TMI Blog2020 (2) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... e membership fee collected by the Appellant, which is purely in the nature of a reimbursement for the meetings and administrative expenditures incurred by the Appellant to sustain and propagate their inherent objectives and programs, would be subject to the double taxation as the amount spent towards the meetings and administrative expenditures is already subjected to GST at the hands of the suppliers of these input services or goods used in the meetings, events and other administrative functions of the Appellant. Thus, doing so would clearly be against the legislature s intention of the formulation of GST, which certainly does not embrace the idea of double taxation - Once the core issue regarding the taxability of the membership subscription fee has been decided, the answers to the other issues/questions posed by the Appellant vide their advance ruling application will follow and the same do not warrant separate discussions. The amount collected as membership subscription and admission fees from members is not liable to GST as supply of services. - MAH/AAAR/SS-RJ/20/2019-20 - - - Dated:- 11-12-2019 - SMT. SUNGITA SHARMA, AND SHRI RAJIV JALOTA, MEMBER PROCEEDINGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sending the fees to International Institution at USA 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 or benefits are provided such as recreation, etc. Thus, Appellant s prayer specifically relates to non-applicability of GST on: 1. Club member fees 2. District fees collected from Clubs 3. Any other payment being disbursed to Rotary International as annual contribution on behalf of the Members as no facilities/benefits are being provided. 6. A separate Administration Account is also being run which is being managed by yearly elected members, wherein based on certain estimation done at the commencement of the year, sums are recovered from all the members for expending the same for the weekly and other meetings and other petty administrative expenses incurred. The expenses incurred for the weekly meetings include the expenses for the location and light refreshments. 7. These meetings are held for all the members to meet from time to time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Entrance reimbursements from new member clubs (if any) (iii) Bank Interest (if any) Expenses are generally in the form off i) Meeting Expenses ii) Printing of Circulars iii) Stationary (iv) Postage (v) Greetings vi) Reimbursements payable to International office vii) Reimbursements payable to District office 14. It can be seen that the amounts collected by way of reimbursements are only pooled together for the sake of convenience. 15. We understand that the principal of mutuality applies in the present case wherein the contributions are being collected merely to spend back on the members themselves. There is no consideration whatsoever. Even in case of a visiting guest at the meetings, estimated amount of expenses recovered from the Guest thus ensuring the collections on this account are spent entirely on the members only. 16. There is no consideration involved in the entire process, just that the funds are collected In a common pool for meeting the expenses for the weekly meetings and other petty expenses incurred in meeting the common objective of betterment of society. Hence, we are not recovering any taxes on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whether the said collection of funds under common pool and spending back the same on said contributors, would entail supply as defined in the law? 6. If answer to Question No. 5 is affirmative, whether the same would be supply of goods or 22. The preliminary hearing in the matter was held on 23.04.2019. The appellants appeared for preliminary hearing. Appellants interpretation of law and/or facts, as the case may be, in respect of the aforesaid questions was reiterated and submission of supporting documents was made. 23. The application was admitted and called for final hearing on 02.08.2019. The appellants appeared for final hearing. Appellants submitted that there is a time limit of 90 days fixed by the Statute as per the express provisions of section 98(6) of the CGST Act 2017 which reads as under 98(6): The Authority shall pronounce its advance ruling in writing with ninety days from the receipt of application. 24. In the present case, the ARA Application had been filed on 29.03.2019. Accordingly, it was humbly submitted that the necessary order ought to have been passed not later than 27.06.2019 when the prescribed period of 90 days lapsed. Hence, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.2019 passed by AAR/ Maharashtra 27. The AAR passed the Advance Ruling No. GST-ARA-142/2018-19/B-88 dated 13.08.2019 = 2019 (8) TMI 819 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA in respect of the six questions enumerated above. 28. Aggrieved by the above rulings passed by the AAR, the appellant has preferred appeal on the basis of the grounds mentioned hereinunder: Grounds of Appeal The appellants are filing the present appeal on the following grounds, which are urged herewith without prejudice to one another. A. No GST applicable since the AAR application having been deemed accepted. A.1 At the onset, we have to humbly submit that the application in the present case was filed on 29.03.2019. Thereafter, hearing was held on 23.04.2019 for admission of the said application. The said ARA Application was admitted for final hearing on said date. Thereafter, notice dt. 25.07.2019 had been issued for final hearing in the matter and the date for hearing was fixed for 02.08.2019. A.2 In this regard, your Honour s kind attention is invited to the section 98 of the CGST Act 2017 dealing with the procedure on receipt of application for Advance Ruling, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) {or clause (ab)] of sub section (1) of section 12A.] A.8 Perusal of the above section would reveal that it is identical to the provisions of section 98(6) of the CGST Act 2017 which actually applies to the present case and accordingly, this decision of the Apex Court would have direct application to the present case before Your Honours. A.9 Strong reliance is being placed on the above decision of the Hon ble Apex Court, which it is humbly submitted is directly applicable to the present case and the same would be binding on all lower authorities to follow, It would be pertinent to note here that Article 141 of the Indian Constitution states that law declared by Supreme Court to be binding on all courts within territory of India. A.10 Hence, in view of the above facts and circumstances of the case and the position of law supported by the judicial pronouncement of the Hon ble Supreme Court which would be binding on the lower authorities to follow, we have to humbly submit that the case, having been time barred a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration Account is not a Supply within the meaning of the term, as defined under the Act. B.4 The appellants are of the opinion that its contributions from the members is not covered under supply by one to another , since the basic fact of the said transaction happening between two separate and independent persons / entities would itself be missing. B.5 Supply has been defined to include all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Accordingly, the definition has the following main ingredients There should be two distinct persons Supply should be for a Consideration Supply should be in the course or furtherance of business B.6 Consideration in relation to the supply of goods or services has been defined to include any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the test of mutuality does not require that the contributors to the common fund should willy-nilly distribute the surplus amongst themselves; it is enough f they have a right of disposal over the surplus and in exercise of that right they may agree that non winding up the surplus will be transferred to a similar association or used for some charitable objects... C. No GST applicable since there is no Supply of any goods or services C.1 As per Sec.9 of the Central Goods Services Tax ( CGST ) Act, 2017, levy of tax is on an event called supply . Scope of supply is stated u/s.7. Relevant portion of said provision is reproduced below for ready reference; Sec. 7 91) for the purposes of this Act, the expression Supply includes- a) all forms of supply of goods or services or both such as sale, transfer, barker, exchange, license, rental lease or disposed made or agreed to be made for a consideration by a person in the course or furtherance of business c) the activities specified in Schedule I made or agreed to be made without a consideration. C.2 To tax the transaction between an association or club and its members, said transaction must either f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices or both, the person to who is liable to pay that consideration; (b) Where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) Where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied. E.2 Co-joint reading of both the definitions provides that where a consideration is involved in a transaction, the recipient is the person who pays the consideration to the supplier . Hence two different persons have been envisaged in the law to tax a transaction as a supply made for a consideration. E.3 Now the question remains that whether the club and its members can be treated as different persons? Recent Circular: GST is levied on Intra-State and Inter-State supply of goods and services. According to section 7 of CGST Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deemed sale. It does not enable to tax supply of service as a deemed service. Even para 7 of Schedule II only covers supply of goods by any unincorporated association. It does not cover supply of services. Unless provision similar to that of deemed sale is made either in the Constitution or the Act, services provided by an association to its members cannot be taxed c. Invoking the concept of deemed sale shall result in countless litigation. This is because Schedule - II of the CGST Act, 2017 is at any many places in direct conflict with Article 366(29A). Hence the said circular will open Pandora s Box full of litigation. E.5 Now, let us examine whether the transaction between an association and its member can be taxed u/s.7(1)(c). Said clause covers activities specified in Schedule l, made or agreed to be made without a consideration. If self-supply is taxable, it must be covered under Schedule l. Entry number 2 of Schedule I provides that supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in course of furtherance of business shall be taxable. Members are not covered under section 25 as dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten submissions, and relied upon various legal provisions and judicial pronouncement in support of their contentions. In the aforesaid hearing, the Department was represented by Shri Rahul Dhingra, Asst. Commissioner, who tendered oral submissions to counter the Appellant s contention. Discussions and Findings 2. We have gone through the facts of the case, documents on record, and the entire oral and written submissions made by both the appellant as well as jurisdictional officer. We have also perused the ruling pronounced by the Advance Ruling Authority, wherein the AAR inter observed that the membership subscription and admission fees collected by the Appellant from its members is liable to GST as supply of services. On perusal of the entire case records, the moot issue in the present case is whether the membership/subscription fees, admission fees collected by the Appellant from its members will be subject to GST or not. In other words, whether the transaction between the Appellant and its members can be construed as supply as envisaged under section 7 of the CGST Act, 2017, or otherwise. 3. At the outset, we would like to discuss the scope of term supply as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he membership fee collected by the Appellant, which is purely in the nature of a reimbursement for the meetings and administrative expenditures incurred by the Appellant to sustain and propagate their inherent objectives and programs, would be subject to the double taxation as the amount spent towards the meetings and administrative expenditures is already subjected to GST at the hands of the suppliers of these input services or goods used in the meetings, events and other administrative functions of the Appellant. Thus, doing so would clearly be against the legislature s intention of the formulation of GST, which certainly does not embrace the idea of double taxation. 6. Once the core issue regarding the taxability of the membership subscription fee has been decided by us, the answers to the other issues/questions posed by the Appellant vide their advance ruling application will follow and the same do not warrant separate discussions. 7. In view of the above discussions and findings, we set aside the rulings pronounced by AAR and pass the following order: ORDER We, hereby, hold that the amount collected as membership subscription and admission fees from members is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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