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2019 (10) TMI 452
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....s there is no furtherance of business in this activity and neither any services are rendered nor are any goods being traded, whether the above transaction can be considered as supply of goods or services to its Members under GST"? At the outset, we would like to make it clear that the provisions of both, the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a reference 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 MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT Rotary International is an International organization whose stated purpose is to bring together business and professional leaders in order to provide humanitarian service and to advance goodwill and peace around the world. It is a non-political and nonsectarian organization open to all people regardless of race, color, creed, religion, gender, or political preference. 2. Rotary members believe that they have a shared responsibility to take act....
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....f 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 furtherance of business (b) import of services for a consideration whether or not in the course or furtherance of business (c) the activities specified in Schedule I, made or agreed to be made without a consideration and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. 2. On reading of the above section, it can be construed that to tax the transaction between an association or club and its members, said transaction must either fit under clause (a) or clause (c) above. Clause (a) covers all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed be made for a consideration by a person in the course or furtherance of business. Hence following ingredients must be satisfied: a. There must be supply of goods or services or both for a consideration; b. And such supply must be in the course or furtherance of bus....
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....fined under Explanation to section 15 of CGST, reproduced below for ready reference: Explanation. - For the purposes of this Act, a) persons shall be deemed to be "related persons" if i) such persons are officers or directors of one another's businesses; ii) such persons are legally recognised partners in business; iii) such persons are employer and employee; iv) any person directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding voting stock or shares of both of them; v) one of them directly or indirectly controls the other; vi) both of them are directly or indirectly controlled by a third person; vii) together they directly or indirectly control a third person; or viii) they are members of the same family; b) the term "person" also includes legal persons; c) persons who are associated in the business of one another in [hat one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. 6. On perusal of above list, one can conclude that there must be two or more perso....
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....n of the Applicant describing the purpose and Article 5, describing the object of the Applicant, is reproduced hereunder for reference: Article 3 Purposes The purposes of this club are to pursue the object of Rotary, carry out successful service projects based on the Five Avenues of Service, contribute to the advancement of Rotary by strengthening membership, support The Rotary Foundation, and develop leaders beyond the club level. Article 5 Object The Object of Rotary is to encourage and foster the ideal of service as a basis of worthy enterprise and, in particular, to encourage and foster: First. The development of acquaintance as an opportunity for service; Second. High ethical standards in business and professions, the recognition of the worthiness of all useful occupations, and the dignifying of each Rotarian's occupation as an opportunity to serve society; Third The application of the ideal of service in each Rotarian's personal, business, and community life; Fourth. The advancement of international understanding, goodwill, and peace through a world fellowship of business and professional persons united i....
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....in humanitarian and charitable services. These services are executed through various districts comprising of many clubs. In order to facilitate meetings and administration, fees are collected from members. These amounts are then used for administration and meetings. The applicant-Rotary club, is a member of Rotary International having 35,000+ clubs is engaged in humanitarian and charitable services. In order to facilitate meetings and administration, fees are collected from members. These amounts are then used for administration and Meeting Same in the both cases, clubs are formed for humanitarian and charitable purpose. Amount collected Members utilised for administration and Meeting 2. The transaction between the club and its members does not fit into the definition of 'supply' owing to the different limbs of the definition, i.e., 'business' and 'consideration'. So it was prayed that, subscription received from members or cabinet should not be subjected to GST as it is a contribution towards common expenditure to conduct the meeting etc. and because no facilities or benefits are being provided out of this subscription. As mentioned above,....
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....n the surplus must be an identical body. That does not mean that each member should contribute to the common fund or that each member should participate in the surplus or get back from the surplus precisely what he has paid.' The Madras, Andhra Pradesh and the Kerala High Courts have held that the test of mutuality does not require that the contributors to the common fund should willy-nilly distribute the surplus amongst themselves : it is enough if they have a right of disposal over the surplus, and in exercise of that right they may agree that on winding up the surplus will be transferred to a similar association or used for some charitable objects......" ii) Saturday Club Ltd. v. Assistant Commissioner, Service Tax Cell [2005] 1 STT 64 (CAL.) = 2004 (6) TMI 11 - HIGH COURT CALCUTTA wherein it was held as under: 17.........Therefore, principally there should be existence of two sides/entities for having transaction as against consideration. In a member's club there is no question of two sides. 'Members' and 'club both are same entity. One may be called as principal when the other may be called as agent, therefore, such transaction in between themselves cannot be r....
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....Implicit in membership of clubs and associations is the obligation to share in such expenses. These are required for maintaining the assets of the club or association for which a service provider may or may not be contracted but the contributing members are not the direct beneficiaries of such services. Contribution to expenses cannot, by any stretch, be deemed to be consideration for any identified service rendered to individual members by access to the facilities or advantage that is within the wherewithal of the "club or association". However, to the extent that it is possible to identify the facilities, advantage or services of the "club or association" utilized without further payments specifically attributable to such facility, advantage or service, the subscription will be taxable. [Emphasis Supplied) vi) M/s DLF Recreational Foundation Ltd. v. CST, New Delhi [2017] Appeal No. ST/1085/2011 (Chandigarh Tribunal) = 2017 (5) TMI 100 - CESTAT CHANDIGARH wherein it was held as under: 6. Considering the fact that the levy of service tax on the service provided by a club to its members has been purported ultra-virus under the category of club or association services.....
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.... Members of the Applicant are not entitled to any facilities whatsoever such as sports, fitness, lifestyle, entertainment and personal transportation out of these funds. 5. In case of training programs/workshops/cultural programs conducted by the Applicant for the benefits of the Members, the amount towards the said programs/workshops are collected and separately from the Members and accounted accordingly. We undertake to make payment of GST on the same provided the same is above the threshold limit as prescribed by the Govt. 6. The Applicant hereby confirms that membership fees collected from the Members is towards Rotary International / district dues, meeting expenses, administrative expenses and charitable activities. 04. CONTENTION - AS PER THE CONCERNED OFFICER The jurisdictional office has not made any submissions. 05. HEARING Preliminary hearing in the matter was held on 19.09.2019, Sh. Ganesh Narayan, C.A. of T R Chadda & Co LLP appeared and made written submissions and also requested for admission of their application. He further requested for conducting the final hearing simultaneously. The application was admitted and also taken up for final....
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....;2019 (7) TMI 616 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA and Rotary Club of Nariman Point = 2019 (8) TMI 819 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA, this authority has already held that the amount collected as membership subscription and admission fees from members is liable to GST as supply of services. We also find that, vide Amended Order No. MAH/AAAR/SS-RJ/32A/2018-19 dated 14.08.2019 (order issued after the orders passed by this authority in the cases of Rotary Club of Queens Necklace = 2019 (7) TMI 616 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA and Rotary Club of Nariman Point = 2019 (8) TMI 819 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA), the Hon'ble Appellate Authority For Advance Ruling, Maharashtra, in the case of Lions Club of Kothrud, has held that the membership fee collected by them will not be subject to GST and only registration fee charged from members for participation in the training programs/workshops will be subject to GST. The amended order was issued taking into consideration, the additional submissions made by the Lions Club of Kothrud stating that membership fee recovered by them from their members is spent towards meeting various admini....