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2018 (12) TMI 1086 - AAR - GSTLevy of GST - supply of services or not - contribution made by Members towards “Annual Membership Fees and registration fees” to the Corpus Fund of BCSBI - recurring expenditure - Principle of Mutuality - whether the applicant is providing supply of services to their members and if so, is there any consideration received by them for such supply of services/ goods? Held that:- These activities are undertaken only for and in respect of the Member Banks, who have voluntarily become their members. Hence their primary objective is to guide the public and publicise about the Codes and Standards and Commitment of their Member Banks. Hence, the applicant is firstly developing and publishing and then publicizing Banking Codes and Standards for the banks who are their members and after this, they are monitoring its compliance, undertaking further research with regard to codes and standards and are also training bank employees about these codes - the applicant is also advertising and publishing promotional literature in newspapers and are also organizing, teaching and training courses, conferences, seminars and lectures and also publishing journals, pamphlets, reports, books and booklets in this regard. The applicant are basically drafting certain codes and standards and are directly as well as indirectly ensuring that member banks adhere to these standards and codes and thus provide banking services as per these codes and standards and thus the credibility of services of member banks increases if they are able to provide services as per codes and standards as drafted for adherence by the applicant. For performing the said activities, the applicant requires funds which are collected by them in the form of Annual Membership Fees and registration fees. Even though these fees are not used by them, it is clear that the said fees which are termed by them as corpus fund are used to generate interest amounts which are further used for performing their activities. In other words if there is no fee there is no corpus fund and no interest payment which can be used to fund their activities which are in the form of supply of services to their member banks. Thus here there is no doubt that consideration is flowing from Banks to the applicant in the form of Annual Membership Fee and Registration Fee which are being utilized by the applicant for generating further income as found feasible by them. Thus the consideration is clearly in the form of Annual Membership Fee and Registration Fee. Principles of mutuality - Held that:- The essence of the principle of mutuality is present only in situations where a group of persons form an association and contribute to constitute income of the associations in the nomenclature of a common fund, which so collected is used for the benefit of the members. Here the member banks have not come together contributing their resources to form the board like that of the applicant and for the benefits of the members themselves - In the present situation there is no compulsion under any enactment for the member banks to become the member of the applicant since the membership of the applicant body is voluntary. Hence the principle of mutuality is not at all applicable in present case. The applicant is supplying services to their Member Banks, against a consideration received from them in the form of Annual membership fees and registration fees and their supply is in furtherance of business as defined under Section 2 (17) (e) of the Act. Ruling:- The activity of BCSBI I.e. The Applicant is falling under the definition of “Supply”, as per Section 7 of the CC,ST Act, 2017. The contribution made by Member Banks to ‘Corpus Fund” can be considered as “Consideration”, as per Section 2 (31) of the CGST Act, 2017. Supply is meant to be between 2 persons, the Applicant Association” trust and Its Members are legally distinct from each other. The “Principle of Mutuality” is non existent in the subject case. The activity of Applicant is to be termed as “Business” as provided under Section 2 (17) (e) of the CGST Act, 2017.
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