Total Consideration Received from Members to be Redetermined for Service Tax: CESTAT Remands Matter Once Again [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Hyderabad Bench, remanded a matter again wherein the total consideration received from the members was to be redetermined for service tax .

The appellants, Country Club (India) Ltd, are a public limited company providing services under the categories of ‘Health Club & Fitness Center services’ falling under Section 65(51) of the Finance Act, 1994 and ‘Club or Association services’ falling under Section 65(25a) of the Finance Act, 1994. The appellants also offer its members/future members an option to purchase land along with the membership of the club for which there is an additional charge over and above the membership fee and land is transferred absolutely to the said category of members.

The members had a bonafide belief that no service tax is payable to that extent and did not pay service tax in respect of amounts recovered from members and others towards sale of land. In the remand proceedings, the appellant submitted certain details of amounts transferred towards land to their sister concern Amrutha Estates, duly supported by the bank statements.

The counsel for the appellant contested that value of land cannot be included in the gross value for determining service tax leviable on the services of club or association.

The tribunal observed that the counsel for the appellant was only contesting the value adopted by the department for calculating the amount of service tax leviable. CESTAT considered the Board’s Circular wherein it was clarified that the sale of items such as food or beverages would not be taxable provided the documents evidencing such sale are available.

After being repeatedly appealed and remanded, it was decided that the issue of non-inclusion of land value has to be excluded from the gross value for levying service tax. A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) allowed the appeal and remanded back the matter to the adjudicating authority for redetermination of demand, this is to be completed within two months after the furnishing of certificate of CA by the appellant.

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