The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the Patanjali Trust not liable to pay service tax in respect of membership donations.
The Trust is engaged in the activities of teaching Yoga and for research on Vedic traditions of Yoga and are registering the interested people in these activities as their members. The Trust received an amount of 11 Thousand to 11 lakhs for extending lifetime membership. The department levied service tax on the same under the category of Club and Association Services as defined under Section 65 (25) A of the Finance Act, 1994.
Before the Tribunal, the appellants relied on the decision in the case of Sports Club of Gujarat Ltd. vs. Union of India wherein it was held that the Club and Association Services have already been held ultra vires.
While granting relief to the Trust, the CESTAT noted that “the amount of consideration ranging from Rs.11,000/- to 11,00,000/- has been received by the appellant for extending lifetime membership is an amount, which is received where the person paying it is becoming the member as a shareholder of the Trust and the element of mutuality as discussed in the Sport Club case (supra) comes into existence between the Trust and the said members. As a result, this demand is held to be squarely covered under the Sports Club decision. Accordingly, is held to have been wrongly confirmed by the Department.”
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