TaxTMI 
TaxTMI 
2022 (2) TMI 82
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....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: The submissions made by M/s. The Poona Club Limited, the applicant, are as under:- 2.1 As per the Clauses of Articles of Association (Definition clause 2) : Member means and includes: (i) Permanent Member but shall not include a Subsidiary Member, (ii) Life Member but shall not include a Subsidiary Member. "Subsidiary Member" means and includes : (i) Corporates Member ; (ii) Gymkhana Subscriber (iii) Honorary Member ; (iv) Spouse Subscriber ; (v) Games playing subscriber ; (vi) Visiting subscriber ; (vii) N.R. I Subscriber ; (viii) Lady Subscriber 2.2 Club dues are defined in sub clause (d) as : "Club Dues" in relation to a Member, means & include, aggreg....
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....e case may be; (f) Admission, for a consideration, of persons to any premises; and services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; Explanation:- Any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities shall be deemed to be business." 2.6 Sub-clause (e) is a specific clause made for associations, clubs and societies. Therefore, the general terms of sub-clause (a) cannot apply on the basis of the principle that the specific clause ousts the general clause. It is to be seen that sub-clause (a) specifically speaks of profit motive, but sub-clause (e) does not. Therefore, the intention of the Legislature is clear that profit motive is not ousted from sub-clause (e) though it is ousted from sub-clause (a). 2.7 Assuming but not admitting that profit motive is not required in sub-clause (e), it is well settled that where the main objects of the entity is not of a "commercial nature", then that activity cannot be called "business", whether or not the Legislature m....
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....s, maintain the same and administer the club. There are two distinct activities. One purpose is administration of the club and maintenance. There cannot be any "provision...of facilities or benefits" as required in sub-clause (e) of Section 2 (17) in such a case or a "supply" or "service" as required under charging section 7 where mere internal maintenance and administration is done. Second purpose is to provide the facilities and services to members for which members are charged as and when members use the facilities and to the extent of use. This has no nexus to the membership fees charged in the present case which do not give any right to use facilities of the Poona club. 2.12 The activity of pooling resources by members for the club by way of membership fee (contribution to corpus), is one-time payment and there is no nexus with any particular goods or services as required in the charging section. The funds raised do not entitle anyone to claim any facility or benefit from the club. There is no element of service which is given in reciprocation of the contribution. The entire membership fees are capitalized. It is similar to capital contribution by partners in case of Partne....
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....association is not formed for profit motive. Applicant states that assuming but not admitting that profit motive is irrelevant in sub-clause (e) of Section 2 (17) also, it is submitted that the definition has not made "commercial object test" irrelevant. In the earlier Sales Tax era, the Supreme Court has held in Commissioner of Sales Tax v Sai Publication Fund [(2002) 4 SCC 57] that even after making profit motive irrelevant in the definition of "business" in the Bombay Sales Tax Act, 1959, the Legislature has not made commercial object test irrelevant. The Supreme Court had specifically held that the question of profit motive being irrelevant by statute does not mean that the activity automatically becomes a "business". It was held that if the main object of the trust is not commercial in nature, then the fact that the incidental objects require sale and purchase of goods is irrelevant. Thus, if the main object is not commercial in nature, then the entire activity falls outside the definition of "business". 2.19. It is submitted that, if the intention of the Legislature was to tax every supply, then there was no necessity to place the limitation of in the course or furtherance....
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....nd the Applicant association is not carrying on any commercial activity and hence is not covered by the definition of "business". 03. CONTENTION - AS PER THE CONCERNED OFFICER: The jurisdictional/concerned officer has not made any submissions. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 08.06.2021. The applicant was represented by Authorized Representatives Shri. G. Y. Patwardhan, Advocate, Shri. Ishaan Patkar, Advocate, Smt. Swati Mokashi, Applicant Side. Jurisdictional officer was absent. The Authorized Representative made oral submission with respect to admission of their application. 4.2 The application was admitted and called for final e-hearing on 26.11.2021. The Authorized representative of the applicant, Shri. Ishaan Patkar, learned advocate, Shri. G. Y. Patwardhan, learned advocate and Smt. Swati Mokashi, employee were present. Jurisdictional officer was absent. 4.3 Heard the matter 05. DISCUSSIONS AND FINDINGS: 5.1 We have perused the documents on record and considered the oral and written submissions made by the applicant. 5.2 The applicant has submitted that, "Membership associations like Poona Clubs are formed for creation....
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.... (b) the activities specified in Schedule I, made or agreed to be made without a consideration; and (c) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. ......................................... (3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- 1. a supply of goods and not as a supply of services; or 2. a supply of services and not as a supply of goods. 5.4.4 Vide clause 99, an amendment was proposed in the CGST Act, 2017, whereby, in section 7, in sub-section (1), after clause (a), the following clause was to be inserted and deemed to have been inserted with effect from the 1st day of July, 2017, namely: "(aa) the activities or transactions, by a person, other than an individual, to their members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation.-For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time....
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....son, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration' cover all types of activities/transactions of the present applicant. There is no list or limit or any restriction prescribed in this respect in this amendment. The fees, collected by the applicant, is nothing but the "consideration" for "supply of services/goods" 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. All the other case laws relied upon, also do not provide any guidance on the legal situation, particularly after the amendment. 5.5.1 Applicant has submitted that, the ordinary meaning of "business" requires profit motive to be established. The applicant has reproduced the definition of the term "business" defined u/s 2(17) of CGST Act 2017 and has stated that even though clause (e) of the said Section 2 (17) mentions that the '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 as the case may be', is terme....
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....er or not the same is for pecuniary benefit (used in clause (a) above), implies that whether or not such activity yields the benefit which can be quantifiable in monetary terms or not. Hence the intent behind the said clause (a) is to even cover the commercial transactions which are in the nature of barter or exchange wherein the benefit is in non-monetary terms. Thus, the interpretation of the applicant that 'pecuniary benefit' means 'profit' is not correct. Further, Sub-clause (e) is a specific clause made for associations, clubs and societies and the same does not talk about any profit motive to be attributed to any club for the activities to be considered as 'business'. The said clause only speaks of Provision by a club, association, society, or any such body of the facilities or benefits to its members for a subscription or any other consideration. Therefore the question whether profit motive is ousted or not, does not arise in this case at all. 5.6 The applicant has substantially borrowed from the observation/decision of the Hon'ble Supreme Court, made in the case of Commissioner of Sales Tax v Sai Publication Fund [(2002) 4 SCC 57]. We find ....