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TMI Blog2019 (7) TMI 1281X X X X Extracts X X X X X X X X Extracts X X X X ..... y with a view to promoting national development, to assist banking and financial institutions in matters such as designing measurement tests for employee selection, appraisal programs, conducting morale, productivity studies, streamlining organizational structure and to review, from time to time, the impact of educational, training and research activities and offer suggestions for filling the gaps in the banking and financial systems and to maintain liaison with banking and financial institutions. There is a supply of taxable services by the applicant which are performed for consideration (in this case contributions received for performing activities mentioned in the MOA) received in furtherance of their business. As per Section 2 (17) (e) business includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. Here, the applicant is a society formed by the RBI and various Public Sector Bank/s and are providing services mentioned in para 5.6 above to their member banks. Therefore it can safely be said that they are receiving consideration (contribution) for supply of taxable serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tonomous Apex Institute, with the mandate of playing a pro active role of Think Tank of the banking system. NIBM is registered as a society under the Indian Society Registration Act (XXI) of 1860. RBI, State Bank of India (SBI) Other Public Sector Banks were the first members of Governing Board of this society to which, by rules of the society, the management of its affairs entrusted. Copy of Memorandum is attached for reference. As per Memorandum of Association, the objects for which the society is established are as under: 1. to plan, promote and provide for education and training in operations and management of banking and financial institutions and to undertake, organize, and facilitate Conferences, Seminars, Study Courses, Lectures and similar other activities for the purpose; 2. to promote and conduct research in matters pertaining to: (a) the improvement of banking operations, (b) the education, training and development of personnel of banking and financial Institutions, (c) the maximum augmentation and effective deployment of banks resources including analytical and perspective studies of various sectors of the economy with a view to promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Public Sector Banks are given freely in which the said banks do not receive any exclusive benefit in return; iv) the contribution, received by NIBM from the Public Sector Banks shall not be treated as consideration received for training or other taxable supplies; v) the supply is defined u/s 7(1) of the GST Act as follows: For the purposes of this Act, the expression supply includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business ; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration Thus, the three factors, namely, Goods or Service, Consideration and Business must exist simultaneously to complete the definition of supply vi) Since, the contributions received / receivable by NIBM from the Public Sectors banks cannot be held as consideration , there is no supply and thus, GST should not become applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iptions towards recurring expenses. The planned non-recurring expenses including the capital expenditure is also contributed based on the budget approved by the finance committee in their annual meeting. The member banks contribute towards the recurring and non-recurring expenditure in the following proportion: i) RBI 40% of - ₹ 100 lakh and the budgeted expenditure; ii) SBI 20% of- ₹ 100 lakh and the budgeted expenditure; iii) Other Public Sector Banks - 40% of ₹ 100 lakh and the budgeted expenditure in proportion to their deposits with RBI. d. Source of income for NIBM (i) Short term Training courses offered by NIBM to banks; (ii) Consultancy related to specific needs of banks; (iii) Research activities for banks (iv) Post Graduate Diploma in Management (Banking and Financial Services) PGDM PGDM course offered by NIBM is recognised under AICTE hence, exempt under GST. For all the other above revenue generating activities, GST is levied on the fees collected by NIBM. e. Question Raised Whether amount paid as subscription or contribution towards recurring or capital expenses or reimbursement or by whatever name called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, profession, vocation, adventure, wager or any 0iher similar activity, whether or not it is for a pecuniary benefit; b) any activity or transaction in connection with or incidental or ancillary to sub clause (a); c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency; continuity or regularity of such transaction; d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business, e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members, admission, for a consideration, of persons to any premises; g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club, and] i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BM from the member banks, there is no supply of goods or services neither there is any consideration nor business or furtherance of business thus the said receipts fall outside the scope of supply and thus, shall not attract GST. As a matter of fact, there is no direct nexus / linkage between the contribution received from members and services offered to them and thus, there is no supply as defined u/s 7 of the GST Act. NIBM offers various services in the nature of training, coaching, research, consultancy to members for which separate fees are charged and the GST is levied on such services wherever specific exemption is not available under the GST law. NIBM also relies on following decisions/circulars, wherein, it has been held/clarified that: a) the amounts received as charitable donations out of free will and public Government grants for activities of society are not related to services provided by Society. These are excludible from taxable value for charging service tax - Cultural Society of Angamally v. CCE (2008) 13 STT 277 (CESTAT) = 2007 (6) TMI 43 - CESTAT, BANGALORE ; b) Prima facie, there was no nexus between grants/donations from donors and med ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mutuality would, therefore, be applicable even in respect of applicability of Goods Services Tax. Principle of Mutuality was considered in CIT. v. Bankipur Club [1997] 92 Taxman 278 (SC) = 1997 (5) TMI 392 - SUPREME COURT . These principles are applicable and have been applied by the Calcutta High Court in Saturday Club Ltd. v. Asstt. CST [2005] 1 STT 64 (Cal.)) = 2004 (6) TMI 11 - HIGH COURT CALCUTTA as concurred to in Dalhousie Institute v. Asstt. CST [2005] 1 STT 15 (Cal.))(EXHIBIT A-1 to A-3) = 2004 (6) TMI 625 - CALCUTTA HIGH COURT . 2012 (26) S.T.R. 401 (Jhar.) In The High Court of Jharkhand At Ranchi, Prakash Tatia. CJ. Aparesh Kumar Singh. J. Ranchi Club Ltd. v. Chief commr. Ofc. EX. S.T., RANCHI ZONE [2012] 22 taxmann.com 217/36 STT 64 (Mag.) = 2012 (6) TMI 636 - JHARKHAND HIGH COURT In case of NIBM, it is registered as a society under the Indian Society Registration Act (XXI) of 1860 wherein RBI, SBI Other Public Sector Banks are the members. The contribution by the members is regardless of any services offered by NIBM. As stated in point number 17 of the Object Clause of MoA, the said contribution is to meet the recurring and non- r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Furtherance of business advertising and publishing promotional literature in newspapers and are also organizing, teaching and training courses, conferences, seminars and lectures and also publishing journals, pamphlets, reports, books and booklets in this regard No facilities are provided to members against the subscription amount, as the said amount is utilised for recurring and non- recurring expense. As there is no business, there is no furtherance of business. 7. Supply - publishing and promotions - increased credibility of member banks -increased client base supply -No facility - -No business -No furtherance of business and no supply 8. Necessity of the service provided Yes, in case no service was provided by banking codes, there was requirement of the service as per the mandatory guidelines of RBI No such requirement 9. Promoting national development By using the unique codes developed, credibility of the member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - publishing and promotions - increased credibility of member banks -increased client base supply -No facility - -No business -No furtherance of business and no supply 8. Necessity of the service provided Yes, in case no service was provided by banking codes, there was requirement of the service as per the mandatory guidelines of RBI No such requirement 9. Promoting national development By using the unique codes developed, credibility of the member banks is increased, hence no national development the services provided are for spreading of education, creating awareness and promoting national development Similarities between Poona Club and NIBM Sr.No. Similarity Poona Club NIBM Ruling 1. Utilization of contribution by members The contribution is received for defraying meeting expenses, administrative expenses and other co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s facilities and/or benefits, enabling them to attend conventions/meetings for the furtherance of the objectives of the organisation. Such facilities/benefits are not available to the non- members of the organisation. Services in the nature of education, training, etc are offered to members as well as non-members for separate consideration in the form of fees. No services are provided to members against the contribution received from them as the contribution is received towards meeting of recurring and non-recurring expenses 2. Utilisation of fund raised / contribution received The Balance sheet has no indication of expenses made by them towards social work except some amount of expense towards Relief Fund for Cyclone in the year ending on 30 th June, 2018. But from income side it appears that much amount was raised by the club for that very purpose. Hence, the club has no regular social activity and also has no segregated fund for that purpose though the Appellant claimed in their grounds of Appeal that the subscription / membership fees collected from the members are utilised entirely for funding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has informed that the Reserve Bank of India, State Bank of India and other public sector banks in capacity of promoters of the institute contribute annually an amount of ₹ 100 lakh as subscription towards recurring expenses. The entire CAPEX is also contributed at actuals by RBI, SBI, and other public sector banks in ratio of RBI 40%, SBI 20%, and other public sector banks 40%. On perusal of nature of activities undertaken by NIBM it appears that the annual subscription and reimbursement received from RBI and other public sector Banks are used for carrying out the activities of NIBM. NIBM carries out its activities on commercial basis and the promoter banks have control over its activities being the members of governing board. Hence, there is a direct relation between the activities of NIBM and the funds received. Hence the considerations paid as subscription or contribution towards recurring or capital expenses or reimbursement to M/s. NIBM by its members for its recurring and non-recurring expenses is leviable to GST. The ratio of cultural society of Angamally V. CCE (2008) = 2007 (6) TMI 43 - CESTAT, BANGALORE is not applicable as in that case donations were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, - The supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the central Government or a State Govt. The annual subscription and reimbursement received from RBI and other public Sector Banks are used for carrying out the activities of NIBM. NIBM carries out its activities on commercial basis and the promoter banks have control over its activities being the members of governing board. Hence, there is direct relation between the activities of NIBM and the funds received. In view of above facts it is seen that NIBM is a person doing business of supply of services for monitory consideration received in the form of annual subscription. In a similar case of The Banking codes and standards Boards of India Advance Ruling is decided by Hon ble Maharashtra Authority for Advance Ruling, The BCSBI is registered under the Societies Registration Act-1860 and public trust under Maharashtra Public Trust Act, 1950. BCSBI undertakes various activities viz. to advertise and publish p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pacity of promoters, contribute an amount of ₹ 100.00 lakh, per annum, as subscriptions towards recurring expenses. Their entire CAPEX is also contributed at actuals by them in a certain ratio. The contribution is to ensure that the applicant is not in deficit as regards their operations. 5.3 They have also submitted that their operations, as per Memorandum of Association, include: (A) promotion and conducting of research in matters pertaining to (a) the improvement of banking operations, (b) the education, training and development of personnel of banking and financial Institutions, (c) the maximum augmentation and effective deployment of banks resources including analytical and perspective studies of various sectors of the economy with a view to promoting national development; (B) to assist banking and financial institutions in matters such as designing measurement tests for employee selection, appraisal programs, conducting morale, productivity studies, streamlining organizational structure and to review, from time to time, the impact of educational, training and research activities and offer suggestions for filling the gaps in the banking a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to receive the contributions as mentioned above, they must carry out the activities entrusted to them and these activities are nothing but supply of services by them, rendered in lieu of the receipt of contributions. Thus their argument that, the contributions are not consideration received for taxable supply is not acceptable. They have submitted that the contributions received cannot be said to be in the nature of consideration but it is more in the nature of aid / grant / subsidy received from the members to support functioning of the NIBM. We find that the contribution has been received with a caveat i.e. to perform the activities mentioned in the MOA mentioned above. 5.8 In view of the above, we find that there is a supply of taxable services by the applicant which are performed for consideration (in this case contributions received for performing activities mentioned in the MOA) received in furtherance of their business. As per Section 2 (17) (e) business includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. Here, the applicant is a society formed by the RBI an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision by club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. 5.11 In view of the discussions made above we are firmly of the opinion that the contributions received by the applicant from the RBI and other Public Sector Banks is nothing but consideration for the entire gamut of services supplied by them as mentioned in para 5.6 supra and GST is payable on such contributions received. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-139/2018-19/B-75 Mumbai, dt. 25.06.2019 For reasons as discussed in the body of the order, the questions are answered thus - Question 1:- Whether consideration paid as subscription or contribution towards recurring or capital expenses or reimbursement or by whatever name called to National Institute of Bank Management (NIBM); a society registered under Societies Registration Act, 1860 by its members (being Banks) for its recurring and nonrecurring ..... X X X X Extracts X X X X X X X X Extracts X X X X
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