Service tax on trade associations
The CBEC clarifies:-
Service tax is applicable on "club and association service" with effect from 16.6.2005. The taxable service under this category is any service provided by a club or association to its member for a fee or any other consideration.
A number of trade associations have disputed the levy of service tax on them under this category of taxable service. In this regard it is stated that there is no dispute that such bodies fall within the scope of club or association. The services provided by these associations are not of charitable, religious or political in nature. They collect membership fees and other charges form their members and they work for the interest of trade and industries. Therefore, they do not have objectives which could be categorized as public service. Accordingly, they do not fall within the scope of the excluded categories.
Further some of the trade associations have also argued that they are providing service to their own members and thus the service is self service. However such argument does not have any legal basis. In this regard attention is invited to the Explanation to section 65 of the Finance Act, 1994, which clearly clarifies that taxable services includes any service provided by any unincorporated association or body of person to a member thereof, for cash deferred payment or any other valuable consideration.
In view of the above, appropriate action may please be taken for recovery of service tax in all these case.
We had carried this clarification from Delhi Service Tax Commissionerate on Friday; now we have it from the Horse's mouth and so we are carrying it again for record and posterity.
CBEC F.No . 137/50/2008- CX.4 Dated: April 28, 2008