INDIA INTERNATIONAL CENTRE Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) Heard both sides. The appellants filed this appeal against the impugned order whereby demand of service tax was confirmed and penalties were imposed on the ground that appellants were providing services as Mandap keeper.

(2.) THE contention of appellants is that it is registered under Societies Registration Act, 1986. The premises of the Centre is being used by their members only. The services provided by the Centre to their members cannot be held to be providing service as Mandap keeper. The contention is that as per Section 65 of Finance Act, taxable services in relation to Mandap keeper means any service provided to a client by Mandap keeper in relation to use of Mandap including the facilities provided to client in relation to such use and also the service, if any, rendered as a caterer and as per the provision of Sub -section 66 of the Section 65 of the Act. The definition of Mandap is any immovable property as defined under Transfer of Property Act and includes any furniture, fixtures and floor covering therein, let out for consideration for organizing official, social or business functions. The contention is that appellants are not providing any service as Mandap keeper as members of the Centre are using the premises of center which cannot be said to be service provided to a client. The appellants submitted that this issue is covered in the following decisions of the Hon'ble High Courts: Saturday Club Ltd v. Asstt. Commissioner, Service Tax, Calcutta Dalhousie Institute v. Asstt. Commissioner, Service Tax Cell whereby the Hon'ble High Court set aside the demand of serviced tax raised on the same ground that these are clubs where service is provided only to their members. The Revenue relied upon the findings of the lower authorities.

(3.) IN this case, the demand of service tax was confirmed on the ground that the appellants were providing service as Mandap keeper. In the impugned order, the Commissioner of Service Tax rejected the contention of the appellants that they were providing service to their own members and the element of service to a client as such does not exist. The Commissioner held as under: The party's contention that they are providing services to their own members i.e. the element of services provided to a client as such does not exist, is not tenable. The word 'client' is not defined under the provisions of the Act ibid. However, a client, under the relevant of the 'service tax' taxation principles, can be considered to be a person who is receiving the taxable services, provided by the service provider against a consideration. Thus, the requisite stipulations of being a client are satisfied in the instant case as it is observed that the renting out of given immovable property to a person, who in turn avails such services from the service provider i.e. IIC against payment. The categorization of such a person is a futile exercise as the definitions supra does not call for such interpretation. It is also not the case where IIC is claiming that the persons, incidentally' the members, who are availing such services, are not being charged for the same. It is on record that members are being charged for such services. Secondly, it is also observed that since IIC is a society registered under an Act, it assumes the identity and role of a body, independent of its constituent members. There is also a scope of increase or decrease of members but the constitutions and the existence of IIC as a registered body would remain same. Society would continue even if member(s) ceases to be a member. The entity of the IIC and the members are different and are identifiable. Even though the services were rendered to its own members there is primarily existence of a service to its member on consideration. Since an activity of a service is rendered for a consideration an economic activity concerning taxable even has taken place. Thus, the service provider, service receiver and the event would clearly fall in the parameters of Act ibid and the nomenclature, purpose etc would not overrule the legal provisions unless specifically exempted. Thirdly, the relevant provisions of the Act ibid do not differentiate between a service provider and a service receiver based on the existence of the society and its members vis -a -vis the referred definition supra.