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ST – Bar account collection charges, Cards account collection charges & Bar dining collection charges collected by a club from its members will not attract service tax: CESTAT

2019-TIOL-2316-CESTAT-MAD

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI

Appeal No. ST/40781/2013

Arising out of Order-in-Appeal No.327/2012, Dated: 21.12.2012
Passed by Commissioner of Central Excise (Appeals), Madurai

Date of Hearing: 28.02.2019
Date of Decision: 28.02.2019

THE MADURAI UNION CLUB

Vs

COMMISSIONER OF CENTRAL EXCISE
MADURAI

Appellant Rep by: Shri S. Ramachandran, Consultant
Respondent Rep by: Shri K Veerabhadra Reddy, ADC AR

CORAM: Sulekha Beevi, C S, Member (J)
Madhu Mohan Damodhar, Member (T)

ST – The issue pertains to amounts collected by assessee from its members such as Bar account collection charges, Bar sundry collection, Cards account collection charges, Bar dining collection charges and Guest House amenity charges – Assessee placed reliance on the judgment in case of Ranchi Club Ltd. – 2012-TIOL-1031-HC-JHARKHAND-ST and also the decision of this Bench in a batch of cases in the case of Cosmopolitan Club & others – 2018-TIOL-2739-CESTAT-MAD – The ratio laid down by High Court of Jharkhand in Ranchi Cluband also by High Court of Gujarat in Sports Club of Gujarat – 2013-TIOL-528-HC-AHM-ST has not been stayed by Apex Court – The judgement of Bangalore Club – 2013-TIOL-05-SC-IT relied upon by him is totally on a different aspect and also relates to income tax taxability under the Income Tax Act and the same cannot be made applicable to Finance Act, 1994 – In consequence, issue found in favour of assessee – Impugned order then cannot sustain: CESTAT

Appeal allowed

Case laws cited:

Ranchi Club Ltd. Vs CCE & ST Ranchi – 2012-TIOL-1031-HC-JHARKHAND-ST… Para 1

Cosmopolitan Club & others – 2018-TIOL-2739-CESTAT-MAD… Para 1

Bangalore Club Vs CIT – 2013-TIOL-05-SC-IT… Para 2

Gujarat in Sports Club of Gujarat Vs UOI – 2013-TIOL-528-HC-AHM-ST… Para 3

FINAL ORDER NO. 40398/2019

Per: Bench:

After hearing both sides, we find that the issue in dispute pertains to amounts collected by the appellants from its members such as Bar account collection charges, Bar sundry collection, Cards account collection charges, Bar dining collection charges, Guest House amenity charges etc. Ld. Consultant Shri S.Ramachandran appearing for the appellant placed reliance on the judgment of Hon’ble High Court of Jharkhand in the case of Ranchi Club Ltd. Vs CCE & ST Ranchi – 2012 (26) STR 401(Jhar.) = 2012-TIOL-1031-HC-JHARKHAND-ST and also the decision of this Bench in a batch of cases in the case of Cosmopolitan Club & others vide Final Order Nos.40366-40385/2018 = 2018-TIOL-2739-CESTAT-MAD dt. 06.02.2018.

2. On the other hand, Ld. A.R Shri K. Veerabhadra Reddy submits that the judgement of Ranchi Club (supra) has been appealed to the Apex Court and that has been referred to Larger Bench of the Apex Court with other related cases as reported in 2018 (13) GSTL J91 (SC). He draws our attention to the Apex Court judgment in Bangalore Club Vs CIT – (2013) 5 SCC 509 = 2013-TIOL-05-SC-IT, in respect of exemption claimed by the assessee from payment of income tax on interest earned on fixed deposits kept with certain banks, which were corporate members of the assessee, the Hon’ble Apex Court has held that none of three preconditions essential for applicability of doctrine of mutuality were made out, hence the assessee was disentitled to claim for exemption.

3. Notwithstanding the assertion of the Ld.A.R, we find that the ratio laid down by High Court of Jharkhand in Ranchi Club (supra) and also by Hon’ble High Court of Gujarat in Sports Club of Gujarat Vs UOI – 2013 (31) STR 645 (Guj.) = 2013-TIOL-528-HC-AHM-ST has not been stayed by the Hon’ble Apex Court. The judgement of Bangalore Club (supra) relied upon by him is totally on a different aspect and also relates to income tax taxability under the Income Tax Act and the same cannot be made applicable to Finance Act, 1994.

4. In consequence, we find the issue in favour of the appellant. Impugned order then cannot sustain and will require to be set aside, which we hereby do. Appeal is allowed with consequential benefits, if any, as per law.

(Dictated and pronounced in court)

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