2023 (4) TMI 582 - AAR - GST

Doctrine of mutuality - Benefit of Exemption from GST - Notification No. 14/2018 - Central Tax dated 26.07.2018 - non-profit association registered under any law engaged for the welfare of farmers vide serial No. 77A, Heading 9995 - applicant-association a person distinct from the member or a related person - Section 7(1) (a), (c) or (d) of the Central Goods and Services Tax Act, 2017 - whether the applicant is eligible to avail the benefit of Notification No. 14/2018 CT dated 26.07.2018 as a registered non-profit association engaged for the welfare of farmers under Serial number 77A and whether there is a transaction between the applicant association and its members which is covered under Section 7(1) (a), (c) or (d) of the GST Act, 2017? - HELD THAT - In order to tax, the activity must be a supply of either goods or service or both end the supply is to be made for a consideration to a person in the course of furtherance of business, i.e., there should be a supply of goods or service, recipient, supplier, consideration, in the course or for furtherance of business - In the instant case, it is evident from the submissions of the applicant that their activities are squarely covered under scope of supply and their contention that applicant association is neither a person distinct from the member nor a related person is laid to rest by retrospective amendment of Section 7 by insertion of clause (aa) to sub-section (1) and explanation with effect from 01.07.2017, which states that the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. As per the provisions of GST Law, the applicant being a registered society, providing services to their members, who are distinct from the applicant and registered as member on payment of any amount towards subscription/contribution, is a supply of service and is accordingly taxable except subscription received from natural persons who are farmers simpliciter and the annual subscription for all membership is up to Rs. 1000/-.

Summary

Issues Involved:
1. Eligibility for Notification No. 14/2018 - Central Tax.
2. Applicability of the doctrine of mutuality.
3. Impact of GST introduction on the doctrine of mutuality.
4. Distinction between the applicant-association and its members.
5. Coverage of transactions under Section 7(1) of the GST Act, 2017.

Summary:

1. Eligibility for Notification No. 14/2018 - Central Tax:
The applicant, a non-profit association registered under the Tamil Nadu Societies Registration Act, 1975, sought to determine eligibility for exemption under Notification No. 14/2018 - Central Tax dated 26.07.2018. The Authority ruled that the applicant is eligible for exemption under Serial number 77A of Notification No. 12/2017 Central Tax (Rate) as amended, but only for subscription received from natural persons who are "farmers simpliciter" and where the annual aggregate subscription amount for all membership is up to Rs. 1000/-. The Authority emphasized that the exemption is strictly interpreted and only applicable to natural persons who are farmers and not to entities involved in multiple activities.

2. Applicability of the Doctrine of Mutuality:
The Authority refrained from ruling on the applicability of the doctrine of mutuality, stating that interpretation of law is not mandated to the Advance Ruling Authority under Section 97(2) of the GST Act, 2017.

3. Impact of GST Introduction on the Doctrine of Mutuality:
Similarly, the Authority did not provide a ruling on whether the introduction of GST abrogates the doctrine of mutuality, as this also falls outside the scope of their mandate under Section 97(2).

4. Distinction Between the Applicant-Association and Its Members:
The Authority did not rule on whether the applicant-association is a person distinct from its members or a related person, citing the same limitation under Section 97(2).

5. Coverage of Transactions Under Section 7(1) of the GST Act, 2017:
The Authority confirmed that transactions between the applicant-association and its members are covered under Section 7(1)(a) of the GST Act, 2017. This was further clarified by the insertion of Section 7(1)(aa) and its explanation, effective from 01st July, 2017, which states that the person and its members shall be deemed separate and their transactions shall be considered as supply.

RULING:
1. The applicant is eligible for exemption under Notification No. 14/2018 - Central Tax for subscriptions from natural persons who are farmers and where the annual aggregate subscription amount is up to Rs. 1000/-.
2. No ruling on the applicability of the doctrine of mutuality.
3. No ruling on the impact of GST introduction on the doctrine of mutuality.
4. No ruling on whether the applicant-association is distinct from its members.
5. Transactions between the applicant-association and its members are covered under Section 7(1)(a) and clarified by Section 7(1)(aa) of the GST Act, 2017.