TaxTMI 
TaxTMI 
2019 (11) TMI 477
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....red to as the "Appellant" or "the Department" interchangeably) against the Advance Ruling No. GST-ARA-33/2018-19/B-118 dated 28.08.2018 = 2018 (12) TMI 590 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA. BRIEF FACTS OF THE CASE A. Lions Clubs are autonomous units those collect fees from their members in order to conduct social activities and meet their administrative costs. Similarly, Lions Districts collect fees from Clubs and Cabinet Members to manage District activities. B. It was felt by M/s. Lions Club of Poona, Kothrud (hereinafter referred to as the respondent) that under the principle of mutuality and since the fees so collected are only pooled together for convenience of conducting social activities, paying meeting expenses and administrative expenses, should not be brought under the purview of GST. C. The question raised by the respondent before the Advance Ruling Authority was "Since the amount collected by individual lions clubs and lions districts is for convenience of lions members and pooled together only for paying meeting expenses and communication expenses and the same is deposited in a single bank account, as there is no furtherance of business in this a....
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....inct persons. Therefore, deeming provision has been introduced with effect from 1-7-2012 to the effect that the club and members are deemed to be separate persons. In view the given situation, respondent agrees that club and Its members were two distinct persons, at that time. 3. After introduction of GST w.e.f. 01-07-17, GST is levied on all types of supplies which are- (i) made for consideration; and (ii) are for the purpose of furtherance of business The definition of "business" under Section 2(17)(e) of the CGST Act, 2017 states that- "business" includes 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. 'Thus, the definition is enough comprehensive to include a service by way of a subscription to its members by a "club" in the term captioned as "business. Moreover, the "business" i.e. "furtherance of business" is duly Incorporated in the definition of "scope of supply", as defined under Section 7 (a) of the Central Goods and Services Tax Act, 2017 which is reproduced as under- "all forms of supply of goods or services or both such ....
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....ts also programs, seminars and Institutes for Leadership Development and other forums and these programs are only for Lion members and non-lions are not allowed to take part. Thus, funds received from members are utilized for mutual benefit of members" 9. The element of - "the facilities or benefits to its members" (emphasis supplied) as envisaged under the definition of "business" in Section 2(17) of the CGST Act, 2017 gets satisfied. 10. As per Section 7 of the CGST Act, 2017, the expression "supply" includes 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 furtherance of business and includes activities specified in Schedule II to the CGST Act, 2017. 11. The business includes 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. 12. It is pertinent to mention here that in an identical case of the West Bengal Authority for Advance Ruling, Kolkata in case of M/s. The Association of Inner Wheel Clubs in India = 2018 (11) T....
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....ngs vi) Fees payable to International office vii) Fees payable to Multiple office It can be seen that the amounts collected by way of fees are only pooled together for the sake of convenience. No other facilities or benefits such as sports, fitness, recreation, lifestyle, entertainment and personal transportation are provided to its Club members. Cabinet Membership Fees Collected by District Cabinet members are representatives of various Clubs in defined Area (e.g. District 3234 D2 consist of 3 Revenue Districts Pune, Ahmednagar & Nashik) they collectively form policies and Social Activities for Clubs in the District fees collected from Cabinet Members are used to defray i) Meeting Expenses of Cabinet Members ii) Printing of Circulars iii) Stationery iv) Postage v) Greetings No other facilities or benefits such as sports, fitness, recreation, lifestyle, entertainment and personal transportation are provided to its Cabinet Members. Seminars for the Members These are events where members are enlightened the need of Social Services to be conducted and motivate them to conduct and involve in ....
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.... lifestyle, entertainment and personal transportation etc. 13.5. Incorrect claim in Departmental Appeal as to "Declaration of No facilities provided": It is stated on the page no. 3 of the Form ARA - 03, in the appeal filed by the department as, "The applicant have nowhere expressly submitted and committed that they are not engaged in the activities which may amount to "facilities" or "benefits" to its members". (Emphasis provided) But in the submission made to Advance Ruling Authority, Mazgaon, we had already made the declaration that no "facilities" or "benefits" are being provided to its members. Also, the order itself after considering the applicants declaration has stated on Page 10 of the order, "As can be seen, a supplier is one who provides goods and services, whether on his own or on behalf. In the present case, the club is not formed to provide any facilities or benefits to its members." Thus the appeal itself is based on factually incorrect assumption. 14. West Bengal decision:- Advance Ruling Mechanism in GST as stated is very clear that "Application for advance ruling shall not be admitted in cases where the question raised in the applicat....
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....s, can be considered as service or not. (c) Whether the fee collected by the Respondent i.e. the Lions Club from its members in the form of entrance fee and annual membership fee can be treated as consideration or not. (d) Whether the transaction between the Respondent i.e. Lions Club and its members can be construed as supply or not. 17. Now, to start with our discussion, we will first examine the issue (a), enumerated above, which is whether the Club or Association and the member thereof can be considered as distinct persons or not in terms of the provisions of the CGST Act. To determine this, we will first discuss the meaning of person in terms of Section 2(84) of the CGST Act, 2017, which is being reproduced herein below: "person" includes- (a) Individual (b).............. ................... (e) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (f) ..................... It has been submitted before us by the Respondent, as matter of fact that Lions Clubs and Lions Districts consist of Association of Person. In this regard, reference has also b....
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....ship program exclusively for their Lion members, which covers the aspects of 'how to be a Game Changer'- Management skills, Communication Skills, Executive skills, Leadership Skills etc., which clearly benefits the members of the Club, who have paid the subscription fee to become the Lion members. It is pertinent to note that these Leadership Programs are conducted only for the Lion members. Non-Lion members are not allowed to participate in such programs. Thus, by doing so, the Respondents have rendered activity for the benefit of its members against the membership fee. Now, we will discuss the meaning of services provided in the Section 2(102) of the CGST Act, 2017 which is reproduced herein under: "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; Thus, the GST Law has given a very wide connotation to services, which will cover any activity other than which involves goods, money and securities. Therefore, the activity of....
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....nsfer, 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." Thus, the term "Supply", under the GST Act, has got a very wide connotation due to the presence of the clause "all forms of supply of goods or services or both" However, barring specified exceptions and instances, prescribed under Section 7 of the CGST Act, the following two conditions have been imposed to be considered as "Supply" under GST Law: (i) that such supply should be made by a person for a consideration; (ii) that such supply should be made in the course or furtherance of business; Now, coming to the instant case, it is observed that first condition mentioned above, is squarely satisfied on account of the discussions made in para 19. Now, to determine the compliance of the second condition i.e. whether the supply of service has been made by the respondent in the course or furtherance of business, we will resort to the meaning of "business" as provided under Section 2(17) of the CGST Act, 2017, the relevant portion of which is reproduced herein below: (17) "business" includes- ....
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.... Act. Thus, they have not followed the literal rule of construction in so far as the interpretation of the definition of "business" under the CGST Act, 2017 is concerned. It is worth mentioning that the literal rule of interpretation is the most widely accepted rule of legal construction unless the meaning conveyed by literal rule is against the intent and spirit of the legislation. Thus, in the instant case, the AAR has erred by construing the term 'facilities and benefits' only to the extent of recreation, sports, food etc., by going beyond the text of the legislation. The CGST Act has expressly defined the term business, which, inter alia, includes 'provision by club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members'. Thus, any facility or benefits extended by the Club to its members for a consideration will get covered under the business in so far as the GST law is concerned. It is also difficult for us to comprehend the observation made by AAR, wherein they have opined that such activities as the one undertaken by the Respondent, wherein they organise the Leadership and other skill Development p....