TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 933
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....penses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, within the meaning of supply? 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 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 MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: 2.1 'Rotary' is an International organization engaged in humanitarian and charitable services and one of its member clubs is the applicant i.e. M/s. Rotary Club of Bombay Queen City. The applicant arranges meetings for its members and in order to defray its expenditure for such meetings, communications and administration, fees are collected from members. No facilities/benefits are provided such as recreation, etc by the applicant. The applicant also sends fees to International Institution at USA for service activities and In....
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....ollows: It should be noticed that in the case of a mutual society or concern (including a member's club), there Must be complete identity between the class of contributors and the class of participators. The particular label or form, by which the mutual association is known is of no consequence. 2.10 Recently in the case of State of West Bengal vs. Calcutta Club Ltd., Larger Bench of the Hon'ble Supreme Court vide its judgement dated 3rd October, 2019, a service tax matter, observed that the definition of "services" under section 65B(44) of the Finance Act, 1994 requires the provision of services by one person to another, and the doctrine of mutuality, which is applicable to clubs qua sales lax for supplies to members, was equally applicable "on all fours to services." Consequently, services by a members' club to its members amounts to services to self. 2.11 To tax the transaction between an association or club and its members, said transaction must either fit either under clause (a) or clause (c) of Section 7 of the CGST Act, 2017, which defines the term supply". As per Clause (a) there must be supply of goods or services or both for a consideration and such supply....
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....re of a reimbursement for the meetings and administrative expenditures incurred to sustain and propagate their inherent programs, would be subject to double taxation as the amount spent towards meetings and administrative expenditures is already subjected to GST at the hands of the suppliers of these input services or goods used in the meetings, events and other administrative functions of applicant. In this regard, reliance is placed on the finding of Hon'ble Maharashtra Appellate Authority for Advance Ruling for GST, in the cases of Rotary Club of Mumbai Queens Necklace (Order 06.11.2019) and Rotary Club of Mumbai Nariman Point (Order No. MAH/AAAR/SS-R1/20/2019-20, dt. 11.12.2019) No effect of new clause (aa) in sub-section (1) of Section 7 of the CGST Act 2.17 A new clause (aa) has been inserted in Section 7(1) of the CGST Act retrospectively, with effect from the 1st July, 2017, to provide levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. 2.18 Applicant submits that insertion of said clause doesn&....
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....ry working towards the betterment of the society by carrying out various charitable causes and activities through a Charitable Trust. The applicant also receives amounts as donations/charity which are used exclusively for the purposes of the said donation/charity and no amount is utilized for administration purposes. Thus, charitable activities are carried out from the amounts received as donation/charity whereas meetings/administration expenses are incurred from the fees received from its members. The applicant has strongly argued that the principle of mutuality is applicable in it case and therefore tax is not leviable on the fees received from members for carrying out meeting and for administration expenses. 5.4 In view of the above we now take up both the questions raised by the applicant. 5.5 The first question is whether the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is 'business' as envisaged u/s 2(17) of the CGST Act, 2017. The second query of the applicant is whether contributions from its members, recovered for expending the same for the weekly and other meetings and other petty admi....
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.... not, in India or outside India. 5.6.5 Therefore, in view of the amended Section 7 of the CGST Act, 2017, we find that the applicant society and its members are distinct persons and the fees received by the applicant, from its members are nothing but consideration received for supply of goods/services as a separate entity. The principles of mutuality, which has been cited by the applicant to support its contention that GST is not leviable on the fees collected from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received from its members. 5.7.1 According to applicant, there is no commercial consideration involved in the process, just that the funds are collected in a common pool for meeting the expenses for the weekly meetings and other petty expenses incurred in meeting the common objective of betterment of society. According to applicant, the amount being collected from the members is reimbursement of expenses or share of contribution. According to applicant, it does not function on commercial basis. The common pool is being spent back on the members only. According to applican....
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....vices must be supplied in the course or furtherance of their business. The term 'business' is defined under Section 2(17) of the CGST Act includes,- ................................ 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; .............................. 5.9.3 Clause (e) of the above said definition is relevant and it is clear from the said clause that the activity of providing facilities or benefits by an association to its members for a subscription is a business under GST Act. Hence the transactions between the association and its members is a service. 5.9.4 Further, Section 2(31) of the CGST Act states that 'Consideration' in relation to the supply of goods or services includes,- (a) 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, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, whether or not voluntary....
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....t in this amendment. The fees/donation/subscription/ amount (by whatever name called), collected by the applicant, is nothing but the "consideration" for the such "supply" and is covered by the scope of the term "business". The club and the member are two distinct persons. The principle of mutuality has no application after this amendment. The applicant merely contended that the position does not change after the amendment but failed to explain the said proposition of law. The applicant has further failed to explain as to for what purpose or to remove which particular mischief or cover which particular aspect or transaction was the said amendment brought about. All the other case laws relied, also do not provide any guidance on the legal situation, particularly after the amendment. 5.11.1 Further, the applicant has also submitted that a Co-joint reading of the definitions of a "supplier" and "recipient" as per the GST Act provides that, where a consideration is involved in a transaction, the recipient is the "person" who pays the consideration to the "supplier" and hence two different persons have been envisaged in the law to tax a transaction as a supply made for consideration. ....