KARNAVATI CLUB LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) WHETHER the Petitioners, who are basically engaged in promoting different sports, are liable to pay service tax on the services rendered by it to its members is the issue that has come up for our consideration in these petitions.

(2.) THE Petitioners are companies registered under the provisions of the Companies Act, 1956. The main object of the Petitioners is to encourage and promote the game of cricket and other different games and sports in the State of Gujarat and to provide facilities and infrastructure in connection with such games, sports and for other purpose. The Petitioner is a members club without any shareholders and makes available facilities exclusively for its members and their guests and recoups expenses. The Petitioner is therefore, a mutual undertaking which does not earn any profit as understood in commercial parlance and does not carry on any trade or business. In legal parlance, the element of mutuality in the affairs and dealing of the club exists. The Petitioner club is having open lawn (space) and the said lawn of the club is provided for marriage ceremonies and other social functions to the members on charges.

(3.) THE Petitioner challenges the action of the Respondents in holding the Petitioner club liable to pay service tax being a 'Mandap Keeper' within the contents of provision of the Finance Act, 1994.