The Chief Commissioner of Central Excise and Service Tax and Others vs Ranchi Club Limited

Heard learned Counsel for the parties.

The parties have gone up to the Supreme Court and in that it was observed by the Hon''ble Supreme Court that the applicant may apply for review. The matter has come up before us in review.

We have heard the learned Counsel for the parties. Our attention has been drawn to the submission made by the parties in this review application and the decision. The part of the decision which requires consideration is quoted herein-below:

....In this counter affidavit the Respondents have not disputed the legal position that the Petitioner''s club is not liable to pay service tax for the services rendered to its member under the provisions of law. However, it has been asserted that the Petitioner provides and allows the services for outsiders and receives money on this score for which it is liable to pay service tax as per law. ...

... When the matter was taken up for admission in presence of the parties, the learned Counsel for the Petitioner Sri Binod Kumar Poddar, Sr. Advocate and counsel for the Respondents Mr. Mokhtar Khan agreed that "Mandap Keeper" under the provisions of the Act and as per decisions cited by the Petitioners annexed with this writ petition vide annexures-2, 3, 4 & 9 is not liable to pay service tax under the provisions of Section 65(66) (67) of the Finance Act, 1994 when the services were utilized by the members of the club. Therefore the admitted position of law remains that the Petitioner''s club is not liable to pay service tax for the services provided to its members under the Act and this position of law does not require any clarification in the admitted facts. .......

This argument and the observation of the learned Judges have been quoted herein-above. What we found in the judgment is that the relevant law has not been considered neither the Judgments relied upon by the parties have been dealt upon and considered. The judgment has proceeded squarely on the basis of admission of the parties.

The learned Counsel for the Petitioner submitted before us that the law relied upon stood amended in the year 2005 whereby the service tax has been imposed and the amendment was made in section-65 wherein explanation was added. The explanation reads as follows:

[Explanation.-For the purposes of this section, taxable service includes any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration.]

According to the learned Counsel for the Petitioner, if any case was decided prior to the year 2005, it would have no relevance to decide the case of the club. In the instant case what appears is that while the case was being argued perhaps the explanation was not looked into and the law as laid down by the Court prior to the year 2005 was perhaps known to the members of the Bar and the same was not brought to notice of learned Judges. The Court proceeded to decide the issue without noticing the explanation. In that view of the matter, the case came to be decided only on the basis of admission. This prima facie is not correct position of law and therefore, the judgment deserves to be set aside. The applicability of the service tax has to be seen in the light of explanation added to in Section 65 of the Service Tax Law after 2005.

Another aspect which the learned Counsel for the Petitioner brought to our notice is that the provision of Section-65(105)(zzze) also makes it incumbent on clubs and associations to make the service tax.

Replying to the argument of the learned Counsel for the Petitioner, the learned Counsel for the Respondent-club asserted that the arguments are not sustainable in view of the law as laid down in the case of The Joint Commercial Tax Officer, Harbour Division, II-Madras Vs. The Young Men''s Indian Association (Regd.), Madras and Others, and other Judgments relied upon by him. Even if the learned judges have not considered and dealt upon the cases the correct position of law as agreed upon by the counsels remains and therefore the judgment came.

Having considered the aforesaid submission of the parties, we are persuaded that a judgment proceeding simply on the basis of admission cannot be considered to be a correct interpretation of law.

In that view of the matter, it is required that the law should be considered and only then the issue should be decided. Therefore, the Judgments having proceeded only on admission cannot be considered to be a judgment decided in accordance of law and in that view of the matter, we find that there is an error on the face of the record. Therefore, in relation to the question of law, it is required to be decided afresh.

In that view of the matter, the judgment in question is set aside and the writ petition is required to be heard afresh. The parties will address the Court on writ petition on 29.04.2011.