1. This appeal is directed against demand of service tax in regard to, charges for letting out of the appellant club's rooms/ halls and premises. The demand has been made by treating the said charges as that of a mandap keeper from his clients.
2. Heard both sides and perused record. The submission of the learned Counsel for the appellant is that the appellant's club is a non-profit company registered under Section 25 of the Company's Act 1956. It is being pointed out that it is a members' club in as much as every member is a share holder and every share holder is a member. This is also being pointed out that the club is open only to its members and or to members of reciprocating or associate clubs. The contention is that the recipient of services from such a members club' are not clients and no tax is attracted, since service tax is in regard to the service rendered to a client. It is also being pointed out that the very issue had come up before the Hon'ble Calcutta High Court in the cases of Saturday Club Ltd. and Dalhousie Institute and the Hon'ble High Court held that no service tax is attracted in regard to the services rendered by a members' club.
3. It is seen that the dispute that arises in the present case is the same as the one considered by the Hon'ble Calcutta High Court. In the case of Saturday Club, the Hon'ble High Court ordered as under: So far as the merit is concerned, law is well-settled by now that in between the principal and agent when there is no transfer of property available question of imposition of service tax cannot be made available. It is true to say that there is a clear distinction between the "members club" and 'proprietary club'. No argument has been put forward by the respondents to indicate that the club is a 'proprietary club'. Therefore, if the club space is allowed to be occupied by any member or his family members or by his guest for a function by constructing a 'mandap' the Club cannot be called as 'mandap keeper' because the Club is allowing his own member to do so who is, by virtue of his position, principal of the Club. If any outside agency is called upon to do the needful it may raise a bill along with the service tax upon the Club and the Club as an agent of the members, is supposed to pay the same. The authority cannot impose service tax twice once upon the people carrying out the business of 'mandap keeper' as well as the members' club for the purpose of using the space for constructing or using it as 'mandap'.
Therefore, apart from any other question possibility of double taxation cannot be ruled out. If I explain my first query as above it will be crystal clear that if a person being an owner of the house allows another to occupy the house for the purpose of carrying out any function in that house it will not be construed as transfer of property. But if such person calls upon a third party 'mandap keeper' to construct a 'mandap' in such house then in that case such 'mandap keeper' can be able raise bill upon the user of the premises along with the service tax. Therefore, I cannot hold it good that members' club is covered by the Finance Act, 1994 for imposition of service tax to use its space as 'mandap'. So far as the other point is concerned whether the ratio of the judgments can be acceptable herein or not I like to say 'yes it is applicable'. Income-tax is applicable if there is an income. Sales tax is applicable if there is a sale. Service tax is applicable if there is a service. All three will be applicable in a case of transaction between two parties. Therefore, principally there should be existence of two sides/entities for having transaction as against consideration. In a members' club there is no question of two sides. 'Members' and "club" both are same entity. One may be called as principal when the other may be called as agent, therefore, such transaction in between themselves cannot be recorded as income, sale or service as per applicability of the revenue tax of the country. Hence, I do not find it is prudent to say that members' club is liable to pay service tax in allowing its members to use its space as 'mandap'.
Therefore, the entire proceedings as against the Club about the applicability of service tax stands quashed.
4. Similarly, in the case of Dalhousie Institute, the Hon'ble High Court ordered as under: 16. The principle of mutuality in this case is also squarely applicable, as going by the definitions of mandap, mandap keeper and the taxable service, in this case the facility of use of the premises to the members by its club cannot be termed to be a letting out nor the members of the club using the facility of any portion of the premises for any function can be termed to be a client. The services rendered by any person to his client presupposes the element of commerciality and obviously this transaction must be involved with the third parties, as opposed to the members of the club.
17. Thus, I allow the writ petition consequently I set aside and quash the notices and the registration certificate.
5. Thus, the issue in dispute in the present case remains answered in favour of the appellant club by the aforesaid judgments of the Hon'ble High Court of Calcutta. Following them, the present appeal is allowed with consequential relief to the appellant.