TaxTMI 
TaxTMI 
2020 (9) TMI 1278
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....t is involved in providing/rendering services and made the following submission:- (i) M/s Ranchi Club Limited (hereinafter referred to as 'assessee/club') is a Not-for- Profit corporate entity registered under the Companies Act, 1956 (now the Companies Act, 2013). The assessee is a limited company which is guaranteed by its members. The assessee is not a company which provides shareholding to its members rather its liabilities/debts are guaranteed by the members. (ii) As per the memorandum and articles of association there are various categories of persons who may be allowed to use the club. These persons may be defined in the category of permanent members, resident members, corporate members, honorary members, courtesy members and associate members. (iii) That however it is only the permanent members are deemed to be 'members' of the club thereby meaning that the permanent members are those who have a right to elect the executive committee of the club. They are also those who provide their personal guarantee with regards to the debts and liabilities of the club. It is imperative to mention that they are not part of any income which the cl....
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....hereby clarified that any service which the club shall provide to non-members shall come within the purview of GST and the club shall deposit the same to the Government. c That it is most humbly submitted that the principle of mutuality is an important dictate of taxation wherein it has been held by the Hon'ble Courts that wherever two entities are mutual to one another they shall be deemed to be one and the same. The issue came up before the Hon'ble Supreme Court in the case of Chlemsford v. Commissioner of Income Tax (AIR 2000 SC 1092), wherein the Hon'ble Supreme Court was pleased to lay down the following criteria for the principle of mutuality to exist:- a) The identity of the contributors to the fund and the recipients from the fund, b) The treatment of the company, through incorporated as a mere entity for the convenience of the members and policy holders, in other words, as an instrument obedient to their mandate, and c) The impossibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves. d. That in the case at hand all the ab....
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.... f. That the assessee as earlier preferred another advance ruling generated wide application bearing, in which final order was passed vide order detail 6th of September 2018 wherein this Ld. Authority had held that the issue involved in the advance ruling sought under the provisions of the Goods And Services Act, 2017 and the Finance Act, 1994 (service tax) remains the same. Further this Ld. Authority had in light of the case of Chief Commissioner Of Central Excise and Services & Ors Vs. M/s Ranchi Club Ltd (CIVIL APPEAL NO. 7497 OF 2012) pending before the Hon'ble Supreme Court was pleased to refrain from passing any order. That since then the Hon'ble Supreme Court has been pleased to adjudicate the issue in the favour of theassessee. 5. Section 97(2) of the CGST Act, 2017 and Jharkhand GST Act, 2017 empowers the Advance Ruling Authority to decide the following issues:- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed t....
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....sed for the purpose of furtherance of the activities of the club and cannot be used by any member for his/her own benefit. 5. the Memorandum of Association of the club read with applicable provisions of the Companies Act, 2013 mandate that an Annual General Meeting has to be held every year wherein the members of the club participate to discuss the further program and development of the club. The most important exercise held as part of the AGM entrails the election of an 'Executive Committee' in a democratic manner. This 9-member committee is responsible for the day-to-day running of the club and is also tasked with taking any decision regarding the functioning of the club. It is clarified that the committee members serve in an honorary capacity and do not derive any monetary benefit, not even an honorarium for serving as members of the Executive Committee. 6. it of further imperative to bring to the notice of this Hon'ble Authority that the AGM also undertakes the adoption of the accounts of the firm. The Balance sheet and the profit and loss of the firm would reflect that the funds are only utilized for the purpose of furtherance of the purpose of th....
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.... would not apply. 3. That an appeal was filed against this decision before the Hon'ble Apex Court and was registered as CA 7497 of 2012. The Hon'ble Apex Court affirmed the decision of the Hon'ble Jharkhand High Court. The Hon'ble Apex Court in it is judgement is great detail discussed the implication of the Section 65 of the Finance Act, 1994 with is pari materia to the provision of the Goods and Services Tax Act, 2017. 4. That in light of the above mentioned submission it can be safetly concluded that the 'Scope of Supply' under the definition as provided for under Section 7 of the Goods and Services Act, 2017 would require the existence of any two persons and as the same the 'CLUB' and its 'MEMBERS' and one and same no 'Supply' can take place and hence the applicant company doesn't come with the purview of the Goods and Services Tax for the transaction with its members. III. That the instant submission has been made in bona fide and in the interest of justice. IV. That in lights of the above the Applicant shall be grateful if the application as filed is accordingly allowed. V. That t....
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....d under section 2(17) of the CGST Act, 2017, the relevant extract in the context of the instant case is reproduced herein below:- (17) "business" includes- (a) ................................ (b) ................................. (e) provision by club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; ............................. In the instant case, it has been submitted by the applicant that applicant is a Not-for-Profit corporate entity registered under the Companies Act, 1956 (now the Companies Act, 2013) and a limited company which is guaranteed by its members. The applicant is not a company which provides shareholding to its members rather its liabilities/debts are guaranteed by the members. 9.3 Now, once it has been established that the applicant is not doing any business in terms of section 2(17) of the CGST Act, 2017, it can be deduced that activities carried out by the applicant would not come under the scope of supply as envisaged under section 7(1) of the CGST Act, 2017. 10. With regard to the contention that the applicant is governe....
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....2 009 stands dismissed. C.A. No. 7497 of 2012" 13. Similarly, in the same judgment supra in the matter of Civil Appeal No. 7497 of 2012 Chief Commissioner of Central Excise and Service & Ors. Versus M/s. Ranchi Club Ltd. and other connected matters;- (i) The Hon'ble Supreme Court has discussed the appeal filed by the revenue and held that Service Tax cannot be levied on member's club in incorporated form. (ii) The Court has elaborately dealt with the definition of "person" and concluded that the legislature has continued with the pre-2012 scheme of not taxing member's club. (iii) The Hon'ble Court in arriving at the decision has relied on various cases like Young Men's Indian Association (1970)1SCC 462, DALCO Engineering (2010) 4SCC 378, Calcutta Club Ltd, Enfiend India Ltd. (1968) 2 SCR 42 etc. (iv) The Hon'ble Court has upheld the judgment of Jharkhand High Court in the W.P. No. 2388 of 2007 dated 15.03.2012 and judgment of Gujrat High Court dated 25.03.2013. The Hon'ble Supreme Court upheld the Jharkhand High Court Order, wherein it says: " Since the issue whether there are two persons or two legal entit....