CESTAT Bengaluru Rules No Service Tax on Club-Member Services; Upholds Liability on Events, Restaurant & Sponsorship

April 29, 2026 : The Customs, Excise and Service Tax Appellate Tribunal, Bengaluru Bench has held that services provided by a club to its own members are not liable to service tax under the category of “Club or Association Services.” However, it upheld tax liability on activities such as commercial exploitation of events, restaurant services, and sponsorship.

The ruling was delivered by a Bench comprising Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member) in the case of M/s Mysore Race Club Ltd. v. Commissioner of Central Excise, Customs and Service Tax, Mysore, where the appeal was partly allowed.

The dispute pertained to service tax liability for the period from April 1, 2008 to June 30, 2012, under multiple categories including Commercial Use or Exploitation of Event, Renting of Immovable Property, Club or Association Services, Restaurant Services, and Sponsorship Services.

At the outset, the Tribunal set aside the demand under “Club or Association Services,” reiterating the settled legal position that a club and its members are not distinct persons. Relying on the Supreme Court’s judgment in State of West Bengal v. Calcutta Club Ltd., it held that services rendered to oneself cannot constitute a taxable service for consideration.

On the issue of live telecast sharing with other race clubs, the Tribunal upheld the demand under “Commercial Use or Exploitation of Event.” It noted that the appellant received downlinking charges for permitting other clubs to commercially use its racing events, which squarely falls within taxable service under Section 65(105)(zzzzr) of the Finance Act, 1994. The liability applies from July 1, 2010 onwards when the service became taxable.

With respect to payments received from bookmakers, the Tribunal rejected classification under “Renting of Immovable Property.” It observed that such payments were linked to race-related operations governed by betting laws and were not based on the area of the premises, thus not constituting rent.

On restaurant services, the Tribunal upheld the tax demand, noting that food and beverages were served in air-conditioned premises. It relied on the Karnataka High Court decision in Ballal Auto Agency v. Union of India, which affirmed that service tax is leviable on the service component even in composite transactions.

Regarding sponsorship services, the Tribunal sustained the tax liability as the appellant had admittedly sponsored sporting events and failed to establish a valid exemption.

On limitation, the Tribunal ruled that the extended period could not be invoked. It found that there had been continuous correspondence between the appellant and the department over the years, negating any allegation of suppression of facts. Accordingly, all surviving demands were restricted to the normal limitation period.

In conclusion, the Tribunal partly allowed the appeal by setting aside the demand under “Club or Association Services,” while sustaining other tax demands only for the normal period.

Case Reference : M/s Mysore Race Club Ltd. v. Commissioner of Central Excise, Customs and Service Tax, Mysore