2026-VIL-409-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Applicability of service tax on members club - The appellant is a members club registered under the Societies Registration Act, 1860 and is a body constituted under a law for the time being in force - Whether the services rendered to its members by the club are taxable under the category of 'Club or Association Services' - HELD – The issue is no more res integra and has been settled by the Hon'ble Supreme Court in the case of State of West Bengal vs. Calcutta Club Ltd wherein the Hon'ble Supreme Court has affirmed that incorporated or registered clubs and associations were outside the scope of service tax levy prior to 01.07.2012 and that the doctrine of mutuality continues to apply to such entities. Therefore, all receipts from the members of the club are not exigible to service tax under 'Club or Association Services' during the impugned period – Regarding applicability of service tax on non-members, prior to 2011, there was no provision for demanding service tax from non-members on availing the services of the club, but after the amendment introduced by Section 76 of the Finance Act, 2011 (w.e.f. 01.05.2011) that the phrase "or any other person" was inserted after the words "its members". By the said amendment, the scope of tax was widened and even the non-members were liable to pay service tax on the services rendered by the clubs or associations; but the period involved in the present case is prior to introduction of said amendment, therefore, the appellant is not liable to pay service tax on services rendered to non-members – The impugned order is set aside and the appeal is allowed - Demand on income from sponsorship - The department has demanded the service tax on income from sponsorship under the head 'Club or Association Services' - Whether the demand on income from sponsorship under the head 'Club or Association Services' is sustainable - HELD - The sponsorship service, which was primarily for sports event, was having a separate category under the head 'Sponsorship Services' introduced under Section 68(2) vide Notification No. 15/2006-ST dated 25.04.2006. But instead of demanding the service tax on sponsorship service, the SCN has raised the demand under an incorrect head 'Club or Association Services', therefore, the demand confirmed under an incorrect head is not sustainable in law.
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