TaxTMI 
TaxTMI 
2026 (5) TMI 1151
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....s Tax Act, 2017 (hereinafter referred to as KSGST Act) are same except for certain provisions. Accordingly, a reference hereinafter to the provisions of the CGST Act, Rules and the notifications issued thereunder shall include a reference to the corresponding provisions of the KSGST Act, Rules and the Notifications issued thereunder. 3. The facts of the issue: The Applicant has stated that it is engaged in providing short-term and long-term credit facilities to its members and in accepting deposits from them, both being interest bearing activities. It also collects membership fees and processing charges related to its lending operations. Membership is limited to individuals who become shareholders of the Society, and only such members can avail or extend credit on a cooperative basis. The Applicant has further submitted that certain members who voluntarily assist in promoting the Society's objectives are designated as "facilitators," who help in arranging lending to other members and in encouraging collective action, savings, and investment habits. The Applicant additionally shares certain amounts with these facilitators in connection with the activities they undertake. Based on....
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....ir members, the Kerala High Court in the case of Indian Medical Association [2025 (4) TMI 872], struck down the amendment as ultra vires. The Court reaffirmed the doctrine of mutuality under GST and held that an association and its members cannot be treated as distinct persons for levy of GST and ruled that the deeming fiction introduced to tax intra-member transactions is invalid, and GST cannot be imposed on transactions occurring within a mutual association. 4.3. ICCSL also contended that consideration and a transaction between distinct persons are essential elements under Section 7 defining scope of supply and both are absent in the present case. Membership fees, processing charges and other amounts collected from members are stated to be internal allocations and not consideration for any supply. Payments made to facilitators who are also members are surplus distributions permissible under Section 63 of the Multi-State Co-operative Societies Act, 2002, rather than commission or service fees. 4.4. On these grounds, the Applicant contended that the Society and its members constitute a single entity for internal transactions, and therefore no supply takes place, and no GST i....
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....ly similar issue. It was reported that a show cause Notice (SCN No. 02/AC/2022 (Central Tax)) dated 16.02.2022 was issued alleging failure to obtain GST registration for the period 01.07.2017 to 06.10.2017. The Applicant, in response, contended that its activities were confined to members and hence not liable to GST in view of the Supreme Court's decision in Calcutta Club (2019 (29) GSTL 545(SC)). The adjudicating authority vide OIO No. 21/2023-24-GST(ADJ) dated 26.03.2024 rejected this contention but, since the tax dues for the relevant period had already been voluntarily paid, imposed only a penalty of Rs.10,000 for non-registration vide OIO dated 26.03.2024. 5.2. The Applicant later filed an appeal against the imposition of penalty, reiterating that its activities were not taxable in light of Calcutta Club. The Joint Commissioner (Appeals), however, rejected the appeal vide OIA No. 164-2025-26-JC dated 25.09.2025. Although the Kerala High Court's subsequent judgment in Indian Medical Association (2025) was not invoked in these proceedings, the jurisdictional officer noted that the core question whether GST applies to transactions between the Society and its members has alread....
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.... questions at Sl. Nos. (iii) and (iv) raised by the applicant appear, prima facie, to fall within the scope of clauses (a) and (b) of Section 97(2) of the CGST Act, 2017, respectively. However, these questions can be examined only in conjunction with questions (i) and (ii) raised by the applicant, as they are intrinsically linked to the determination sought therein. On examination of questions (i) and (ii), it is observed that the same are not framed with sufficient specificity and appear to be ambiguous in nature. It is evident that the said questions do not fall within the ambit of clauses (a), (b), (c), (d), or (f) of Section 97(2). Further, the questions may or may not fall within the scope of clauses (e) or (g) of Section 97(2), depending upon the exact nature and intention of the subject matter on which the ruling is sought. In this regard, it is pertinent to note that rulings under the aforesaid clauses can be rendered only in respect of the supply of goods or services undertaken by the applicant. It is observed that the questions raised do not relate to supplies undertaken by the applicant but rather to services allegedly rendered by facilitators to the applicant. The Autho....
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....17. Accordingly, no ruling can be issued on question (ii) as well. 7.6. During the course of the personal hearing and in the written submissions, the applicant contended that, being a society, the principle of mutuality is applicable, and therefore the applicant and its facilitator members cannot be regarded as distinct persons for the purpose of levy of GST. In this context, the applicant has relied upon the doctrine of mutuality and the judgment of the Hon'ble Supreme Court in Calcutta Club Ltd. However, it is observed that Section 7(1)(aa) was inserted in the CGST Act, 2017 with effect from 01.01.2022, whereby activities or transactions by a person, other than an individual, to its members or constituents for consideration are deemed to constitute a supply. It is true that the Hon'ble Kerala High Court, in the case of Indian Medical Association v. Union of India, held the said amendment to be ultra vires. However, it is noted that the Department has challenged the said judgment before the Hon'ble Supreme Court of India by filing SLP (Civil) No. 55454 of 2024, and the matter is presently sub judice. The Department continues to maintain the position that transactions between a ....