2026-VIL-472-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exclusion of land value from gross value for computation of service tax liability under 'club or association service' - The appellant provides 'health club & fitness center services' and 'club or association services' to its members. The appellant offers an option to purchase land along with the membership of the club, for which there is an additional charge over and above the membership fee – Demand of service tax on the amounts collected from the members towards membership fee (with/without land) - HELD - As per the settled position, the value of land cannot be included in the gross value for determining service tax leviable on the services of club or association. It is irrelevant as to what mode is adopted for transferring the land to the members and by whom i.e., by the appellant directly or through their sister concern - The appellant is directed to produce the audited balance sheet and other financial and sales records to a Chartered Accountant, who shall clearly certify the amounts transferred by the appellant to their sister concern towards the value of the land, which was transferred by the sister concern to the members under this category of membership on behalf of the appellant. The value of land sold/transferred to members of the appellant's club through their sister concern, as verified by CA based on financial records, bank statements, other relevant documents and certified accordingly, would be accepted as value of land and the same will be excluded from the gross value for re-computation of tax liability, if any, keeping in view the payments of service tax already made - While computing the service tax liability net of land value, the cum-tax benefit will also be extended along with eligible credit lying in the balance and used for payment of service tax. Further, the penalty under section 78 will not be invokable as the issue relating to leviability of tax under the category of 'club or association service' was a matter of interpretation and the appellant was not in a position to take a firm stand. The demand, if any, will be confirmed only within the normal period - The appeal is allowed partly by way of remand
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