Jubilee Hills International Centre Vs Union of India And Another (Telangana High Court)
In the case of Jubilee Hills International Centre vs Union of India, the Telangana High Court considered a writ petition challenging the constitutional validity of Clause (25a) and Clause (105)(zzze) of Section 65 of the Finance Act, 1994. The petitioner is a registered Press Club under the Andhra Pradesh (Telangana Area) Public Societies Registration Act, operating as a social and recreational association funded by member contributions through entrance fees, subscriptions, and other charges. The club functions on a non-profit basis, and its primary objective is to provide services to its members rather than generate profit.
The challenge focused on provisions of the Finance Act that imposed service tax on services provided by such clubs to their members. The court noted that similar provisions had previously been held unconstitutional by various courts. The Supreme Court, in State of West Bengal v. Calcutta Club Limited, endorsed the view that such clauses were unconstitutional. Earlier, the Jharkhand High Court (W.P.(T). No.2388 of 2007) and the Gujarat High Court had also declared these provisions ultra vires to the extent they imposed service tax on non-profit club services.
Relying on these precedents, the Telangana High Court allowed the writ petition, holding that the challenged clauses of the Finance Act could not validly impose service tax on non-profit associations providing services to their members. The court clarified that there would be no order as to costs, and all pending miscellaneous applications related to the petition were closed. The decision reaffirms the legal position protecting non-profit clubs from service tax liabilities under the specified sections of the Finance Act.
