2020 (7) TMI 200 - AAR - GST

Supply or not - Applicant raises funds by collecting contributions, (also called as charges in the bye laws of Applicant Society), from members of the society - If the activities of the applicant are treated as supply under CGST Act, 2017 then whether the applicant has correctly discharged the GST as per the illustrative copy of the invoice generated by the Applicant? HELD THAT - A Reading of Circular No.109/28/2019-GST dated 22.07.2019, issued vide F. No. 332/04/2017-TRU by the Government makes it clearly evident that it is the intention of the Government to tax Housing Societies under GST Laws subjcet to the condition that the reimbursement of charges or share of contribution of the members exceed an amount of ₹ 7500/- per month per member for Supply of service rendered by Resident Welfare Association (unincorporated body or a non- profit entity registered under any law) to its own members. Applicant relied upon the decision in the case of IN RE M/S. LIONS CLUB OF POONA KOTHRUD 2019 (11) TMI 420 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA where it was held that the membership fee collected by them will not subject to the GST and only the registration fee charged from the members for participation in the training programs/workshops will be subjected to GST - In the subject case, first of all there is no collection of me membership fees. Further, the applicant has not mentioned that they are undertaking any administrative expenses. Both, collection of membership fees and utilization of the same for administrative purposes are facts of the matter in the Lions Club case but not in the subject matter - the decision of the Authority in the case of M/s Lions Club, Kothrud is not applicable in the instant case. If the activities of the applicant are treated as supply under CGST Act, 2017 then whether the applicant has correctly discharged the GST as per the illustrative copy of the invoice generated by the Applicant? - HELD THAT - The question which has been raised by the applicant is not pertaining to any of the matters mentioned in Section 97 (2) of the GST Act. In other words, Section 97(2), which encompasses the questions, for the ruling by this Authority does not deal with the issue of whether the applicant has correctly discharged the GST as per the illustrative copy of the invoice generated. This question does not pertain to any matter in respect of which an Advance Ruling can be sought under the GST Act. Hence, it is held that this authority does not have jurisdiction to pass any ruling on such matters and the said question is not maintainable under the GST Act.

Summary

Issues Involved:
1. Whether the activities carried out by the applicant for its members qualify as "supply" under Section 7 of the CGST Act, 2017.
2. If the activities of the applicant are treated as "supply" under the CGST Act, 2017, whether the applicant has correctly discharged the GST as per the illustrative copy of the invoice generated by the Applicant.

Issue-wise Detailed Analysis:

1. Whether the activities carried out by the applicant for its members qualify as "supply" under Section 7 of the CGST Act, 2017:

The applicant, a co-operative housing society, sought an advance ruling to determine if their activities for members qualify as "supply" under Section 7 of the CGST Act, 2017. The applicant argued that their activities are merely for managing the society and do not constitute "business" or "supply" under the GST Act, citing the principle of mutuality. They contended that the society and its members are not distinct persons and hence, no consideration flows between two distinct persons.

The jurisdictional officer countered that the applicant and its members are distinct persons under Section 2(84) of the CGST Act, 2017, and the activities carried out by the society, such as managing the property and raising funds, qualify as services provided for consideration. The officer emphasized that the wide definition of "services" under GST law includes these activities.

The Authority observed that the term "supply" under Section 7 of the CGST Act, 2017, has a broad connotation, including all forms of supply of goods or services for a consideration in the course or furtherance of business. The applicant, being a registered co-operative society, is a "person" under Section 2(84) of the CGST Act. The membership fees collected from members are considered "consideration" for the supply of services. The definition of "business" under Section 2(17) of the CGST Act includes the provision of facilities or benefits by a society to its members for a subscription or other consideration.

The Authority concluded that the applicant's activities meet all conditions stipulated for "supply" under the GST law. The principle of mutuality was found inapplicable in the GST regime, as both the applicant and its members are distinct entities.

2. If the activities of the applicant are treated as "supply" under CGST Act, 2017, whether the applicant has correctly discharged the GST as per the illustrative copy of the invoice generated by the Applicant:

The second query was whether the applicant correctly discharged GST as per the illustrative invoice. The Authority examined whether this question falls under Section 97(2) of the CGST Act, which specifies the scope of advance rulings. The Authority found that the question of correct discharge of GST does not pertain to any matters listed under Section 97(2), such as classification of goods or services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, registration requirements, or whether an activity amounts to a supply.

Consequently, the Authority held that it does not have jurisdiction to pass a ruling on whether the applicant correctly discharged GST as per the illustrative invoice. The question was deemed not maintainable under the GST Act.

Order:

1. The activities carried out by the applicant for its members qualify as "supply" under Section 7 of the CGST Act, 2017.
2. The question of whether the applicant has correctly discharged the GST as per the illustrative invoice was not answered due to lack of jurisdiction.