Secunderabad Club Vs Assistant Commissioner of Customs (Telangana High Court)
Telangana High Court considered a writ petition filed by Secunderabad Club challenging the constitutional validity of Section 65(105)(zzzzv) of the Finance Act, 1994, as introduced by the Finance Act, 2011, which sought to levy service tax on specified services provided by clubs to their members. The petitioner argued that the levy was unconstitutional, relying on earlier judicial precedents. The High Court noted that this very issue had already been examined in detail in a previous case—Jubilee Hills International Centre v. Union of India—where similar service tax provisions concerning clubs, including Clauses (25a) and (105)(zzze) of Section 65, were declared unconstitutional. In that decision, the Court had relied heavily on the Supreme Court judgment in State of West Bengal v. Calcutta Club Ltd. (2019), which comprehensively held that service tax could not be levied on transactions between a club and its members due to the doctrine of mutuality. The Supreme Court had affirmed the earlier views of the Jharkhand and Gujarat High Courts, both of which had struck down corresponding service tax provisions as ultra vires. Since the Supreme Court’s ruling directly covered the issue and upheld the unconstitutionality of service tax on clubs, the Telangana High Court held that the same reasoning applied to the present case. Accordingly, the Court allowed the writ petition and declared that the impugned provision could not be sustained. It also closed all pending miscellaneous applications and made no order as to costs.
