27 May 2013
Dear Expert, my client is a members club and under its premises it is operating restaurant (centralised A/C), Bar. and some time it is providing space to the members for some function. My query is club is liable for service tax? AS per discussion with various person i get that club and members are not different person there is a relation as principal & agent. and service tax applicable on service provided by one person to other for any consideration. the other part is that if service tax is not applicable then what should i do about all taxable services provided by the club,like restaurant services, bar pls give me the solution as soon as possible on urgent basis
27 May 2013
1st of all they are different person. proof: explanation to 65B(44). where it is written that AOP/BOI etc will be distinct person from its member. therefore on these grounds club is separate from its members and your doubt that service can not be provided to self does'n arise.
NOW TAXABILITY: yes taxable from 1st july 2012. as once it is proved they are different persons service by one to another is taxable for consideration.
TAX RATE = 12.36%
EXEMPTION= 33/2012 SSP exemtpion upto 10 lakhs for the 1st year. 25/2012= point 28. service tax is not chargeable in case provided services which are not taxable, hence only taxable services are taxable.
NOTE: even if they are charging on the basis of reimburesment or contribution like annual fee, association fee etc all are taxable. next thing is service will be taxable in as per there specific valuation. eg on restaurant service tax will be according to valuation rules RULE 2(c), and as per 25/2012 after checking ac restaurant or not. means whatever service club providing tax will be charged as per rules for that service.
remember tax will not be charged on such value which is on the basis of pure agent basis, means that is only pure reimbursement and club is not charging any hidden cost, bill are on customers name. though its a rare situation, but if comes then no tax on that. otherwise on all reimbursement and contribution are taxable. as for providing services to members.
CENVAT CREDIT club can take credit of service tax on services used like security housekeeping etc.
27 May 2013
thanks sir, but, club is registered under u/s 25 of the companies act and the recent ranchi high court decision in the case of Ranchi Club it is found that there is no services provided by the club to its member.
Ranchi Club Ltd vs Central Excise & Service Tax on 15 March, 2012
sir, pls hel, what should i do my client is getting notice for tax dues or other matter. pls help me as soon as possible
27 May 2013
Dear the case is related to year 2007, though i will again study the same for your query.. but according to me the explanation to 65B(44), came after the judgement and now we should go with the intention of law.
earlier the matter under dispute was whether club and members are separate or not, whether registered or not.
the decision was based on as per the general rule followed for income tax and other acts that they are not different,
but according to me when the disputable thing is now cleared by the explanation 3 of 65 B(44) then the intention is clear to treat them distinct even if not registered. so in your case already it is registered as company and should be treated as separate entity keeping in mind the intention of law.
after 1st july every service provider has to follow the new rules and almost all the matters which were subject to litigation and were challenged many times in court are now solved with the inclusion of various 'explanations, declared service list, negative list and valuation rules etc'.
27 May 2013
thanks sir, i am completely satisfied with your view again thanks alot.
i have another query, the club has the service tax registration of the premises and as per the notice the department said that the club have been providing short term accomodation services of residential complex as defined under clause(zzzzw)of section 65(105)without obtaining the service tax registration, can the club will go for another registration
30 May 2013
a person can be registered for any number of services at once. so if the case is so.. just alter your registration certificate. make the amendment online in st-2 and submit the new copy.
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