Service Tax on club or association membership service – Board wants tax compliance
What triggered this alert notice is a case booked against a reputed club for non-payment of service tax to the tune of nearly three Crores under club or association service. This reputed club reportedly had not paid a single rupee right from 16.6.2005, from which date the service was brought under the tax net. The Board is not happy with the pleas often put forward by the clubs or associations like, the club provides services to its own members only which is in the nature of self-service and is not chargeable to tax. This is not legally sustainable in view of the explanation added to Section 65(121) in 2006, says the letter. (Section 65(121) is missing in the letter – proof readers – most wanted!).
The other argument that the activities are of charitable nature is also not acceptable in view of the Circular dated 19.9.2006. So the Board has desired that all prominent clubs and associations should be contacted for recovery of the tax.
The clubs are not paying, but what is the government doing – these clubs are very popular and well known. Does the fact their members are powerful in society make any difference?
F.No. Dated : March 5, 2008