2025-VIL-635-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund, Doctrine of Mutuality, Unjust Enrichment, Club or Association - Refund claim for service tax paid for the period of 01.04.2016 to 30.09.2016 under the category of "Club or Association Services" - Adjudicating Authority rejected the refund claim, but the Commissioner (Appeals) allowed the refund claim on the basis of the doctrine of mutuality between the club and its members - Whether the refund claim of the Respondent is eligible for refund on the grounds of the doctrine of mutuality – HELD - the issue of the doctrine of mutuality between the club and its members was settled by the Supreme Court in the case of State of West Bengal v. Calcutta Club Ltd., wherein it was held that the club and its members are not distinct entities, and the services provided by the club to its members are not taxable under service tax. However, the Supreme Court did not address the issue of unjust enrichment in its judgment - The doctrine of mutuality cannot be extended beyond the scope of the levy provisions. While the club and its members may be considered as one entity for the purpose of levy of service tax, the same principle cannot be applied for the refund of such tax. The refund claim must pass the test of unjust enrichment - if the refund is granted to the club, it may result in the unjust enrichment of the club, as the service tax was ultimately borne by the individual members, and not the club itself. Accordingly, the refund claim cannot be allowed without examining the aspect of unjust enrichment - the matter back to the adjudicating authority to examine the aspect of unjust enrichment in the refund claim of the assessee - the appeal of the department is allowed
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