9911796707
TMI Blog2020 (9) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... es and made the following submission:- (i) M/s Ranchi Club Limited (hereinafter referred to as 'assessee/club') is a Not-for- Profit corporate entity registered under the Companies Act, 1956 (now the Companies Act, 2013). The assessee is a limited company which is guaranteed by its members. The assessee is not a company which provides shareholding to its members rather its liabilities/debts are guaranteed by the members. (ii) As per the memorandum and articles of association there are various categories of persons who may be allowed to use the club. These persons may be defined in the category of permanent members, resident members, corporate members, honorary members, courtesy members and associate members. (iii) That however it is only the permanent members are deemed to be 'members' of the club thereby meaning that the permanent members are those who have a right to elect the executive committee of the club. They are also those who provide their personal guarantee with regards to the debts and liabilities of the club. It is imperative to mention that they are not part of any income which the club generates. (iv) That the services provided to the club can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same to the Government. c That it is most humbly submitted that the principle of mutuality is an important dictate of taxation wherein it has been held by the Hon'ble Courts that wherever two entities are mutual to one another they shall be deemed to be one and the same. The issue came up before the Hon'ble Supreme Court in the case of Chlemsford v. Commissioner of Income Tax (AIR 2000 SC 1092), wherein the Hon'ble Supreme Court was pleased to lay down the following criteria for the principle of mutuality to exist:- a) The identity of the contributors to the fund and the recipients from the fund, b) The treatment of the company, through incorporated as a mere entity for the convenience of the members and policy holders, in other words, as an instrument obedient to their mandate, and c) The impossibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves. d. That in the case at hand all the above three criteria are met. The members of the club provide fund to the assessee which is a separate entity incorporated for the convenience of the members and the members can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Authority had held that the issue involved in the advance ruling sought under the provisions of the Goods And Services Act, 2017 and the Finance Act, 1994 (service tax) remains the same. Further this Ld. Authority had in light of the case of Chief Commissioner Of Central Excise and Services & Ors Vs. M/s Ranchi Club Ltd (CIVIL APPEAL NO. 7497 OF 2012) pending before the Hon'ble Supreme Court was pleased to refrain from passing any order. That since then the Hon'ble Supreme Court has been pleased to adjudicate the issue in the favour of theassessee. 5. Section 97(2) of the CGST Act, 2017 and Jharkhand GST Act, 2017 empowers the Advance Ruling Authority to decide the following issues:- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the club participate to discuss the further program and development of the club. The most important exercise held as part of the AGM entrails the election of an 'Executive Committee' in a democratic manner. This 9-member committee is responsible for the day-to-day running of the club and is also tasked with taking any decision regarding the functioning of the club. It is clarified that the committee members serve in an honorary capacity and do not derive any monetary benefit, not even an honorarium for serving as members of the Executive Committee. 6. it of further imperative to bring to the notice of this Hon'ble Authority that the AGM also undertakes the adoption of the accounts of the firm. The Balance sheet and the profit and loss of the firm would reflect that the funds are only utilized for the purpose of furtherance of the purpose of the club. 7. it is further imperative to note that the decision of the Hon'ble Jharkhand High Court (later adopted by the Hon'ble Apex Court) is based on the judgment of the Chlemsford Club v. Commissioner of Income Tax (AIR 2000 SC 102), wherein the Hon'ble Apex Court had laid down three essential for the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the provision of the Goods and Services Tax Act, 2017. 4. That in light of the above mentioned submission it can be safetly concluded that the 'Scope of Supply' under the definition as provided for under Section 7 of the Goods and Services Act, 2017 would require the existence of any two persons and as the same the 'CLUB' and its 'MEMBERS' and one and same no 'Supply' can take place and hence the applicant company doesn't come with the purview of the Goods and Services Tax for the transaction with its members. III. That the instant submission has been made in bona fide and in the interest of justice. IV. That in lights of the above the Applicant shall be grateful if the application as filed is accordingly allowed. V. That the instant application is being filed by the authorized representatives of the applicant is pursuance of the order of the Hon'ble Authority after due verification from side of the Applicant. Discussion and Findings: We have considered the submission made by the applicant in their application for the advance ruling as well as the submission made by the authorized representative of the applicant during personal he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the applicant that applicant is a Not-for-Profit corporate entity registered under the Companies Act, 1956 (now the Companies Act, 2013) and a limited company which is guaranteed by its members. The applicant is not a company which provides shareholding to its members rather its liabilities/debts are guaranteed by the members. 9.3 Now, once it has been established that the applicant is not doing any business in terms of section 2(17) of the CGST Act, 2017, it can be deduced that activities carried out by the applicant would not come under the scope of supply as envisaged under section 7(1) of the CGST Act, 2017. 10. With regard to the contention that the applicant is governed by the principal of mutuality, the applicant submitted that the Club was established for non - profit motive and the club was and its members were distinguishable, and they do not have any right in any surplus, if any generated, by the applicant club and none of the activities of the club could be tainted with commerciality. 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 own benefit. 10.1 In this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the pre-2012 scheme of not taxing member's club. (iii) The Hon'ble Court in arriving at the decision has relied on various cases like Young Men's Indian Association (1970)1SCC 462, DALCO Engineering (2010) 4SCC 378, Calcutta Club Ltd, Enfiend India Ltd. (1968) 2 SCR 42 etc. (iv) The Hon'ble Court has upheld the judgment of Jharkhand High Court in the W.P. No. 2388 of 2007 dated 15.03.2012 and judgment of Gujrat High Court dated 25.03.2013. The Hon'ble Supreme Court upheld the Jharkhand High Court Order, wherein it says: " Since the issue whether there are two persons or two legal entity in the activities of member's club has been already considered and decided by the Hon'ble Supreme Court as well as by the full bench of this Court in the cases referred above, therefore, this issue is no more res integra and issue is be answered in forum of the writ petition... " (v) Further, the Hon'ble Court held that 2005 onwards the finance Act, 1944 does not purport to levy Service tax on member's club in the incorporated form. 14. The above judgment of the Hon'ble Supreme Court has made the matter clear in all aspects. 15. In view of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
