TMI Blog2018 (12) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... services to members but people gather under the umbrella of the Club to perform socially relevant activities. A club, association or society as understood under section 2(17) is one which would provide goods or services or both to its members such as recreation, sports, food, etc. The club is not formed to provide any supply of goods or services to its members qua the fees received from them. There being no supply qua the fees received, there arises no occasion for us to visit the definition of ‘Supply’ under the GST Act. The applicant club as per the facts put up before us does not render any ‘Supply’ for the purposes of the CST Act. The amounts spent are for building and empowering a human resource to help perform the activities of the Club in a better way. The members pay fees to act as volunteers in the social causes. Besides, the club is not formed to build and empower or impart skills in leadership such that people would get themselves enrolled for acquiring the skills. By no means could it be said that the members pay fees to acquire services of training in leadership development. Ruling:- No registration is required. - GST-ARA-33/2018-19/B-100 - - - Dated:- 28-8-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formulated. 3.Cabinet of District:- Comprises Of various member from Lion fraternity, who are head of various committee that conduct social activities. Receipts of Lions Club cab be broadly divided into following categories- 1) Club receiving Fees from its members. These can be purely said to be collected to defray its expenditure on meetings and communication. No facilities/ benefits are provided such as recreation, etc by Individual clubs. 2) District receiving its payment from Clubs to meet the expenses of Administration since one district comprises of more than 100 clubs. These dues are towards: (a) Postage, printing, communication, etc. and (b) Sending the fees to international institution at Chicago for service activities and International administration. District receiving fees from its members constituted as cabinet to draft policy, plans and give direction to Clubs in order to execute policies and social activities. Again it is needless to mention that no facilities/benefits are provided such as recreation, etc. Thus our prayer specifically relates to non-applicability of GST on: 1) Club member fees 2) District fees collected f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Lions have created a huge impact on Indian society. The Lions Clubs International Foundation has provided US$ 901 million in grants globally of which India is the recipient of USS 84 million for 1535 projects . Through programs like Sight-First, Lions Quest and Opening Eyes, the Foundation provides essential grant funding to Lions Clubs so they can carry out ambitious projects. Currently the three major projects running in India are Measles Rubella, Diabetes and Sight First. India is the home to the most diverse of cultures, but each one of them has one thing in common- acceptability. Naturally, Lions India has been successful in building symbiotic growth systems among Lions across the country. As a result, strenuous activities such as raising awareness, organising camps, fundraising etc. have become simpler. Membership is open to all people of the community in good standing Clubs may either provide service or raise funds 100% of funds donated by the public are directed to the project for which they are intended The activities of District are comprise of administering the functioning of each and every member Club ( Lions Club ) and co-ordinating their a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi) Fees payable to International office vii) Fees payable to Multiple office. It can be seen that the amounts collected by way of fees are only pooled together for the sake of convenience. PRICIPLE OF MUTUALITY Various case laws are here below referred; though directly not decided under the Act in question; would help throw light on principle of mutuality:- The three conditions stipulated by the Judicial Committee in the case of English and Scottish Joint Co-operative Wholesale Society Ltd. v. Commr. Of Agrl. I.T. (1948) 16 ITR 270 (PC) = 1948 (4) TMI 2 - PRIVY COUNCIL ; existence of which establishes the doctrine of mutuality. They are as follows (page 559): (1) the identity of the contributors to the fund and the recipients from the fund, (2) the treatment of the company, though incorporated, as a mere entity for the convenience of the members and policyholders, in other words as an instrument obedient to their mandate, and (3) the impossibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves. In the case of CIT vs. Bankimpur Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the or furtherance of business. Hence following ingredients must satisfied: a. There must be supply of goods or services or both for a consideration b. And such supply must be in the course or furtherance of business It must be noted that both the ingredients must be satisfied to tax the transaction. If only one is satisfied, transaction cannot be taxed under the referred Clause. BUSINESS :- The term business is defined u/s 2(17). For our discussion clause (e) of said definition is relevant and hence reproduced below for ready reference: (17) business includes (e) 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; From the above definition it is Clear that for getting satisfied under the term business , there must be facilities or benefits to its members. In case of Lions Clubs, as we have discussed above, the members of the club come together only for social cause and there is neither furtherance of any b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the course or furtherance of business, and includes activities specified in Schedule II to the CGST Act, 2017, definition of business in section 2(17) of CGST Act states that business includes provision by a club, association, society, or any such body (for a subscription or any other consideration) oi the facilities or benefits to its members. The term person is defined in section 2(84) of the CGST Act, 2017 include an association of persons or a body of individuals, whether incorporated or not, in India or outside India. Further, Schedule II of CGST Act, 2017 enumerates activities which are to be treated as supply of goods or as supply of services. It states in para 7 that supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of goods. A conjoint reading of the above provisions of the law implies that supply of services by an unincorporated association or body of persons (AOP) to a member thereof for cash. deferred payment or other valuable consideration shall be treated as supply oi services. The above entry in Schedule II is analogous to and draws stren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation. - For the purposes of this Act, (a) persons shall be deemed to be related persons if (i) such persons are officers or directors of one another s businesses; (ii) such persons are legally recognised partners in business; (iii) such persons are employer and employee; (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family; (b) the term person also includes legal persons; (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. On perusal of above list one can conclude that there must be two or more persons who can be considered as related owing to the above conditions. As an association and its members are the same because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application has been examined by this office. In this regard views of this office against Sr. No. 14 16, are as under: Para no. 14 : The question(s) on which advance ruling is required. Since the amount collected by individual Lions clubs Lions Districts is for convenience of Lions members pooled together only for paying Meeting expenses communication expenses the same is deposited in a Single bank account. As there is no furtherance of business in this activity and neither any services are rendered nor any goods are being traded. Whether registration is required? Legal position upto from 01-07-12 to 30-06-17: There seems to be a fact that the club and members are not distinct persons, levy of service tax on such clubs/ associations may not be warranted. Principally, there should be existence of two sides/entities for having transaction as against consideration. in u members club, were is no question of two sides - Members and club, both are same entity. With effect from 1-7-2012, the word service has also been defined under Section 65B (44) of the Finance Act, 1994. Explanation 3a) to said Section states that for the purposes of this Chapter, an unincor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted prior to and hence not relevant during the GST regime. Additional submissions on 07.08.2018 The Applicant in this case had earlier filed copy of GST ARA-1 on 31-5-18 and as per the request made by the Applicant, the extension was granted to them to file additional submission in this case by the ARA, Mumbai. The Applicant has made available the following additional documents : 1) Sample Financial Accounts in case of other Lions Club 2) Lions Club - Constitution and by laws 3) District Club -- Constitution and by laws 4) Circular No. 35/9/2018-GST dated 05-03-2018. Para No. 1: The sample Financial Accounts now made available pertains to the Malegaon Sapphire District Club. Hence no comments are offered. Para No.2 and Para No. 3: The documents show the Club Constitution, i.e. club s vision, mission, procedure for membership, their mode various activities etc. Hence no comments are offered. Para No. 4: The said set of document was perused by this office. The Applicant has relied upon the Circular No. 35/9/2018-GST dated 05-03-2018, The circular is applicable to Joint Venture- taxable services provided by the members of the Joint Venture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed to take part. Thus, funds received from members are utilized for mutual benefit of members / last para of page no. 2 refers). Para No. 6 - Therefore, there is no force in the submission of the Applicant that there is no furtherance of business in the activity and neither any services are rendered nor any goods are being traded. Consequentially, a prayer that there is no registration is required, has no legal backing. 04. HEARING The case was taken up for Preliminary hearing on dt. 04.07.2018 when Sh. Abhay Shatri, the Applicant and one of the member of club appeared and stated that present application is filed in individual capacity. It was informed to Sh. Abhay Shatari that present application is not tenable in individual capacity and some executive person of the club duly authorized has to file the application. At oral request of Sh. Abhay Shatri, it was allowed that they will revise this application and ensure it is filed in the name of proper authorized person. Jurisdictional Officer, Sh. P.G. Gotkhinde, Asstt. Commr, Cental Tax,(DIV -IV) Pune-II CGST COMMM RATE, Pune appeared and made written submissions. The applicant has filed revised application on 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture with which to advance the Purposes of Lions Clubs International in this district. b) To create and foster a spirit of understanding among the people of the world. c) To promote the principles of good government and good citizenship. d) To take an active interest in the civic, cultural, social and moral welfare of the community. e) To unite the members in the bonds of friendship, good fellowship and mutual understanding. f) To provide a forum for the open discussion of all matters of public interest; provided, however, that partisan politics and sectarian religion shall not be debated by club members. g) To encourage service-minded people to serve their community without personal financial reward, and to encourage efficiency and promote high ethical standards in commerce, industry, professions, public works and private endeavors. ARTICLE VII-CONVENTION FUND- Section 1. CONVENTION FUND TAX . In lieu of or in addition to a district convention registration fee, an annual district convention fund tax of (insert value in national currency____) may be levied upon each member of each club in the district and shall be collected and paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r tenth of each year to cover the semi-annual period July 1 to December 31; and (value in national currency __) per club member on March tenth of each year, to cover the semi-annual period January 1 to June 30, with billings of the same to be based upon the roster of each club as of the first days of July and January, respectively. Said tax shall be paid to the cabinet secretary or cabinet treasurer (or secretary-treasurer), by each club in the district, except newly chartered and reorganized clubs, which shall collect and pay said tax on a pro-rata basis from the first day of the second month following the date of their organization or reorganization, as the case may be. Said tax shall be disbursed only for administrative expenses of the district and only upon approval by the district governor s cabinet. Disbursement therefrom shall be by checks drawn and signed by the cabinet treasurer and countersigned by the district governor. Section 2. REMAINING FUNDS. In any fiscal year, any balance remaining in the district administrative fund after payment of all district administrative expenses in that year shall remain in said district administrative fund and become available for fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facilities or benefits to its members; (f) ; (g) ; (h) ; and (i) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and ; [this clause is substituted for the earlier clause by the Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018] (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; We see that clause (e) speaks about subscription. But this subscription is for the facilities or benefits that would be provided. The definition requires that the club, association, society, or any such body has to provide facilities or benefits to its members. And these facilities or benefits are to be provided for a subscription or any other consideration . In the facts of the instant case, the amounts collected as fees from the members are not for the purposes of making any supply . All are aware that the definition of supply under the provisions of the GST Act is an inclusive one. However, it is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the club. Thus, here too, the amounts spent are for building and empowering a human resource to help perform the activities of the Club in a better way. The members pay fees to act as volunteers in the social causes. Besides, the club is not formed to build and empower or impart skills in leadership such that people would get themselves enrolled for acquiring the skills. By no means could it be said that the members pay fees to acquire services of training in leadership development. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-33/2018-19/B-100 Mumbai, dt. 28/08/2018 For reasons as discussed in the body of the order, the questions are answered thus - Question :- Since the amount collected by individual Lions clubs and Lions District is for convenience of Lion members and pooled together only for paying Meeting expenses communication expenses and the same is deposited in single bank account. As there is no furtherance of business in this activity and neither ..... X X X X Extracts X X X X X X X X Extracts X X X X
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