TMI Blog2020 (10) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... are also person as per Section 2(84) (a). Hence, there are two different persons , one of whom is the supplier and other the recipient. From the MOA of the applicant, the mission of the applicant is to provide a forum for its members, to facilitate professional networking for mutual benefit in academic, professional, and/or business areas. This shows that the applicant provides a forum for useful knowledge exchange which definitely for the benefit for the members. The alumni subscribe to become a member of the association and also contributes/makes payment for the events conducted by the applicant with a membership fees of ₹ 1000 for lifetime as per the Byelaws. The Byelaws of the applicant clearly states that members can use the services of the applicant, receive publications/newsletters, and attend alumni meetings and events, facilities at IIT Madras. In this case, the provision by the applicant of the benefits as above for a membership fees to the its members constitute business as per Section 2(17) of the Act. The applicant collects membership fee from the members and also collects charges for various events, activities which include conducting seminars, hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they strive to create and maintain a life-long connection between IIT, Madras (the institute) and its Alumni (members of IITMAA). The Association works to connect Alumni, supports students of the institute and builds an unforgettable institute experience through diversity of events/ programmes and services by members to themselves and the association activities are managed by extremely dedicated volunteers from the Alumni members. The mission of the Alumni association is to foster strong bonds between alumni, students and the institute; to keep alumni informed about the institute and create a network enabling the alumni remain engaged with their alma mater and help shape its future through the association s programmes and activities.; they serve diligently its alumni with the objective to initiate interaction among alumni and improve engagement between the members and the institute.; they also promote, encourage and facilitate education and research and other activities in the institute through individual members. They are registered under the Societies Act since 22.09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x incidence, GST is not applicable on the activity of alumni association.; To tax the transaction between an association and its members, said transaction must either fit, either under Clause (a) or Clause (b) of Section 7 which defines supply. Clause (a) covers all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Hence following ingredients must be 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 can 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. Further, the applicant has interpreted that to satisfy the definition of Business under section 2(17) there must be some benefit/facility to its members. In case of alumni association, the members of the association come together only for social cause and there is neither furtherance of any business or benefits or facilities to the members. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. If self-supply is taxable, it must be covered under Schedule I. Also entry number 2 of Schedule I states that Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business shall be treated as supply. However, members are not covered under Section 25 as distinct person. In the instant case the association and members are the same because of principle of mutuality and they cannot be regarded as related person. They have referred to the Ruling of Hon ble AAR Maharashtra in the case of Lions Club of Poona Kothrud. 2.6 In view of the aforesaid facts the applicant has contended that the transaction between alumni association and its members cannot be covered within the scope of supply under Section 7 of CGST Act 2017. 3.1 The applicant was given an opportunity to be personally heard on 30.08.2019. The authorized representative appeared before the authority and submitted their balance sheet, bye laws, MOA, Certificate of registration of societies as they are registered under the Tamil Nadu Societies Registration Act. They stated that they collect subscription from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requests from fellow alumni and organize events accordingly For ease of operation a single bank account was opened and a small team is posted on IITM campus to handle the inflow and outflow of funds. Funds from IITM and fee collected for organizing meet is all collected and paid from this account Elections are held every alternate year and Office bearers, Volunteers, hold office for 2 years. They supervise the team handling the funds and the office bearers are solely responsible for the same Like other club s membership is not marketed to join the association. Anyone who passes out of IITM is automatically part of the association and they can be part of any and all activities organized by any alumni across the globe. All activities of the applicant are ideated and organized by the alumni for IIT Madras Alumni only. 3.3 The applicant was extended another personal hearing on 07.11.2019. They stated that they are a registered society. They submitted that they receive membership income from the institute from the students. Later, alumni can become members by accessing their website iitmaa.org. The website gives various facilities such as events, jobs, membership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce being provided by the association to its members From the inclusive definition of the term Consideration , it can be construed that the membership fee collected by the Association from its members is not only meant for meeting administrative expenses, but is also towards organizing the various activities for the direct or indirect benefit of the members. Thus, any membership fee collected by the Association from its members is to be construed as Consideration as the same has been paid for supply of services. IITMAA has fulfilled both the conditions prescribed by Section 7 of the CGST Act; firstly, that such supply is made by them in lieu of consideration and secondly, such supply has been made in the course or furtherance of business since the term business includes provision by club. association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. Thus, both the conditions stipulated for supply under the CGST Laws have been adequately fulfilled to lead to the conclusion that transaction between the Association and its members are nothing but supply, and accordingly will attract GST. Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent persons and as per Para 7 of Schedule II of the Act, the 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 which implies that supply of services by an unincorporated association or body of persons to a member for a consideration shall not be treated as supply of service. since an association and its members are the same because of principle of mutuality, they cannot be regarded as related person and therefore not covered under Entry number 2 of schedule I which provides that supply of goods or services or both between related persons or between distinct persons as specified in Section 25, made in the course or furtherance of business shall be taxable Therefore the applicant has prayed that the transaction between alumni association and its members cannot be covered within the scope of supply and therefore are not taxable. 7.1 It is seen from the submissions that the applicant is an alumni association registered under the societies act; every student who joins IIT Madras pays a fee to the alumni association through the institute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wsletters, maintaining websites, and technology infrastructure. Every person who has received a degree of diploma from IIT Madras is eligible to be an Alumni member on payment of membership fees and all academic staff of IIT Madras are eligible to be as associate member. An electronic database of Alumni registry is maintained. Members can use the services of the applicant, receive publications/newsletters, attend alumni meetings and events, facilities at IIT Madras. The lifetime membership fees are ₹ 1000/- for the alumni members with no membership fees for associate members. It is seen from the Financial accounts for 2017-18 submitted that apart from income from membership receipts, the applicant also receives income for specific events such as Alumni Outing, Alumni Reunion, special contributions from individual batches etc. The turnover exceeds ₹ 20 lakhs. It is also seen from the expenditure made that the applicant has incurred expenses to organizing various events, chapter (city) meets and other activities where its members participate. 8.1 As per Section 3 of the Tamilnadu Society Registration Act 1975, 3. (1) Subject to the provisions of sub-section (2), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its members are not distinct persons and therefore levy do not apply on the consideration. For the purposes of GST Law, the applicant being an unincorporated association or body of persons is a person under Section 2(84) (f) and their members being Individuals are also person as per Section 2(84) (a). Hence, there are two different persons , one of whom is the supplier and other the recipient. Section 2(17) of the Act defines Business as under (relevant portion extracted): (17) business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; .; ..; (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; The definition is an inclusive definition and states that provision of facilities or benefits to the members of association/society by an association/society for a subscription or any other consideration is business for the purpose of GST. From the MOA of the applicant, the mission of the applicant is to provide a forum for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng seminars, holding meetings, organizing events, publishing magazines and newsletters, maintaining websites, and technology infrastructure for the benefit of its members. Thus, the supply of the services of these activities by the applicant to its members for consideration either in form of membership fee or additional charges collected for specific activities constitute a supply of service under Section 7(1)(a) of CGST/TNGST Act as it is in the course of furtherance of business of the applicant as per Section 2(17) of the Act. This is also reiterated in Circular No. 35/9/2018-GST dt 5.03.2018: 3. GST is levied on intra-State and inter-State supply of goods and services. According to section 7 of CGST Act, 2017, the expression supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, and includes activities specified in Schedule II to the CGST Act, 2017. The definition of business in section 2 (17) of CGST Act states that business includes provision by a club, association, society, or any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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