2024 (12) TMI 1441 - HC - GST

Jurisdiction - power of Tax Authorities to recover the dues of the Society from members - Society registered under the Andhra Pradesh Societies Registration Act 2001 qualifies as an Association of Persons under Section 94 of the CGST/SGST Act or not. Whether Section 94 of the CGST Act empowers the Tax Authorities to recover the dues of the Society registered under the Act of 2001 from any of its members? - HELD THAT - Section 94 of the CGST Act empowers the Tax Authorities to recover the dues of the Society registered under the Act of 2001 from any of its members - This provision would be applicable where the taxable person is a firm or association of persons or a Hindu Undivided Family. Further this entity should have discontinued business. It appears that the Society had discontinued business and the second condition would be applicable. However the question of whether the first condition is applicable or not requires to be looked into. Whether a Society registered under the Andhra Pradesh Societies Registration Act 2001 qualifies as an Association of Persons under Section 94 of the CGST/SGST Act? - HELD THAT - The conditions required for creation of a Society under the Act of 2001 are in pari materia similar to the conditions set out in the Act of 1860. Further Sub-section 2 and Sub-section 3 stipulate that a Society in which un-incorporated association of individuals is a member or a firm is a member is not liable to be registered under the Act of 2001. This would clearly indicate that a Society registered under the Act of 2001 meets all the requirements of a Society as defined under the Act of 1860 - the Society would not fall within the purview of the term Association of Persons set out under Section 94 (1) of the CGST/SGST Act - no proceedings can be initiated against the petitioner who was a member/Secretary of the Public Association registered under the Act of 2001. Conclusion - The Society would not fall within the purview of the term Association of Persons set out under Section 94 (1) of the CGST/SGST Act. A Society registered under the Andhra Pradesh Societies Registration Act 2001 is distinct from an Association of Persons as defined in the CGST/SGST Act and members of such a Society cannot be held liable for the Society s tax dues under Section 94. Form GST DRC-16 dated 29.07.2022 the communication of the 2nd respondent to the 3rd respondent dated 03.11.2022 requesting the 3rd respondent not to permit alienation of the properties of the petitioner and the endorsment dated 27.06.2023 issued by the 2nd respondent for taking action for recovery of the dues of the Society from the petitioner set aside - Petition allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the court in this judgment are:

• Whether the petitioner, as the Secretary of a Society, can be held liable for the tax dues of the Society under Section 94 of the Central / State Goods and Services Tax Act, 2017 (CGST/SGST Act).
• Whether a Society registered under the Andhra Pradesh Societies Registration Act, 2001, qualifies as an "Association of Persons" under Section 94 of the CGST/SGST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability of the Petitioner for Society's Tax Dues

• Relevant legal framework and precedents: The court examined Section 94 of the CGST/SGST Act, which deals with the liability of members of a firm, association of persons, or Hindu Undivided Family for tax dues.
• Court's interpretation and reasoning: The court scrutinized whether the petitioner, as a member of the Society, could be held liable for the Society's tax dues under this provision. The court highlighted that Section 94 applies to firms, associations of persons, or Hindu Undivided Families, and not to societies.
• Key evidence and findings: The Society was registered under the Andhra Pradesh Societies Registration Act, 2001, and not as an association of persons. The court found that the Society's registration did not fall under the entities described in Section 94.
• Application of law to facts: The court applied the definition of "Association of Persons" and concluded that the Society did not meet this definition under the CGST/SGST Act.
• Treatment of competing arguments: The respondents argued that the petitioner, as a member of the Society, was liable under Section 94. However, the petitioner contended that a Society is distinct from an association of persons, which the court accepted.
• Conclusions: The court concluded that the petitioner could not be held liable for the Society's tax dues under Section 94 of the CGST/SGST Act.

Issue 2: Classification of the Society as an "Association of Persons"

• Relevant legal framework and precedents: The court analyzed the definitions provided in Section 2(84) of the CGST/SGST Act to determine if a Society could be classified as an "Association of Persons."
• Court's interpretation and reasoning: The court noted that the CGST/SGST Act distinguishes between "Association of Persons" and "Society" by listing them separately in the definitions.
• Key evidence and findings: The Society in question was registered under the Andhra Pradesh Societies Registration Act, 2001, which aligns with the definition of a Society under the Societies Registration Act, 1860.
• Application of law to facts: The court applied the statutory definitions and concluded that the Society does not qualify as an "Association of Persons" under the CGST/SGST Act.
• Treatment of competing arguments: The respondents' argument that the Society should be treated as an "Association of Persons" was rejected based on the statutory definitions and legislative intent.
• Conclusions: The court concluded that the Society is not an "Association of Persons" and thus Section 94 of the CGST/SGST Act does not apply.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "In view of the above, it must be held that the Society would not fall within the purview of the term 'Association of Persons' set out under Section 94 (1) of the CGST/SGST Act."
• Core principles established: The court established that a Society registered under the Andhra Pradesh Societies Registration Act, 2001, is distinct from an "Association of Persons" as defined in the CGST/SGST Act, and members of such a Society cannot be held liable for the Society's tax dues under Section 94.
• Final determinations on each issue: The court allowed the writ petition, setting aside the actions taken against the petitioner to recover the Society's tax dues and enabling the petitioner to deal with his property without restrictions from the tax authorities.

The court's decision underscores the importance of adhering to statutory definitions and legislative intent when determining liability under tax laws, particularly distinguishing between different types of legal entities.