TMI Blog2021 (11) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute raised by the applicant in respect of fees received from its members is settled by the above mentioned amendment made to Section 7 of the CGST Act, 2017 and therefore, fees received by the applicant from its members for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to 'supply' as defined under the GST Act. In the instant case, the monthly contribution made by the members to the association is in return for receiving the services of the Applicant Club. The money collected by the Appellant from its members is used to procure services and goods from a third party and provide the benefits of such procured goods and services to the members of the association. Under GST, the term 'person' has been defined in Section 2(84) of the CGST Act, 2017, to include an 'individual' as well as an association of persons or a body of individuals, whether incorporated or not. Therefore, the individual members who are members of the Applicant Club are beneficiaries and the contribution made by them is to be considered as consideration for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advance Ruling, the expression GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: 2.1 Rotary' is an International organization engaged in humanitarian and charitable services and one of its member clubs is the applicant i.e. M/s. Rotary Club of Bombay Queen City. The applicant arranges meetings for its members and in order to defray its expenditure for such meetings, communications and administration, fees are collected from members. No facilities/benefits are provided such as recreation, etc by the applicant. The applicant also sends fees to International Institution at USA for service activities and International administration. The applicant further sends fees to its District Clubs. 2.2 A separate Administration Account is maintained by the club, wherein sums are recovered from all members for using the same for meetings and other petty administrative expenses and also include expenses for location and light refreshments. Meetings are held for members to review existing activities and consider new projects for execution. In these meetings the charitable proposals are considered, discussed and approved or rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the definition of services under section 65B(44) of the Finance Act, 1994 requires the provision of services by one person to another, and the doctrine of mutuality, which is applicable to clubs qua sales lax for supplies to members, was equally applicable on all fours to services. Consequently, services by a members' club to its members amounts to services to self. 2.11 To tax the transaction between an association or club and its members, said transaction must either fit either under clause (a) or clause (c) of Section 7 of the CGST Act, 2017, which defines the term supply . As per Clause (a) there must be supply of goods or services or both for a consideration and such supply must be in the course or furtherance of business. 2.12 The term business is defined u/s 2(17) (e) includes: Provision by a club association society or any such body (for a subscription or any other consideration) of all the facilities or benefits to its members . In applicant's case, members of the club come together only for social cause and there is neither furtherance of any business of benefits or facilities to the members. Hence, applicant is not doing any business as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharashtra Appellate Authority for Advance Ruling for GST, in the cases of Rotary Club of Mumbai Queens Necklace (Order 06.11.2019) and Rotary Club of Mumbai Nariman Point (Order No. MAH/AAAR/SS-R1/20/2019-20, dt. 11.12.2019) No effect of new clause (aa) in sub-section (1) of Section 7 of the CGST Act 2.17 A new clause (aa) has been inserted in Section 7(1) of the CGST Act retrospectively, with effect from the 1st July, 2017, to provide levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. 2.18 Applicant submits that insertion of said clause doesn't alter case of Rotary Club, because of Agency principle' and reasoning of AAAR in the cases of in the cases of Rotary Club of Mumbai Queens Necklace and Rotary Club of Mumbai Nariman Point. 03. CONTENTION - AS PER THE CONCERNED OFFICER: 3.1 The concerned jurisdictional officer submitted and referred to provisions of law and facts of present case mainly to contend that, from the definitions it is clear that the member and the club ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings/administration expenses are incurred from the fees received from its members. The applicant has strongly argued that the principle of mutuality is applicable in it case and therefore tax is not leviable on the fees received from members for carrying out meeting and for administration expenses. 5.4 In view of the above we now take up both the questions raised by the applicant. 5.5 The first question is whether the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is 'business' as envisaged u/s 2(17) of the CGST Act, 2017. The second query of the applicant is whether contributions from its members, recovered for expending the same for the weekly and other meetings and other petty administrative expenses amounts to or results in a supply, within the meaning of supply'. 5.6.1 The term Supply is defined under Section 7 of the CGST Act and was amended last, in the Budget 2021. Prior to the amendment supply was defined as : 7 (1) 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, barter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to support its contention that GST is not leviable on the fees collected from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received from its members. 5.7.1 According to applicant, there is no commercial consideration involved in the 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. According to applicant, the amount being collected from the members is reimbursement of expenses or share of contribution. According to applicant, it does not function on commercial basis. The common pool is being spent back on the members only. According to applicant, in the absence of two distinct persons and also in absence of consideration, as defined under the Act, contributions received from the members in the Administration Account does not qualify as a Supply within the meaning of the term, as defined under the Act. 5.7.2 We find that the entire dispute raised by the applicant in respect of fees received from its members is settled by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above said definition is relevant and it is clear from the said clause that the activity of providing facilities or benefits by an association to its members for a subscription is a business under GST Act. Hence the transactions between the association and its members is a service. 5.9.4 Further, Section 2(31) of the CGST Act states that 'Consideration' in relation to the supply of goods or services includes,- (a) 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 Government or a State Government; (b) the monetary value of any act or forbearance, whether or not voluntary, 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 Government or a State Government: PROVIDED that a deposit, given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not change after the amendment but failed to explain the said proposition of law. The applicant has further failed to explain as to for what purpose or to remove which particular mischief or cover which particular aspect or transaction was the said amendment brought about. All the other case laws relied, also do not provide any guidance on the legal situation, particularly after the amendment. 5.11.1 Further, the applicant has also submitted that a Co-joint reading of the definitions of a supplier and recipient as per the GST Act provides that, where a consideration is involved in a transaction, the recipient is the person who pays the consideration to the supplier and hence two different persons have been envisaged in the law to tax a transaction as a supply made for consideration. 5.11.2 The amendment to Section 7 (mentioned above) clearly treats the applicant and its member as two different persons where there is a supply of services from the applicant to its members and thus as per the applicant's own submission that two different persons have been envisaged in the law to tax a transaction as a supply made for a consideration, we find that in the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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