The Ahmedabad CESTAT (tax tribunal) has ordered Rajpath and Karnavati clubs to refund over Rs 20 crore in service tax to their members within two years.

The tribunal ruled that any interest earned on these refunds must be kept in a special account. If members don’t claim their refunds within two years, both the original amount and interest must go to the Consumer Welfare Fund.

Rajpath Club received Rs 17.18 crore from the tax department in 2018, while Karnavati Club received Rs 2.66 crore. These refunds came after a ruling that service tax collected from members (April-September 2016) wasn’t actually taxable because clubs and their members are considered the same entity.

The tribunal criticized Rajpath Club for not proving they had repaid members despite receiving the refund in 2018. The club’s vice president told TOI, “A majority amount has been refunded to the members and the process is underway for the remaining.”

Tax officials argued that the members who originally paid the tax should get the refund, not the clubs.