Order date: 13 September 2022

Facts-

• The Appellant, Karnawati Club submitted that on the issue of taxability of Membership of Club or Association Service, the same is settled by the larger bench of Hon’ble Supreme Court in the case of State of West Bengal Vs. Calcutta Club Ltd. - 2019. Further, the appellant was also one of the litigant before the Hon’ble Supreme Court. As per the Hon’ble Supreme Court judgment the present liability of Service tax is not sustainable.
• The Revenue submitted that the judgment of Hon’ble Supreme Court is on the mixed issue of law and facts. He further submitted that while passing the adjudication order, the judgment of Hon’ble Supreme Court was not available therefore, seeks the remand of the matter to reconsider in the light of the Hon’ble Supreme Court judgment.

Issue-

• Whether the appellant is liable for service tax under the head of “Membership of Club or Association Service” in respect of the amount received towards various activities though from the members but the services were availed by the guests of the club members?

Order-

• The Tribunal observed that the issue related to taxability of Club Membership was under litigation before various forums. Finally, the Hon’ble Supreme Court in the case of Calcutta Club Ltd. the larger bench held that for the period prior to 1.7.2012 i.e. before the Negative List regime, the definition of "club or association" as per Section 65(2a) of the Finance Act, 1994 was specifically excluded incorporated entities. Thus, the Court held that incorporated entities providing services to its members would be outside the service tax net prior to 1.7.2012. For the period post 1.7.2012, the Court ruled that services by a member's club to its members would amount to services to self and hence would not qualify as service as defined above. Accordingly, it was held that services provided by a member's club, which are not incorporated under any law for the time being enforced, to its members would be taxable.
• Therefore, the present issue needs to be reconsidered by the adjudicating authority on the basis of the law laid down by the Hon’ble Supreme Court vis-à-vis facts of each case.
• Therefore, the Tribunal set aside the impugned order and remand the matter to the adjudicating authority for passing a fresh order. And held that all the issues are kept open. Since the appeal pertains to the period 2012 and the period involved is 2005-06 to 2008-09, the adjudicating authority is expected to pass a denovo order within a period of two months from the date of this order.
• The appeal is allowed by way of remand to the adjudicating authority.