C.J. Mathew, Member (T) -
(1.)This appeal of M/s. Cricket Club of India, Mumbai (CCI) relates to payment of service tax of Rs. 96,06,434, along with interest of Rs. 4,86,855, on the entrance fee of Rs. 9,41,80,745 collected from new members during the period from 16th June 2005 to 30th January 2006. This amount was remitted under protest on 27th February 2006 following letters issued by Superintendent of Central Excise (Tax Group XIV), Mumbai in early 2006 consequent upon introduction of levy of tax for rendering of club or association service under Sec. 65(105)(zzze) of Finance Act, 1994 with effect from 16th June, 2005. Refund of this amount was sought in application dated 7th June 2006 claiming that the entrance fee was not liable to tax. The Assistant Commissioner of Central Excise, Division II, Service Tax Commissionerate, Mumbai rejected the claim vide order -in -original no AKS/R02/2008 dated 18th January 2008 and, the Commissioner of Central Excise (Appeals), Mumbai Zone I, in order -in -appeal YG(19)/STC/2008 dated 29th October 2008, upheld the rejection of claim while modifying the tax levy to the extent Rs. 9,34,244 on the ground that the taxable value was to be reduced as service tax had not been collected from members. Aggrieved by the rejection of their refund claim the appellant is before us.
(2.)The appellant is a company limited by guarantee having no share capital and was incorporated in 1933 under Indian Companies Act, 1913; these, till recently, were governed by the provisions of Sec. 25 of the Companies Act, 1956 and now under Sec. 8 of Companies Act, 2013. For this reason it is claimed to be a members club as opposed to the other category of clubs, viz., proprietary clubs. While both accord facilities to its members, the former are run by the members themselves through appropriate management bodies and the latter by promoters in the business of running clubs. Statutorily, in the event of winding -up, the assets of the appellant devolve on its members who are also liable to make good any deficits during the existence of the club.
(3.)The appellant had sought refund of the tax paid by them for the above period on the ground that they were not liable to tax on the amounts collected as entrance fee for admission of new members. The claim was based on the principle of mutuality which was well -settled in law relating to income tax and sales tax and, in accordance with which, club and members being indistinguishable, the scope of transactions between the former and the latter was held to be beyond the scope of taxation. The decision of the Tribunal in Breach Candy Swimming Bath Trust v/s. Commissioner of Central Excise, Mumbai -I [ : 2007 (5) STR 146 (Tri -Mumbai)] which relied upon the principle of mutuality as applied to clubs by the Hon'ble Supreme Court in Chelmsford Club v/s. Commissioner of Income Tax [ : 2000 (243) ITR 89 (SC)], Commissioner of Income Tax v/s. Bankipur Club Ltd. [ : 1997 (22G) HR 97 (SC)], that of Hon'ble High Court of Delhi in Commissioner of Income Tax v/s. National Sports Club of India [ : 1998 (230) ITR 373 (Del.)], Commissioner of Income Tax v/s. Delhi Gymkhana Club Ltd. [1905 (155) ITR 373 (Del.)] and that of Hon'ble High Court of Andhra Pradesh in Commissioner of Income Tax v/s. Merchant Navy Club [ : 1974 (96) ITR 2GI (AP)] was cited by the appellant. It was further contended that entrance fees are not subscription and hence beyond the scope of definition of taxable service in Sec. 65(105)(zzze) of Finance Act, 1994; that this amount could not be correlated to any service rendered by the appellant thereby eliminating it from scope of levy of service tax as held by the Tribunal in Cochin International Airport v/s. Commissioner of Central Excise Kochi [2007 (7) STR 486 (Tri -Bang)] and Euro RSCG Advertising Ltd. v/s. Commissioner of Service Tax Bangalore [ : 2007 (7) STR 277 (Tri -Bang]. Anticipating the resort to unjust enrichment for denying the refund claim, the appellant also intimated the lower authorities that no amount over and above the stipulated entrance fee had been collected and that the amount remitted as tax, under compulsion from the jurisdictional Central Excise officer, was from the funds of the club. These contentions and citations did not impress the authority competent to sanction refunds who rejected the claim on the ground that the cited decisions on mutuality, pertaining as they did to income tax and other taxes, could not be extended to service tax and that the decision in re Breach Candy Swimming Bath Trust was not applicable to M/s. Cricket Club of India. Further, it was held that entrance fees were tantamount to advance payment for facilities of the club and that the charging Sec. relating to taxation of clubs or associations was extendable beyond subscriptions to include any other amounts collected from members. The same were reiterated in the proceedings before the first appellate authority who has, however, endorsed the findings of the Assistant Commissioner.