The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), New Delhi while adjudicating an appeal observed that ‘club or association services’ may not be classified as commercial concern for the purpose of levying service tax against the specific activities undertaken by them.
The judgment was delivered by CESTAT while hearing a Service Tax Appeal filed by All India Distillers Association ( AIDA ) against the Commissioner, Service Tax – Delhi assailing an order–in-appeal by which the Respondent Commissioner confirmed a Service Tax demand of Rs.28,23,620 against AIDA.
AIDA is an association of members involved in the business of distillation of alcohol and other liquors, and is registered with the Service Tax Department under the category of Club or Association Services covered under Section 65 (105) (zzze) of the Finance Act 1994.
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Individuals/entities interested to join AIDA are required to pay admission/affiliation or membership fees for becoming a member and then become eligible to attend seminars organized by AIDA, for which a ‘delegation fee’ is also received.
The financial records of the Appellant were audited by the Service Tax Department who noted that that the amounts received for ‘Delegation Fee’ for Seminars collected from members during the period from 2007 to 2012, are liable to be covered under Convention Services under Section 65 (105), raising a demand of Rs.10,82,057/- against the appellant.
Furthermore, a demand of Rs.12,12,961/- was confirmed under the category of Club or Association services on other activities such as Tour receipts, Circular income, Contribution from Newsletter, Advertisement Income and Sale of Publication. Thereafter, three more show cause notices were issued for the subsequent periods i.e., 2012-13 to 2014-15. The matter was dropped by the adjudicating authority but upheld by the Commissioner (Appeals) in the appellate stage.
The two-member Bench of Dr. Rachna Gupta, Member (Judicial) and Hemambika R. Priya, Member (Technical) referred to the decision of the Chandigarh Tribunal in M/s CII vs Commissioner, Chandigarh (2023) wherein it was observed that “when meetings or seminars are held for members, the charging of delegation fee is not exigible to service tax as the activity is squarely covered by the principle of mutuality.” The Chandigarh CESTAT further held that ‘the appellant may not be deemed a commercial concern for service tax purposes since the seminars are open to the general public upon payment of the requisite fee; once a convention becomes open to the general public it may not be deemed a convention for service tax purposes.’
In tandem with the decision in M/s CII, the Bench proceeded to set aside the impugned order and upheld the decision of the Adjudicating Authority.
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