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January 2016

[2015-TIOL-2315-CESTAT-MUM] M/s Chiplun Nagari Sahakari Patsanstha Ltd. vs. Commissioner of Central Excise, Kolhapur

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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Services provided by a co-operative society lub to its own members is not chargeable to service tax.

Facts
The Appellant is a Co-operative Society of members and is engaged in accepting deposits from their members and distributing the said amounts as loan to its own members and is not extending loans to outsiders. In order to process loan applications certain charges are levied from the members incurred for stationery and other expenses. The department contended that these charges are collected in the course of rendering services under the category of Banking and Other Financial services.

Held
The Tribunal, in order to determine the ratio of tax liability on the members of a society relied on the decision of the High Court of Gujarat in the case of Green Environment Services Co-op. Soc. Ltd. [2015 (37) STR 961 (Guj.)] wherein the Court declared “Club and Association” service ultravires to the extent the services are provided by the Club to its members. Accordingly, applying the said ratio the order was set aside and the appeal was allowed.

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