MATUNGA GYMKHANA Vs CST-TIOL

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2015-TIOL-108-CESTAT-MUM
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, MUMBAI
Appeal No. ST/105/2009-Mum, ST/185/2011-Mum, ST/298-299/2011-Mum
Arising out of Order-in-Appeal No. 47/STC/BR/08-09 Dated: 30.01.2009
Order-in-Appeal No. RBT/21/2011, RBT/16-17/2011
Passed by the Commissioner of Service Tax & Commissioner (Appeals) Central Excise,
Mumbai-I
Date of Hearing: 20.11.2014
Date of Decision: 18.12.2014
MATUNGA GYMKHANA
TAHNEE HEIGHTS CO-OP HOU SOC LTD
MITTAL TOWER PREMISES CO-OPERATIVE SOCIETY
MITTAL TOWER PREMISES CO-OPERATIVE SOCIETY
Vs
COMMISSIONER OF SERVICE TAX, MUMBAI
Appellants Rep by: Shri Bharat Raichandani, Adv. Shri Prasad Paranjape, Adv. & Shri
Bakul B Modi C.A.
Respondents Rep by: Shri D Nagvenkar, Addl. Commr. & Shri B K Iyer, Superintendent
(AR)
CORAM: Anil Choudhary, Member (J)
P S Pruthi, Member (T)
ST Services to members of club/co-operative housing society is not a service
by one to another and, therefore, is not chargeable to service tax appeals
allowed: CESTAT [para 8]
Appeals allowed
Case laws cited Ranchi Club vs. Chief Commr. Of C. Exc. & ST, Ranchi JHARKHAND-ST ... para 5, 8relied upon
Sports Club of Gujarat vs. Union of India relied upon

2012-TIOL-1031-HC-

2013-TIOL-528-HC-AHM-ST

... para 5, 8

M/s. Federation of Indian Chambers of Commerce & Industry vs. Commissioner

of Service Tax, Delhi - 2014-TIOL-701-CESTAT-DEL ... para 5, 8relied upon
ORDER NO.A/1800-1803/14/CSTB/C-I
Per: P S Pruthi:
As the issue involved in these appeals is same, common order is being passed. There are
three appellants in these appeals and the facts of each case may be mentioned
separately. The first appellant M/s Matunga Gymkhana run a club for their members. The
activities carried out by them relate to Sports, Yoga etc. According to them, their
objective is charitable as per the constitution of the Gymkhana. They are a Public
Charitable Trust registered under the Mumbai Public Trust Act. Their objective is for
promotion of physical well being and most of the sports facilities are utilized by the

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members and their children. According to them, Section 65 (25a) of the Finance Act,
1994 states that club or association means any body or body of persons providing
services facilities for a subscription but does not include any body engaged in activities
having objectives which are in the nature of public service and are of charitable, religious
or political nature.
However, Revenue was of the view that the activities are not charitable in nature as they
are chargeable and neither are they in the nature of public service. According to Revenue,
the appellant do not come in the purview of the exclusion clause under Section 65(25a)
ibid. Therefore, the demand of service tax against the appellant was confirmed,
appropriate interest ordered and penalties imposed under Sections 76, 77 & 78 of the Act.
=ibid.
2. The second appellant M/s. Tahnee Heights Co-operative Housing Society formed a
society in which all the members are share holders. The society is registered under the
Maharashtra Co-operative Societies Ltd. Charges are collected from the members for
maintenance, repair, beautification etc. According to the appellant, they offer services to
self and, therefore, would not be covered under service tax. In their view they are
covered by the exclusion clause under Section 65(25a) which excludes any body
established or constituted by or under any law from the coverage of 'club or association'.
The appellant had however, paid service tax on persuasion by the department. Later they
filed refund claims which were rejected on merits.
Revenue was of the view that the above exclusion clause only refers to bodies which are
established or constituted under a Statute and not bodies which are formed and
registered under a statute. Therefore, the refund claims were rejected on merits without
going into the aspects of unjust enrichment.
3. The third appellant is M/s. Mittal Tower Premises Co-operative Society. The facts in this
case are similar to the facts of the case relating to the second appellant. Here also, the
appellants were managing and maintaining the land and building belonging to the society
formed amongst members of the premises. They collected expenses from the members
towards water charges, security charges, repair expenses, lift repairs etc. They are also
registered under the Maharashtra Co-operative Housing Societies Act. In their case also
the service tax had been paid initially and later refund was claimed. The refund claims
were rejected on merits without going into the aspect of unjust enrichment.
4. Heard all the appellants and Revenue.
5. The Ld. Counsel relied on three judgments namely:
(i) Ranchi Club vs. Chief Commr. Of C. Exc. & ST, Ranchi 2012 (26) STR 401
(Jhar) = 2012-TIOL-1031-HC-JHARKHAND-ST
(ii) Sports Club of Gujarat vs. Union of India -

2013-TIOL-528-HC-AHM-ST

(iii) M/s. Federation of Indian Chambers of Commerce & Industry vs.

Commissioner of Service Tax, Delhi - 2014-TIOL-701-CESTAT-DEL.
6. The Ld. AR's reiterated the findings of Revenue authorities.
7. We have heard the rival contentions. The demand of service tax in these cases is based
on the premises, that the appellants had provided taxable 'club or association' service
specified in Section 65 (105) (zzze). The words "club or association" are defined in
Section 65(25a) of the Finance Act, 1994. These provisions are extracted below:
"Section 65 (105) (zzze)
Taxable service means any service provided or to be provided to its members,
by any "club or association" in relation to provision of services, facilities or
advantages for a subscription or any other amount;
Section 65(25a)

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"club or association" means any person or body of persons providing services,

facilities or advantages, for a subscription or any other amount to its
members, but does not include:
(i) Any body established or constituted by or under any law for
the time being in force; or
(ii) any person or body of persons engaged in the activities of
trade unions, promotion of agriculture, horticulture or animal
husbandry; or
(iii) any person or body of persons engaged in any activity having
objectives which are in the nature of public service and are of a
charitable, religious or political nature; or
(iv) any person or body of persons associated with press or
media;"
8. We find that the subject matter in the present appeals has also been the subject issue
in various judgements. In the case of Ranchi Club (supra), the Hon'ble Jharkhand High
Court held that "Since the issue whether there are two persons or two legal entity in the
activities of the members' club has been already considered and decided by the Hon'ble
Supreme Court as well as by the Full Bench of this Court in the cases referred above,
therefore, this issue is no more res integra and issue is to be answered in favour of the
writ petitioner and it can be held that in view of the mutuality and in view of the activities
of the club, if club provides any service to its members may be in any form including as
mandap keeper, then it is not a service by one to another in the light of the decisions
referred above as foundational facts of existence of two legal entities in such transaction
is missing. However, so far as services by the club to other than members, learned
counsel for the petitioner submitted that they are paying the tax".
Subsequently it was held by the Hon'ble Gujarat High Court in the case of Sports Club of
India (supra) that "it is hereby declared that Section 65(25a), Section 65(105) (zzze)
and Section 66 of the Finance (No.2) Act, 1994 as incorporated / amended by the Finance
Act, 2005 to the extent that the said provisions purport to levy service tax in respect of
services purportedly provided by the petitioner club to its members, to be ultra vires."
These judgments were also considered by the Principal Bench in the case of Ficci(supra).
It was held that - On the analyses above and on the basis of the precedential guidance
adverted to, we conclude that in view of the decision in Ranchi Club Limited (supra), on
application of the principle of mutuality, services provided by the appellants to their
respective members would not fall within the ambit of the taxable "club or association"
service nor the consideration whether by way of subscription/ fee or otherwise received
therefor be exigible to service tax. In view of the decision of the Gujarat High Court in
Sports Club of Gujarat Limited, as the relevant provisions (namely Section 65(25a),
Section 65(105)(zzze) and Section 66 of the Act), to the extent these provisions purport
to levy service tax in respect of services provided by a "club or association" to its
members is declared ultra vires, we hold that there are no operative legislative provisions
of the Act legitimizing the levy and collection of service tax from the appellants, for
providing "club or association" service, in so far as these relate to any services provided
to members of these appellants."
It was further held by the bench that "We hold that services provided to non members fall
outside the ambit of "club or association" service prior to 01.05.2011 and subsequent to
this date there is no specific allegation that the services provided to non-members fall
within the expanded scope of this taxable service qua provisions of the Finance Act,
2011...............".
8#. In view of the above judgments, the issue at hand is no more res integra. We set
aside the impugned orders and allow the appeals with consequential relief, if any, in
accordance with law.
(Pronounced in court on 18.12.2014)

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