. Young Men’S Indian Association — 2024 (5) TMI 200 — Referred [Paras 2.22, 3.2, 3.3]
- Karnavati Club Ltd. v. Commissioner — 2013 (31) S.T.R. 445 (Tribunal) — Referred [Paras 3.2, 3.3, 5]
- Mafatlal Industries Ltd. v. Union of India — 1997 (89) E.L.T. 247 (S.C.) — Relied on [Paras 2.21, 2.23, 2.28, 2.29, 5.3]
- Padmasundara Rao (Dead) v. State of Tamil Nadu — AIR 2002 SC 1334 — Referred [Para 2.27]
- Sports Club of Gujarat Ltd. v. Union of India — 2013 (31) S.T.R. 645 (Guj.) — Referred [Paras 2.12, 2.18, 2.20, 2.22]
- State of West Bengal v. Calcutta Club Ltd. — 2019 (29) G.S.T.L. 545 (S.C.) — Relied on [Paras 2.20, 2.22, 2.26, 2.27, 3.2, 3.3, 5, 5.1]
