Custom, Excise & Service Tax Tribunal
M/S. Country Club (India) Ltd vs Cc,Ce&St, Hyderabad on 7 October, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 07/10/2010
Date of decision:07/10/2010
Appeal No.ST/173/09; ST/466/09
(Arising out of Order-in-original No.19/2009-ST dt. 23/3/2009; No.30/2008-ST dt. 10/12/2008 passed by CC,CE&ST, Hyderabad)
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Country Club (India) Ltd.
..Appellant(s)
Vs.
CC,CE&ST, Hyderabad
..Respondent(s)
Appearance Mr. Joseph Vellapally, Sr. Advocate and Ms.Rukmani Menon, Advocate for the appellant.
Ms. Sudha Koka, SDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per M.V.Ravindran These two appeals are filed by the appellant against the Orders-in-Original No. 19/2009-ST dt. 23/3/2009 and No.30/2008-ST dt. 10/12/2008. Since the issue in these appeals are the same and in respect of the very same assessee, we dispose off both the appeals by a common order.
2. The relevant facts that arise for consideration are that the appellant herein is engaged in providing various taxable services and is registered under the category of Club or Association Services & Health Club and Fitness Centre and is discharging service tax liabilities. On gathering intelligence that the appellant was not discharging the correct service tax liability on the membership fees collected by them, an investigation was carried out and Sr. Manager of the appellant was questioned and his statement was recorded. On conclusion of the investigation, it was noticed by the lower authorities that the appellant is offering membership which is termed as membership (with land) in various locations and is discharging the service tax liability on the membership fees less the amount which is considered by the appellant as cost of the land. Coming to such conclusion, show-cause notices dt. 1/6/2007 and dt. 23/10/2008 were issued and Adjudicating Authority by different impugned orders confirmed the demands raised in the show-cause notices and also directed for payment of interest and imposed consequential penalties.
3. Mr. Joseph Vellapally, Sr. Counsel and Ms. Rukmani Menon, Advocate appeared for the appellant. Ld. Sr. Counsel would draw our attention to the effect that the appellant herein has offered a membership to general public as Membership(with or without land). He would submit that those who opted for membership with land, they were discharging the service tax liability on the membership fees and were not discharging the service tax liability on the cost of the land. It is his submission that the land is procured by their sister concern i.e. M/s. Amrutha Estates and the amount collected by the appellant as cost of land is transferred to them and the plots to individual members are allotted by the said M/s. Amrutha Estates. It is his submission that the cost of land though inbuilt in the membership fee, can be identified towards the cost of the land from the fact that the appellant had transferred such cost of land to their sister concern M/s. Amrutha Estates who owned the land. It is his submission that para 19 of the Order-in-Original clearly admits that it is cost of land and it is his submission that the ld. Commissioners reliance on the Honble Supreme Courts judgment in the case of CIT VS. Bankipur Club Ltd. is misplaced, as it is in respect of an issue under Income Tax Act. It is also his submission that the reliance placed by the ld. Adjudicating Authority on the decision of a coordinate Bench of the Tribunal in the case of Sterling Holiday Resorts (I) Ltd. Vs. CCE [2008(12) STR 294 (Tri. Chennai)] is also misplaced, as it is in respect of a time sharing and not in respect of sale of land. It is his submission that the appellant is clearly covered by the definition of the Club and Association which would allow them to exclude that amount which is not towards the facilities or advantages given by them as a member.
4. Ld. Jt.CDR on the other hand would submit that the provisions of Section 65(25A) of the Finance Act, 1994 defines the Club or Association and would indicate that any other amount collected by the club or association for providing facilities or advantages, the assessee is liable to discharge the service tax liability. It is his submission that the valuation of the taxable service is a gross amount charged. He would submit that in the case in hand the appellant had offered membership with land to the members which would amount to collection of subscription for the advantages, that could accrue to a person by applying for the said membership. It is his submission that the appellant has not brought on record any evidence as to the partition of the amount towards the cost of the land to their sister concern. He would rely upon the CBECs circular dt. 27/7/2005 which was issued subsequent to the inclusion of the Club or Association Services for the discharge of service tax liability. It is his submission that facilities or advantages are provided to members by the said clubs or association entitled for subscription or other subscription and hence the amount charged by the appellant towards membership fee (with land), service tax needs to be discharged in its entirety.
5. We have considered the submissions made at length by both sides and perused the records.
6. We find that the issue that arises for determination in this case is whether the entire membership fee (with land) collected by the assessee would be chargeable to service tax, irrespective of the fact that part of the membership fee relates to cost of land.
7. It is undisputed that the appellant is offering a category of membership which is called Membership (with land) and charging a membership fee which includes the cost of the land. It is also undisputed that those individuals who had applied for the membership with land paying the membership fee were to be allotted land by their sister concern M/s. Amrutha Estates. It is seen form the records that the appellant has been contending before the lower authorities that the amount collected by them in the membership fee, towards the cost of the land, was transferred to their sister concern. The Adjudicating Authority has not recorded any factual finding on the issue. The entire case needs to be appreciated on the factual matrix inasmuch as the Boards circular dt. 27/7/2005, would indicate at para 10.5, that amount charged by the club to its members for sale of items such as food or beverages would not be taxable provided the documents evidencing such sales are available. This would indicate that the Club or Association was not required to include the cost of sale of items to the members for discharge of service tax liability. In the case in hand before us, it is undisputed that the membership fee (with land) collected by the appellant is towards the membership fee and towards the cost of the land. If it is the contention of the appellant that the cost of the land was transferred to their sister concern M/s. Amrutha Estates for allotting the plot to members who opted for such membership (with land), then these amounts need to be excluded from the gross value for levy of service tax. In our considered view, the plea of the appellant on this point merits consideration and also a finding needs to be recorded on the factual position of transfer of amounts to their sister concern, which needs to be verified from the books of account. We are unable to look into the matter at this juncture, since the factual matrix needs to be appreciated by the Adjudicating Authority. Considering the Boards directive regarding value to be considered for levy of service tax on Club or Association Services, we find that the appellants case is on a more stronger footing, if they are able to demonstrate that the amount on which the lower authorities are seeking service tax, has been actually transferred to their sister concern, then the Boards circular would apply and binding on the Revenue officers, as has been settled by the Honble Supreme Court in the case of CCE, Bolpur Vs. Ratan Melting & Wire Industries [2008(231) ELT 23(SC)].
8. In view of this, we set aside the impugned orders and remand the matter back to the lower authorities to record a finding on the factual matrix of the transfer of the amount towards the cost of land to the individual members, who opted for the membership (with land) in the appellants club or association. Needless to say that the Adjudicating Authority will follow the principles of natural justice before coming to a conclusion. Both the appeals are allowed by way of remand by setting aside the impugned orders.
(Operative portion of this order pronounced on conclusion of the hearing) (P.KARTHIKEYAN) MEMBER (TECHNICAL) (M.V.RAVINDRAN) MEMBER (JUDICIAL) Nr 7