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August 2013

2013-TIOL-528-HC-AHM-ST Sports Club of Gujarat vs. Union of India

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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“Club or Association” service – levy of service tax on sums received from members held to be ultra vires.

Facts:
The
petitioner along with two other clubs filed a writ petition to declare
section 65(25a), section 65(105)(zzze) and section 66 of the Finance
Act, 1994 as amended by the Finance Act, 2005 to the extent that the
said provisions purported to levy service tax on amount received by the
club from its members as being ultra vires, beyond the legislative
competence of the parliament, unconstitutional, illegal and void. The
petitioners substantiated their contentions by referring and relying
upon the decision of Ranchi Club Ltd. vs. Chief Comm. of C.Ex. &
S.T. 2012 (26) STR 401 (Jhar) which further relied upon the decision of
the Full Bench of Patna High Court in Commissioner of Income Tax vs.
Ranchi Club Ltd. 1994 (1) PLJR 252 (Pat) (FB).

Held:
Considering
the decisions of the Hon. Jharkand High Court and the Full Bench of the
Patna High Court in Ranchi Club Ltd. (supra), the Hon. High Court
allowed the petitions and declared section 65(25a), section
65(105)(zzze) and section 66 of the Finance Act, 1994 as amended by the
Finance Act, 2005 to be ultra vires.
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