TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1281
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....provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGS T Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT "The National Institute of Bank Management a premier Academic cum Training Institute was established in 1969 by Reserve Bank of India (RBI) in constitution with Government of India as an autonomous Apex Institute, with the mandate of playing a pro active role of "Think Tank" of the banking system. NIBM is registered as a society under the Indian Society Registration Act (XXI) of 1860. RBI, State Bank of India (SBI) & Other Public Sector Banks were the first members of Governing Board of this society to which, by rules of the society, the management of its affairs entrusted. Copy of Memorandum is attached for reference. As per Memorandum of Association, the objects for which the society is established are as under: 1. to plan, promo....
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....m the participants. However, NIBM contends that the GST is not applicable on the contributions collected the Public Sector Banks on following grounds: i) it is a settled 'legal position that unless the link or nexus between the amount and the taxable activity can be established, the amount cannot be subjected to the tax; ii) contribution, donation or grant-in-aid is not specifically meant for a person receiving such training or to the specific activity, but is in general meant for the charitable cause championed by the registered foundation; iii) the contributions given by the Public Sector Banks are given freely in which the said banks do not receive any exclusive benefit in return; iv) the contribution, received by NIBM from the Public Sector Banks shall not be treated as "consideration" received for training or other taxable supplies; v) the supply" is defined u/s 7(1) of the GST Act as follows: "For the purposes of this Act, the expression "supply" includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or....
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....ch activities and offer suggestions for filling the gaps in the banking and financial systems; 4) to promote and undertake faculty development programmes to assure an adequate supply of competent trainers to institutions conducting training programmes for the personnel of banking and financial institutions; c. Contributions collected from member banks: RBI, SBI & other Public sector banks in capacity of promoters of the Institute contribute now annually an amount of Rs. 100.00 lakh as subscriptions towards recurring expenses. The planned non-recurring expenses including the capital expenditure is also contributed based on the budget approved by the finance committee in their annual meeting. The member banks contribute towards the recurring and non-recurring expenditure in the following proportion: i) RBI 40% of - Rs. 100 lakh and the budgeted expenditure; ii) SBI 20% of- Rs. 100 lakh and the budgeted expenditure; iii) Other Public Sector Banks - 40% of Rs. 100 lakh and the budgeted expenditure in proportion to their deposits with RBI. d. Source of income for NIBM (i) Short term Training courses offered by NIBM to banks; (ii) Consultancy related to specific needs o....
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....ated as 'income received in advance? and adjusted against the contribution of subsequent year. The contribution, therefore, cannot be said to be in the nature of consideration but it is more in the nature of aid / grant / subsidy received from the members to support functioning of the NIBM. 2. No "Business" Section 2(17) of the GST Act defines Business as follows: "business" includes a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any 0iher similar activity, whether or not it is for a pecuniary benefit; b) any activity or transaction in connection with or incidental or ancillary to sub clause (a); c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency; continuity or regularity of such transaction; d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business, e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members, admission, for a consideration, of persons to any premises; g) services supplied by a person as the holder of ....
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.... goods and not as a supply of services; or b) supply of services and not as a supply of goods. Perusal of the above would reveal that there has to be a supply of goods or services for a consideration by a person in the course or furtherance of business to meet the definition of "supply". In case of receipt of recurring and non-recurring contributions by NIBM from the member banks, there is no supply of goods or services neither there is any consideration nor business or furtherance of business thus the said receipts fall outside the scope of supply" and thus, shall not attract GST. As a matter of fact, there is no direct nexus / linkage between the contribution received from members and services offered to them and thus, there is no supply as defined u/s 7 of the GST Act. NIBM offers various services in the nature of training, coaching, research, consultancy to members for which separate fees are charged and the GST is levied on such services wherever specific exemption is not available under the GST law. NIBM also relies on following decisions/circulars, wherein, it has been held/clarified that: a) the amounts received as charitable donations out of free will and public ....
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....s long as its character of a mutual association is retained, with its income not tainted / derived by commerciality. The 'Principle of Mutuality' has been held as a cogent ground for non-taxability of an activity across various taxes such as VAT, Sales Tax as well as Service Tax in several cases. The 'Principle of Mutuality' would, therefore, be applicable even in respect of applicability of Goods & Services Tax. Principle of Mutuality was considered in CIT. v. Bankipur Club [1997] 92 Taxman 278 (SC) = 1997 (5) TMI 392 - SUPREME COURT. These principles are applicable and have been applied by the Calcutta High Court in Saturday Club Ltd. v. Asstt. CST [2005] 1 STT 64 (Cal.)) = 2004 (6) TMI 11 - HIGH COURT CALCUTTA as concurred to in Dalhousie Institute v. Asstt. CST [2005] 1 STT 15 (Cal.))(EXHIBIT A-1 to A-3) = 2004 (6) TMI 625 - CALCUTTA HIGH COURT. 2012 (26) S.T.R. 401 (Jhar.) In The High Court of Jharkhand At Ranchi, Prakash Tatia. CJ. & Aparesh Kumar Singh. J. Ranchi Club Ltd. v. Chief commr. Ofc. EX. & S.T., RANCHI ZONE [2012] 22 taxmann.com 217/36 STT 64 (Mag.) = 2012 (6) TMI 636 - JHARKHAND HIGH COURT In case of NIBM, it is registered as a society under the Indian Society....
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...., reports, books and booklets in this regard No facilities are provided to members against the subscription amount, as the said amount is utilised for recurring and non- recurring expense. As there is no business, there is no furtherance of business. 7. Supply - publishing and promotions - increased credibility of member banks -increased client base supply -No facility - -No business -No furtherance of business and no supply 8. Necessity of the service provided Yes, in case no service was provided by banking codes, there was requirement of the service as per the mandatory guidelines of RBI No such requirement 9. Promoting national development By using the unique codes developed, credibility of the member banks is increased, hence no national development the services provided are for spreading of education, creating awareness and promoting national development Additional submissions on 21.06.2019 1. Statement of decided cases of Advance Ruling in comparison to NIBM a) Banking Codes & Standards Board of India b) Lions club of Poona Kothrud c) Association of Inner Wheel Club, West Bengal AAR d) Maharashatra Rajya Sahakari Sangh Maryadit Points of Compari....
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....ua the fees received from them. There being no supply qua the fees received, there arises no occasion for us to visit the definition of 'Supply' under the GST Act. The applicant club as per the facts put up before us does not render any 'Supply for the purposes of the GST Act. Having observed so, we refrain from any further discussion. 3. Services received out of contribution collected No services received by members out of contribution collected No services received by members out of contribution collected 4. Benefit to members No benefit to members No benefit to members 5. Consideration for services offered No service offered to members Separately received for services offered 6. Furtherance of business No furtherance of business No furtherance of business 7. Supply No supply No supply Points of comparison Sr.No. Point of comparison Poona Club NIBM 1. Nature of activities Humanitarian and charitable Promoting national development 2. Membership Voluntary Non voluntary Comparison between AIWC and NIBM Sr.No. Point of comparison AIWC NIBM 1. Benefits not extended to non-members or r....
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....en thus- on 15.04.2019 "Ms. National institute of Bank Management (NIBM) is registered as a society under the Indian Society Registration Act, Activities of National Institute of Bank Management are to plan, promote, and Doc-vide for education and training in operation and management of Banking and financial institutions and to undertake, organize and facilitate conferences, seminars etc, to promote and conduct research, to assist banking and financial institutions, to promote and undertake faculty development programs. The question on which advance ruling required is as under: "Whether considerations paid as subscription or contribution towards recurring or capital expenses or reimbursement or by whatever name called to National Institute of Bank Management by its Members for its recurring and non-recurring expenses is leviable to GST." National Institute of Bank Management has informed that the Reserve Bank of India, State Bank of India and other public sector banks in capacity of promoters of the institute contribute annually an amount of Rs. 100 lakh as subscription towards recurring expenses. The entire CAPEX is also contributed at actuals by RBI, SBI, and other public s....
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....ails it is evident that NIBM fulfills the ingredients of section 2 as follows: - Section 2(84) "person" includes - Society as defined under the societies Registration Act, 1860; trust - Section 2(17) "business" includes Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity whether or not it is for a pecuniary benefit. - Section 7: scope of supply: - - (1) For the purpose of this Act, the expression "Supply" includes - All forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal - Made or agreed to be made for a consideration by a person in the course of furtherance of business; - Section 2(31):" consideration "in relation to the supply of goods or services or both includes - Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, - The supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the central Government or a State Govt. The annual subscription and reimbursement received from RBI and other public Se....
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....h. M. A. Bhagat, Dy. Commr of S.T. (E-611), LTU-I, Pune also appeared and made written submissions. 05. OBSERVATIONS 5.1 We have gone through the facts of the case, documents on record and submissions made by both, the applicant, as well as the jurisdictional office. 5.2 The applicant, a registered society under the Indian Society Registration Act (XXI) of 1860 is an Academic cum Training Institute established by the Reserve Bank of India (RBI) in constitution with Government of India as an autonomous Apex Institute. RBI, State Bank of India (SBI) & Other Public Sector Banks were the members of Governing Board to whom, by rules of the society, the management of its affairs was entrusted. They have submitted that the RBI, SBI & other Public sector banks in their capacity of promoters, contribute an amount of Rs. 100.00 lakh, per annum, as subscriptions towards recurring expenses. Their entire CAPEX is also contributed at actuals by them in a certain ratio. The contribution is to ensure that the applicant is not in deficit as regards their operations. 5.3 They have also submitted that their operations, as per Memorandum of Association, include: (A) promotion and conducting of ....
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....taining to the improvement of banking operations, pertaining to the maximum augmentation and effective deployment of banks' resources including analytical and perspective studies of various sectors of the economy with a view to promoting national development, to assist banking and financial institutions in matters such as designing measurement tests for employee selection, appraisal programs, conducting morale, productivity studies, streamlining organizational structure and to review, from time to time, the impact of educational, training and research activities and offer suggestions for filling the gaps in the banking and financial systems and to maintain liaison with banking and financial institutions. 5.7 Hence it is very clear that to receive the contributions as mentioned above, they must carry out the activities entrusted to them and these activities are nothing but supply of services by them, rendered in lieu of the receipt of contributions. Thus their argument that, the contributions are not 'consideration' received for taxable supply is not acceptable. They have submitted that the contributions received cannot be said to be in the nature of consideration but it is more in....