TMI Blog2020 (9) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... mber and its services rendered to the members, is not a supply or service by club to the members. Thus, the applicant is governed by the principal of mutuality - the applicant and its members are one and same. - JHR/AAR/2020-21/02/08 - - - Dated:- 22-9-2020 - SRI PRADHUMAN BADRI PRASAD MEENA, I.R.S., AND SRI RAM CHANDRA PRASAD BARNWAL, MEMBER Represented By : Sri Parth Jalan, Advocate Note: Under Section 100 of the JGST Act 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of JGST Act 2017, within a period of 30 days from the date of service of this order. Order under Section 98 of CGST Act, 2017 and under Section 98 of SGST Act, 2017 M/s Ranchi Club Limited, Main Road, PO- Ranchi GPO, PS- Kotwali Thana, Ranchi - 834001 (hereinafter referred to as applicant ), having GSTIN ((20AAACR7751E1ZR)), have filed an application for advance Ruling under Section 97 of the CGST Act, 2017 and under Section 97 of Jharkhand GST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Rules 104 of Jharkhand GST Rules, 2017 in Form GST ARA-01 discharging the applicable fee under the CGST Act and Jharkhand G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is governed by the principal of mutuality? (iii) Whether the assessee and its members are one and same? 4. Applicant's interpretation of Law: Issue No. 1- Whether the service provided by the assessee to its members come within the definition of 'Supply' as envisaged under the Central/ Jharkhand Goods and Services Tax Act, 2017? a. That the assessee is a registered entity under the applicable provision of Central/ Jharkhand Goods and Services Tax Act, 2017. It is also registered with The Companies Act, 2013 (earlier registered under The Indian Companies Act, 1882.) and accordingly has its memorandum and articles of association. b. That the sole issue before this Ld. Authority is whether the services as provided by the club would fall within the definition of supply as provided in section 7 of the Center/Jharkhand Goods and Services Tax Act, 2017. It is clarified that that in order for 'supply' to happen to separate persons are required. However, in the case at hand where it has been held that the members of the club and the club are not separate entity, the charging Section of GST is not required. It is hereby clarified that any servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude any sort of exchange done is due course of business. The definition of business itself has been provided in the Act and includes services provided to members of a club or association for consideration etc. A similar definition was a part of the Finance Act, 1994 wherein under Section 65(105)(zzze) the definition was the same. However, the Hon'ble Jharkhand High Court in the case of Ranchi Club Ltd v. Chief Commissioner of Service Tax and Excise (2012(3)J.L.J.R.l) has clearly stated and specified that the members of Ranchi Club and Ranchi Club are not separate and distinct entity. As in the instant case the members and the assessee are one and same due to the applicability of the principle of mutuality and as 'Supply' has to be from one person to another; the services rendered by the assessee do not come within the purview of supply as provided for in section 7 of The Center /Jharkhand Goods And Services Tax Act,2017. it is imperative to bring to the notice of this Ld. Authority that a similar decision was rendered by the Maharastra Authority for advance ruling in the case of In Re Lions Club Of Poona Kothrut. f. That the assessee as earlier preferred anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the Applicant-Club. 2. That the Hon'ble Jharkhand High Court in the case of Commissioner of Income Tax v. Ranchi Club Limited (1992) 296 ITR 137 (Patna) was pleased to hold that the principle of mutuality shall apply to M/s Ranchi Club Limited as:- A. The Club was established for Non-profit motive; B. The club was and its members were distinct distinguishable, and they do not have any right in any surplus, if generate by the applicant club; C. None of the activities of the club could be tainted with commerciality. 3. the M/s Ranchi Club Limited is a Section 8 (Nidhi Company) under the Companies' Act, 2013 (earlier registered under Section 25 of the Companies' Act, 1956) which establishes that the Applicant-Club is a Non-Profit Organization. Further, the transactions of the club and its members are distinguishable, and the members of the club have no right on any surplus if generate by the club and the same is again used by the club for the furtherance of the object of the club. 4. any reserves held by the club are also used for the purpose of furtherance of the activities of the club and cannot be used by any member for his/her o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rive an profit from the activities of the club and none of the activity of the club is tainted with commerciality. 8. That it is lastly submitted that the the application of the principle of mutuality in case of the applicant is no longer res integra and has the judicial stamp from the Hon'ble Jharkhand High Court. 2nd. Whether the Principle of Mutuality would apply in the case of indirect taxes? 1. That it is most humbly stated that principle of mutuality would apply in the case of indirect taxes. 2. That the Hon'ble Jharkhand High Court in the case of Ranchi Club Limited v. Chief Commissioner of Central Excise and Service Tax, Ranchi (2012 (3) JLJR 1) had held that any 'sale or service' requires the presence of two parties. The applicability of the principle of mutuality would entail that the 'CLUB' and the 'MEMBERS' of the club are one entity and as no sale or service can be provided by the members to oneself the provisions of indirect taxes including those of the Finance Act, 1994 would not apply. 3. That an appeal was filed against this decision before the Hon'ble Apex Court and was registered as CA 7497 of 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, whether the transaction between the applicant and its members can be construed as supply as envisaged under section 7 of the CGST Act, 2017, or otherwise. 9.2 At the outset, we would like to discuss the scope of term supply as envisaged under Section 7 of the CGST Act, 2017, the relevant portion of which has been reproduced herein under: (1) For the purposes of this Act, the expression supply includes- all forms of supply of goods or services or both 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. Thus, on perusal of the aforesaid definition of supply, it is revealed that for any activity/transaction to be qualified as supply, the same should be undertaken in the course or furtherance of business. Now, before applying the above condition in the context of the impugned transaction, we would like to discuss the meaning of business as provided under section 2(17) of the CGST Act, 2017, the relevant extract in the context of the instant case is reproduced herein below:- (17) business includes- (a) ........... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors. Versus Calcutta Club Limited the Hon'ble Supreme Court in its Judgment held the following:- (1) The doctrine of mutuality continues to be applicable to incorporated and unincorporated members' clubs after the 46th Amendment adding Article 366(29-A) to the Constitution of India. (2) Young Men's Indian Association (supra) and other judgments which applied this doctrine continue to hold the field even after the 46th Amendment. (3) Sub-clause (f) of Article 366(29-A) has no application to members ' clubs. 50. Having gone through the judgment and order of the West Bengal Taxation Tribunal dated 3rd July, 2006 and the impugned Calcutta High Court judgment dated 1st February, 2008, and in view of the answers to the three questions referred to the present Three Judge Bench (as listed hereinabove), we are of the view that no interference is called for in the findings of fact or declaration of law in this case. Accordingly, C.A. No. 4184 of2 009 stands dismissed. C.A. No. 7497 of 2012 13. Similarly, in the same judgment supra in the matter of Civil Appeal No. 7497 of 2012 Chief Commissioner of Central Excise and Service Ors. Versus M/s. Ran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of Central GST Act, 2017 was amended with effect from 01sl July 2017, in which the club and its members are deemed two separate persons and the supply of activities or transaction inter se is treated as taxable supply between those. The relevant amendment is quoted hereunder for your reference: That, vide Finance Bill, 2021, section 7 of CGST Act, 2017 was amendment with effect from 1st July 2017, in which a new clause (aa) was inserted after clause (a) of sub-section (1) of section 7, which reads as under: (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Explanation : - For the purpose of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgement, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transaction inter se shall be deemed to take place from one such person to another. This is for your information and necessary action. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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