Tax applicability of Services by Trade Association

This query is : Resolved

Sethumadhavan.N (Querist)
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10 December 2008 I came to know that the Department issued SCN to CII and other industry chambers demanding service tax under the catagory club and association services.

My doubt is the trade associations and industry chambers are non-profit making organisations which give services to their members for obtaining certificate of Origin, GSP and related trade facilities.

Really these are taxable under service tax law? If yes, please brief. It not under which notn: they are exempted?

S. Banerjee

S. Banerjee (Expert)
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16 December 2008 1.1 As per section 65(25a), “club or association” means any person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members. But exclusions have been in respect of specific clubs or associations which will not be covered within the ambit of clubs or associations for the purpose of levy of service tax. These exclusions cover – (i) any body establishment or constituted by or under any law for the time being in force; or (ii) any person or body of persons engaged in the activities in of trade unions, promotion of agriculture, horticulture or animal husbandry; or (iii) any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature; or (iv) any person or body of persons associated with press or media.
1.2. Under section 65(105) (zzze) taxable service defined as “to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount”;

1.3. Departmental clarifications on club or Association Service
PARA 10.2 AND 10.3 OF CIRCULAR F.NO. B1/6/2005-TRU, DATED 27-7-2005 (EXTRACT)
10.2 Various clubs or associations provide services, facilities or advantages to their members for a subscription or a charge. This taxable service covers within its ambit the charges recovered by such clubs or associations for membership and providing various services. However, exclusions have been made in respect of specific clubs or associations which will not be covered within the ambit of clubs or associations for the purpose of levy of service tax.
10.3 These exclusions cover any body established or constituted by or under any law, trade unions, clubs or association formed for promotion of agriculture, horticulture or animal husbandry, clubs or association which are non-profit making bodies and are engaged in any activity which are in the nature of public service and are of a charitable, religious or political nature, clubs or associations associated with press or media.

1.4 Accordingly, an industry association rendering service to its members and charging subscription or membership fees/charges is, therefore covered under definition. It is not meant for public at large but dedicated to advance common interests of a particular section or group of persons.

1.5 Trade and Industrial Associations are formed for the purpose of ‘public utility’. Membership of such associations should not be liable to service tax, even if such associations are only registered as Society or Trusts.
Thanks,
S. Banerjee

Sethumadhavan.N

Sethumadhavan.N (Querist)
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16 December 2008 Thank u very much for the clarification. But according to source from Economic times , New Delhi dated 16/05/2008, ( Also refer Service Tax Review Volume 10 - PArt 5 - page J 190, it clearly says with CBEC clarified on 15/05/2008 that the trade associations falls within the scope for "Clubs & Association Services".

The Board said that the services provided by these associations are not of charitable, religious or political in nature. They collect membership fees and other charges from their members and they work for the interest of trade and industries. Therefore, they do not fall within the excluded categories. This is the clarification given by the CBEC.

Accordinlgy Confederation of Indian Industries (CII) got SCN.

Is there any recent updation on this issue?

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