Taxability of service by Club or Association to Non-members

PJ/Case Laws/2011-12/1306

Case: DLF Golf Resorts v/s Commissioner of Service Tax, Delhi

Citation: 2011(23) S.T.R. 388 (Tri.-Del.)

Issue:- Service tax on club or association for providing services to non-members for which charges collected by them – pre-deposit of Rs. 10 lakhs ordered.

Brief Facts: - Appellant is a club and was receiving certain charges from non-members for providing certain facilities to them on which they were not paying service tax. Department alleged that service tax is payable on such charges and initiated proceedings against the appellant.

Matter is now before the Tribunal. Stay application is filed.

Appellant’s Contention: - Appellant submits that as against the service tax demand of Rs. 62, 45,399/-, an amount of Rs. 20, 69,155/- has already been deposited which is also appropriated. His further submission is that the demand of Rs. 4.2 Lakhs has been made based on the interpretation of the law holding that certain charges received by a club for providing certain facilities to persons who are non-members, have to be taxed. He submits that as per the relevant provisions, tax can be levied only on services provided to members of the club. Such a point can be argued in detail in the course of regular hearing. In view of the aforesaid deposit, there may be stay of realization of the balance demand during pendency of the appeal.

Respondent’s Contention: - Revenue submits that there was proposition in the show cause notice for raising demand of Rs. 1.62 crores. When there is slash of demand in the adjudication, pre-deposit may be insisted upon.

Reasoning of Judgement: - The Tribunal prima facie noticed that the persons to whom service was provided were not members but were getting facilities and advantages by virtue of introduction made to the club by members of the club. It was not ruled out at this stage about the liability that appellant may be incurring. The matter shall be examined in detail while hearing the matter for final disposal. To work out an interim measure, the Tribunal directed the appellant to deposit Rs. 10 Lakhs (over and above the amount already paid as submitted aforesaid) within eight weeks and report compliance on 9-5-2011. Subject to deposit of the ordered amount to be made, realization of the balance demand shall be stayed during pendency of the appeal.

Decision: - Stay application disposed of.

Comments:- This interpretation was going on that the entry fee given by non-members is not chargeable to tax for clubs. This is due to the fact that the definition of “club or association” clearly says that the service tax is to be paid on fees or any other sum received from members. But non members are allowed to enter the club when they are accompanying the members. Hence, the tribunal has rightly held. But it is stay matter only and final decision is still awaited.

Comments

PJ/Case Laws/2011-12/1306

Post a Comment

Query