COMMISSIONER OF SERVICE TAX vs. DELHI GYM KHANA CLUB LTD.

CEAC/5/2009HC DelhiDLHC01047321200928 August 2009Author: HON'BLE MR. JUSTICE A.K.SIKRI,HON'BLE MR. JUSTICE VALMIKI J. MEHTA13 pages
AI SummaryDismissed

What were the facts?

The Commissioner of Service Tax filed appeals before the Delhi High Court against orders of the CESTAT. The respondent in CEAC No. 5/2009 was Delhi Gymkhana Club Ltd., which had been issued show-cause notices demanding service tax of Rs. 22,93,564/-, interest, and penalties. The club contended that no service tax was payable as services were provided to its members, not third parties. The Assistant Commissioner confirmed the demand and penalties. The Commissioner (Appeals) set aside the order, relying on Calcutta High Court judgments. The CESTAT dismissed the Commissioner's appeal, upholding the Commissioner (Appeals)'s decision. CEAC No. 17/2007 involved India International Centre, with similar issues. The High Court consolidated both appeals due to common questions of law.

What did the High Court hold?

The High Court held that the appeals filed under Section 35G of the Central Excise Act, 1944, were not maintainable due to a lack of jurisdiction. The Court reasoned that Section 35L(b) of the Act provides for appeals to the Supreme Court against CESTAT decisions concerning the determination of any question relating to the rate of duty or the value of goods for the purpose of assessment. The Court found that the core issue decided by the CESTAT, regardless of whether it was termed service tax, essentially related to the rate of duty for assessment. Therefore, the High Court lacked the jurisdiction to hear these appeals, and the appropriate remedy for the appellant was to file an appeal under Section 35L of the Act before the Supreme Court. The appeals were dismissed on the ground of maintainability.

What were the issues?

1. Whether the appeals filed before the High Court under Section 35G of the Central Excise Act, 1944, are maintainable when the CESTAT's decision pertains to the rate of duty or value of goods for assessment purposes, as per Section 35L(b) of the Act. Assessee's Contention (Revenue): The Revenue argued that the appeals are maintainable. Their submission was that the dispute relates to the levy of service tax under the Finance Act, 1994, specifically concerning whether the respondent club is liable to pay service tax for allowing members to use its space as a 'Mandap', which is a taxable service under Section 65 read with Sections 67 and 105 of the Finance Act, 1994. They contended that there is no question regarding the rate of duty or value of goods for assessment, but rather the fundamental question of liability to pay service tax. Revenue's Contention (Assessee): The Revenue did not explicitly record arguments for the respondent in CEAC No. 17/2007 as they remained 'NEMO'. However, in CEAC No. 5/2009, the respondent challenged the proposed service tax on the ground that services were provided by the club to its members, and thus, the principle of mutuality applied, negating the element of a taxable service. They relied on the Calcutta High Court judgments in Dalhousie Institute v. Asstt. Commissioner, Service Tax Cell and Saturday Club Ltd. v. Asstt. Commissioner, Service Tax Cell.

Which sections of the Income-tax Act were involved?

Section 35,Section 35G,Section 35L,Section 65,Section 66,Section 66A,Section 67,Section 73,Section 75,Section 75A,Section 76,Section 77,Section 78,Section 105

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Reportable *

IN THE HIGH COURT OF DELHI AT NEW DELHI

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CEAC No. 5 of 2009 and CEAC No. 17 of 2007

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Reserved on : July 24, 2009 Pronounced on : August 28, 2009

1.

CEAC No. 5/2009

Commissioner of Service Tax

. . . Appellant

through : Mr. Mukesh Anand with

Mr. RCS Bhadoria, Mr. Sumit

Batra and Mr. Shailesh Tiwari,

Advocates

VERSUS

M/s. Delhi Gymkhana Club Ltd.

. . . Respondent

through : Mr. P.K. Sahu with Mr. Prashant

Shukla, Advocates

2.

CEAC No. 17/2007

Commissioner of Service Tax

. . . Appellant

through : Mr. Mukesh Anand with

Mr. RCS Bhadoria, Mr. Sumit

Batra and Mr. Shailesh Tiwari,

Advocates

VERSUS

India International Centre

. . . Respondent

through : NEMO

CORAM :-

THE HON‟BLE MR. JUSTICE A.K. SIKRI

THE HON‟BLE MR. JUSTICE VALMIKI J. MEHTA

1.

Whether Reporters of Local newspapers may be allowed to see the Judgment?

2.

To be referred to the Reporter or not?

3.

Whether the Judgment should b

The order continues below.

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