2020 (10) TMI 805 - AAR - GST

Supply or not - money collected by IITMAA from its members and receiving donations/grants/subsidies/budgetary support from IIT, Madras to defray expenses incurred towards administering the association and other expenses related to its engagement activities initiated by members - existence of any liability to comply with GST law including registration and payment of tax or not? HELD THAT - In the instant case, the applicant is a society registered under Tamilnadu Society Registration Act 1975 and is in effect an association with the alumni of IIT Madras as members and hence, the applicant is a person under CGST/TNGST Act as per Section 2(84) of the Act. The applicant has contended that the Principle of Mutuality applies in the case at hand and the applicant 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. 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, 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. The applicant provides supply of services under GST/TNGST ACT and their annual turnover is above the prescribed threshold as per Section 22 of CGST/SGST Act, they are liable to be registered under the Act.

Summary

Issues Involved:
1. Whether collecting money by the alumni association from its members and receiving donations/grants/subsidies/budgetary support from IIT Madras amounts to supply.
2. Whether there is any liability to comply with GST law, including registration and payment of tax.

Issue-wise Detailed Analysis:

1. Collecting Money and Receiving Donations:
The applicant, an alumni association registered under the GST Act 2017, sought a ruling on whether collecting money from its members and receiving donations/grants/subsidies/budgetary support from IIT Madras to defray expenses amounts to supply under GST law. The applicant argued that their activities do not fall under the definition of business as they do not provide facilities/benefits to members, and the transactions are not for consideration. They emphasized that the association and its members are not distinct persons under GST, invoking the principle of mutuality. The applicant contended that their activities are not taxable as they do not meet the criteria for supply under Section 7 of the CGST Act 2017.

2. Liability to Comply with GST Law:
The ruling authority examined the submissions and the legal provisions. They noted that the applicant is a society registered under the Tamil Nadu Societies Registration Act 1975, and their activities include organizing events, maintaining a database, and facilitating professional networking among alumni. The authority determined that the association and its members are distinct entities under GST law, as defined in Section 2(84) of the CGST Act. The definition of "business" under Section 2(17) includes the provision of facilities or benefits to members for a subscription or any other consideration, which applies to the applicant's activities. The authority concluded that the membership fees and other charges collected by the applicant constitute a supply of services under Section 7(1)(a) of the CGST/TNGST Act, as these activities are in the course of furtherance of business.

Conclusion and Ruling:
The authority ruled that the activities undertaken by the applicant for its members, for which membership fees and other charges are collected, are covered under the definition of supply of services under Section 7 of the CGST/TNGST Act 2017. Consequently, the applicant, having an annual turnover above the prescribed threshold, is liable to be registered under the Act.