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TMI Blog2019 (10) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority has already held in similar cases of Rotary Club of Queens Necklace [ 2019 (7) TMI 616 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA ] and Rotary Club of Nariman Point [ 2019 (8) TMI 819 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA ] that the amount collected by the Rotary clubs are towards convenience of members and poled together for paying various expenses and are leviable to GST - there are no grounds to deviate from the said decisions made by this authority since in the facts of the subject case are very much similar to the facts of Rotary Club of Queens Necklace and Rotary club of Nariman Point. The said transaction by the applicant to its members is a supply of goods/services and is liable to GST. X X X X Extracts X X X X X X X X Extracts X X X X ..... iption fees to the Rotarian or Rotary regional magazine, district per capita dues, club annual dues, and any other Rotary or district per capita assessment. Rotary Club holds Programs, Seminars and Institutes for Leadership Development and other forums and these programs are only for Rotary Club members and non-members are not allowed to take part. Thus, funds received from members are utilized for mutual benefit of members. 5. As per By-Laws of the Rotary Club, the administration and working of the Club and implementation of policies are established and are implemented on the concept of mutuality. Each member is equally represented with individual identity and status thereby, establishing the fact of complete transparency i.e. the identity between the contributors and the participators of the Club. 6. Since the amount received by the Rotary Club exceeds ₹ 20 lakhs, being the threshold for registration under GST Act 2017, and in order to avoid any litigation, Rotary Club obtained GST Registration effective from 16.11.2017. STATEMENT CONTAINING APPLICANTS INTERPRETATION OF LAW IN RESPECT OF THE QUESTIONS RAISED 1. As per Section 9 of Central Goods & Service Tax Act, 2017 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) services provided by a race club by way of totalisator or a licence to book 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 authorities; From the above definition, it is clear that for getting satisfied under the term "business", there must be facilities or benefits to its members. However, in the instant case, the members of the club come together only for social cause and there is no furtherance of any business of benefits or facilities to the members. 4. As per clause 7(1)(c) of CGST, the activities specified in Schedule I, made or agreed to be made without a consideration shall be considered as supply. Entry number 2 of Schedule I provides that supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business shall be taxable. Members are not covered under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation 3 to Sec. 65B provided that an unincorporated association or body of persons, as the case may be and a member thereof shall be treated as distinct persons. However, such deeming fiction is not provided under the current GST regime. 9. Further, on the same facts as of the applicant, AAR Maharashtra in the case of Lions club of Poona Kothrud, [2018] 100 taxmann.com 222 = 2018 (12) TMI 590 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA has held has that fees collected from members cannot be brought within purview of GST. The question raised and the answer in the instant case is as under: Question: Since the amount collected by individual lions clubs and lions District is for convenience of lion members and pooled together only for paying Meeting expenses & communication expenses and the same is deposited in single bank account. As there is no furtherance of business in this activity and neither any services are rendered nor any goods being traded. Whether registration is required? Answered in Negative. 10. The purpose of the Applicant is pursuing the object of Rotary International and contribute towards the object of the Rotary. support Rotary Foundation. The same can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply of goods or services under GST? 12. On the same facts, as of the applicant, recently AAR Maharashtra in the case of Lions club of Poona Kothrud, [2018] 100 taxmann.com 222 = 2018 (12) TMI 590 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA has held that fees collected from members cannot be brought within purview of GST. The question raised and the answer in the instant case was as under: "Question: Since the amount collected by individual Lions clubs and Lions District is for convenience of Lion members and pooled together only for paying Meeting expenses & communication expenses and the same is deposited in single bank account. As there is no furtherance of business in this activity and neither any services are rendered nor any goods being traded. Whether registration is required"? Answered in Negative. The comparison of the above case law with the facts of the Appellant is as under: S. Facts of the Above Case Facts of the Applicant Remarks 1. The applicant-Lions clubs, an international organization having clubs in 210 countries is engaged in humanitarian and charitable services. These services are executed through various districts comprising of many clubs. In orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... club and members shall not be considered as different persons for the purpose of levy of tax. Reliance in this regards in placed on following judicial precedents: i) Commissioner of Income-tax v. Bankipur Club Ltd. [19971 92 Taxman 278 (SC) = 1997 (5) TMI 392 - SUPREME COURT wherein it was held as under: 7……….It should be noticed that in the case of a "mutual society or concern" (including a "members' club"), there must be complete identity between the class of contributors and the class of participators. The particular label or form by which the mutual association is known, is of no consequence. The said principle which has been laid down in the leading decisions and emphasised in the leading English text books mentioned above, has been explained with reference to Indian decisions in " The Law and Practice of Income-tax " (Eighth edition, Volume I, 1990) by Kanga and Palkhivala at page 113, thus : " . . . . ' The contributors to the common fund and the participators in the surplus must be an identical body. That does not mean that each member should contribute to the common fund or that each member should par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andap keeper, then it is not a service by one to another in the light of the decisions referred above as foundational facts of existence of two legal entities in such transaction is missing. However, so far as services by the club to other than members, learned counsel for the petitioner submitted that they are paying the tax. 19. Therefore, this writ petition deserves to be allowed and it is held that rendering of service by the petitioner-club to its members is not taxable service under the Finance Act, 1994 and the writ petition of the petitioner is allowed accordingly. [Emphasis Supplied] v) Cricket Club of India Ltd. v. Commissioner of Service Tax [2015] 62 taxmann.com 2 (Mumbai - CESTAT) = 2015 (9) TMI 1389 - CESTAT MUMBAI wherein it was held as under: 16. "Clubs or associations" and entities that need funds to exist in the form that they have assumed or evolved. Wages of employees and costs of running the establishment, such as energy charges, maintenance and repairs etc., are necessary expenses for such sustenance. Implicit in membership of clubs and associations is the obligation to share in such expenses. These are required for maintaining the assets of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices by an association to its members should not be taxed u/s. 7(1)(a). 15. The applicant has submitted Declaration for receipt of Funds and its utilization. This declaration is made in reference to the Application made by the Applicant before Maharashtra Authority for Advance Ruling to seek clarification on, whether GST is payable on the membership fees collected by the Applicant from its Members. In this regard, the Applicant would like to submit as under: 1. The Applicant is an association of persons, joined together to undertake social activities without any profit motive. The applicant is not formed to provide services to members but people gather under the umbrella with objective to perform socially relevant activities, 2. The Applicant collects funds from each of its Members as decided from time to time. 3. Such funds are pooled together to be expended for making payment of Rotary International dues, Rotary District Dues, meeting expenses, administrative expenses and Charitable activities. 4. The Members of the Applicant are not entitled to any facilities whatsoever such as sports, fitness, lifestyle, entertainment and personal transportation out of these funds. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of principle of mutuality and they cannot be regarded as related persons and therefore the transaction between them association and their members will not be covered within the scope of supply u/s. 7 of the CGST Act, 2017. c. Their receipts comprised of Annual Membership Fees, Entrance Fees from New Members, Contribution from Members and Bank Interest. d. The above receipts are utilised for paying Meeting and Communication expenses, Rotary International per capita dues, Subscription fees to the Rotarian or Rotary regional magazine District per capita dues, Club annual dues and any other Rotary or district per capita assessment. e. The facts of the subject case are similar to the facts of the case in Lions Club of Poona Kothrud, wherein the Appellate Authority for Advance Ruling, Maharashtra has held has that fees collected from members cannot be brought within purview of GST. In similar cases of Rotary Club of Queens Necklace = 2019 (7) TMI 616 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA and Rotary Club of Nariman Point = 2019 (8) TMI 819 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA, this authority has already held that the amount collected as membership subscription ..... X X X X Extracts X X X X X X X X Extracts X X X X
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