CESTAT quashes Service Tax demand on Club or Association Service on due Registration as per Indian Trusts Act [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench quashed service tax demand on Club or Association Service Due Registration as per Indian Trusts Act.

The demand was made only against M/s. DivyaYog Mandir Trust, the appellant. The appellant received contributions from its members which are relatable to various privileges which the members enjoy. The case of the Revenue is that such contributions are chargeable to service tax at the hands of this appellant under the head Club or Association Serviceunder Section 65(105(zzze) read with section 65(25aa).

It is undisputed that the appellant was receiving contributions from its members and that such members enjoy some privileges in lieu of such contributions. What needs to be decided is if this arrangement makes it eligible to service tax under section 65(105) (zzze) read with section 65(25a).

The Counsel for the appellant submitted that the services rendered by a club to its members is self-service and is not chargeable to service tax under Club or Association Service and relied on the judgment of the Supreme Court in State of West Bengal vs. Calcutta Club Ltdand asserts that the case of the appellant is squarely covered by the ratio of this judgment.

In Calcutta Club Ltd., the Supreme Court held that companies and co-operative societies which are registered under the respective Acts can be said to have been constituted under those laws and therefore, get excluded from the definition of club or association under section 65(25a) and consequently, any service rendered by them will not be eligible to service tax under section 65(105)(zzze).

A Coram consisting of Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “In this case, it is undisputed that the appellant is registered as a trust under the Indian Trusts Act. Therefore, the ratio of CalcuttaClub Ltd. squarely applies to this case. Hence, the demand under this head cannot be sustained.”

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M/S DIVYA YOG MANDIR TRUST vsCOMMISSIONER OF CENTRAL EXCISE COMMISSIONERATE , 2022 TAXSCAN (CESTAT) 740 , Shri B.L.Narasimhan & Ms. Purvi Asati , Shri Harshvardhan