DALHOUSIE INSTITUTE Vs. ASSISTANT COMMISSIONER SERVICE TAX CELL

JUDGEMENT

(1.) In this case the applicant initially having accepted the applicability of the Finance Act, 1994 as amended by Finance Act, 1997 (hereinafter referred to as the aforesaid Act) to it, the club/petitioner has asked for a declaration that the said Act does not apply. So, they prayed for quashing and rescinding of the communications letters dated 21st October, 1997, 12th October, 1998 and November 26, 1998 and also the Registration Certificate dated 19th November, 1997. The short fact of the case is that the petitioner No. 1 is a body, formed under the West Bengal Societies Registration Act, 1961 by its members and with an object to achieve various purposes as mentioned in the object Clause of its bye-laws. It is stated that the petitioner No. 1 is non-profit making body and extends amenities and facilities to its members only and/or their guests. In the bye-laws there is no provision for allowing the outsider to participate in the club function and affairs except in case of guest(s) of a member, who is solely responsible for making payment on behalf of the guests. In other words, the income of the club derived from the members and/or members of their family and the surplus of the receipts is being invested and/or reserved for the benefit of the members exclusively, no amount of excess is distributed among its members. In legal parlance the element of mutuality in the affairs and dealing of the club exists. The Club provides for various facilities and amenities including space as a venue for holding social, commercial and business functions, meetings and gatherings.

(2.) In 1994 by the aforesaid Act various services rendered by the traders and/or organizations were subjected to tax at a particular rate. In 1997 by way of amendment of the aforesaid Act the services rendered by 'mandap keeper' providing mandap to the clients were brought under exigibility to the Service Taxes. Pursuant to the aforesaid Act the petitioner got itself registered and filed returns. It is claimed that obtaining of registration followed by filing of returns under the aforesaid Act were by mistake. On discovery of legal position the present application has been taken out for the relief as quoted hereinabove.

(3.) The learned Senior Counsel Mr. J.P. Khaitan appearing for the petitioner contends going by the definition of Section 65 [Clause 4(i)] of the said Act that the petitioners' Club cannot be brought within the purview of the same. The said definition of taxable service is quoted below : "65. 4(i) "taxable service" means any service provided............(p) to a client by a mandap keeper in relation to the use of a mandap in any manner including the facilities provided to the client in relation to such use and also the services, if any, rendered as a caterer".