07 May 2009
On getting some clarifications from the panel of Experts of this forum, yesterday, I had approached the Service Tax Department and I had been categorically told as under 1. Once the revenue of any Member's Club at any point of time crosses the threshold limit, ( and it is available to the Club), it has to pay Service Tax on the entire revenue and not on the difference amount that exceeds 10 lakhs.
2. The Club has been ear marking some portion of the Revenue (Donations) towards Building fund account and treated it as Donation to Building fund since 1998 as provided under the Bye-laws of the Club. The department argues that this would be treated as Mandatory Donation and would also be taxable revenue.
Whatever we had been doing (computing the income)during the past years, we have been asked to continue to do so . The Club has been treating the entire receipts as its revenue and paying ST since 2004. All along the revenue exceeds the threshold limit has not been utilized
Please clarify whether the stand taken and cleared by the Department is true? Please throw some lights on the subject and give us your valued opinion on the matter that will enable us to further proceed or drop the the entire matter
07 May 2009
Whether a club and its members are different and whether one can provide service to oneslef is a legal issue which requires to be confirmed. However I think you should get in touch with an expert in your towen/ city.
Please also read Rule 5 (2) of the Service Tax ( Determination of Value ) Rules 2006 for some relief.
07 May 2009
The legal issue has already been decided in case of Saturday Club by Kolkata High Court. The ruling has been followed in numerous cases like Dehradun Club etc. Clubs are not required to pay any service tax on subscription charges. Further they are not required to pay any service tax on any service provided to its members. The departmetal stand is rubbish.
CAclubindia
