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TMI Blog2020 (11) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... a subscription or any other consideration) of the facilities or benefits to its members would be included under the meaning of the term business. The legislature wanted to bring the activities of clubs, association, society or any such body under the ambit of GST law. Therefore, this clause (e) under Section 2(17) has been categorically carved out under the CGST Act, 2017. Thus, provision of any facilities or benefits by a club, association, or society to its members against a subscription or any other consideration would be construed as business. It is needless to elaborate that any society is formed with the sole objective to provide help. benefits or facilities to its members by way of undertaking management, maintenance and proper administration of the society property, which are owned jointly by the society members. Thus, each and every member of the society is benefitted by the formation and functioning of the society. In the present case also, the Appellant is undertaking various sorts of activities, which inter-alia includes the management, maintenance, administration of the society property, payment of various statutory taxes like payment of electricity bill of the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to the same provisions under the MGST Act. 2. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [ hereinafter referred to as the CGST Act and the MGST Act respectively ] by M/s. Apsara Co-operative Housing Society Ltd., N.C.P.A. Complex, Nariman Point, Mumbai-400021 ( herein after referred to as the Appellant ) against the Advance Ruling No. GST-ARA-21/2019-20/B-34 dated 17.03.2020 = 2020 (7) TMI 200 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA , passed by the Maharashtra Authority for Advance Ruling ( hereinafter referred to as the MAAR ). BRIEF FACTS OF THE CASE 3.1 The Appellant is a Co-operative Housing Society, registered under the Maharashtra State Co-operative Society Act 1960.The main objects of the Appellant as per the By-laws are enumerated as under: (a) To obtain the conveyance from the promoter, in accordance with the provision of the Ownership Flats Act and the Rules made thereunder, of the right, title and interest, in the Land with buildings thereon; (b) To manage, maintain and administer the property of the Society; (c) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the said activities have been carried out by the Appellant for consideration in the course or furtherance of business, and hence the same would qualify as Supply in terms of Section 7(1)(a) of the CGST Act, 2017. 3.8 As regards the second question asked by the Appellant, it was held by the MAAR that the same cannot be answered in terms of Section 97(2) of the CGST Act, 2017, as this question, asked by the Appellant, is not covered under Section 97(2) of the CGST Act, 2017, which encompasses the set of questions, in respect of which an Advance Rulings can be sought by the Appellant under the CGST Act, 2017. 3.9 Being aggrieved by the aforesaid Advance Ruling passed by the MAAR, the Appellant has filed the present appeal before this Appellate Authority for Advance Ruling. GROUNDS OF APPEAL 4, The Appellant in its Appeal has, interalia, mentioned the following grounds of Appeal: 4.1 The Advance Ruling Order has been passed without considering all the submissions made by the Appellant, which inter alia included Hon ble Supreme Court Judgement dated 3rd October, 2019 in the case of State of West Bengal Ors. Vs. Calcutta Cub Limited in Civil Appeal No.418 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA and M/s. Rotary Club of Mumbai Western Elite to assert that the Society charges, which are meant toward meeting the administrative expenses of the society, are similar to the membership fee collected by the club from its members, and hence the same would also not be construed as Consideration . Therefore, the said Society charges would not be subject to GST. 4.6 The Appellant have further contended that they cannot be said to be doing business or supplying any goods or services to its members in view of the Principle of Mutuality in light of the Hon ble Supreme Court Judgement dated 3rd October, 2019 in the case of State of West Bengal Ors. Vs. Calcutta Cub Limited in Civil Appeal No.4184 of 2009 = 2019 (10) TMI 160 - SUPREME COURT , wherein the Hon ble Apex Court held that services by a member s club to its members would amount to services to itself, and hence would not qualify as service as defined under the Finance Act,1994. It has further been submitted by the Appellant that the definition of the services under the erstwhile, the Finance Act, 1994 is essentially the same as supply of services as understood under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The submission made by the Department/Respondent is reproduced as under: 5.1 as regards the Hon ble Supreme Court Judgement dated 3rd October, 2019 in the case of State of West Bengal Ors. Vs. Calcutta Cub Limited in Civil Appeal No.4184 of 2009 = 2019 (10) TMI 160 - SUPREME COURT , cited by the Appellant, the Respondent has submitted that the matter, in the aforesaid case, pertains to sales tax regime wherein the concept of the term supply was not prevalent. Therefore, the ratio of the said Apex Court judgement will not be applicable. 5.2 that the Appellant is a service provider/supplier. The word Supply , under the CGST Act, is crucial and significant, as it has got very wide connotation due to the presence of the clause all forms of supply of goods or services or both . 5.3 that on perusal of the above definition of the term business , it can clearly be concluded that the said term has wide meaning and the performance of various activities by the Appellant for the benefit of its members stands covered under the term business. 5.4 that the Appellant collects fees from their members on monthly or quarterly basis by issuing invoices for attainment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorrect to say that the definition of the service under the erstwhile, the Finance Act,1994, is essentially the same as the definition of the term Supply under Section 7 of the CGST Act, 2017. The term supply is essentially wider than service. 5.13 that as regards the Advance Ruling Authority, refraining from passing any ruling on the question pertaining to the correctness of GST in the illustrative invoice, put forth by the Appellant in the Advance Ruling application filed by them, the Respondent has submitted that Section 97(2) Clause (e) specifically covers determination of the liability to pay tax on any goods or services or both but does not cover the quantification or the modalities or the methodology to compute it. Thus. there is no error in the order passed by MAAR in holding that the said question cannot be answered. PERSONAL HEARING 6. A personal hearing in the matter was held on 22.10.2020, which was attended by Shri Rahul Thakkar, Advocate, as the representative of the Appellant, and Shri Vinod Nautiyal, Assistant Commissioner, in the capacity of the Respondent/Jurisdictional Officer in the subject appeal. 6.1 During the Course of the said personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax regime, is mis-founded. The concept of supply has been considered by the Hon ble Supreme Court in Calcutta Club s case and held that the common law principle of mutuality will apply with equal force to supply of sale as well as supply of service. (ii) That GST is nothing but essentially a merger of sales tax and service tax laws prevalent in India prior to introduction of GST. (iii) That it is settled law that the Notifications and Circulars issued under the parent act cannot go beyond the charging provision or the taxable event; that merely because there is an entry under the Exemption Notification or a Circular issued by CBIC does not make a transaction as deemed supply under the CGST Act, 2017. (iv) That the reliance in this regards has been placed on the judgment of Hon ble Supreme Court in the case of Laghu Udyog Bharti and Others Vs. Union of India and Others - (1999) 6 SCC (418) (SC) = 1999 (7) TMI 1 - SUPREME COURT wherein the attempt of the Government to affix the liability to pay the service tax on recipient of GTA and Clearing and Forwarding services by way of amendment in Rules was struck down by the Hon ble Court as being ultra vires the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefits or facilities to its members. Neither the Appellant provides any facilities or benefits to its members. Thus, the said clause (e) is also not applicable in the present case. (ix) That the Revenue s contention that only part of the society charges is collected towards administrative expenses is factually incorrect. The Revenue in their contention has merely made assumptions that the part of the society charges is collected towards facilities and benefits provided to the society without actually identifying the facilities or benefits provided by the Society to its members. (x) That, in the present case, the Appellant has sufficiently proved that the Appellant is utilizing the charges collected from members for meeting the administrative expenses only. As against this, the Revenue has failed to the show any utilization of the charges for other than administrative expenses. (xi) That the question of whether a society and its members are distinct persons has been settled by the Hon ble Supreme Court in catena of decisions. In this regard, the reference has been made to the Hon ble Supreme Court judgment in the case of Income Tax Officer Vs. Venkatesh Premises Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(17) of the CGST Act, 2017. (ii) whether the contribution charges collected by the Appellant from the members of the society would be construed as consideration in terms of Section 2(31) of the CGST Act, 2017. 9. At the outset, we would like to visit the nature of the activities carried out by the Appellant, which are mentioned in the By-laws of the Appellant Society. They are being reproduced herein under: (a) To obtain the conveyance from the promoter, in accordance with the provision of the Ownership Flats Act and the Rules made thereunder, of the right, title and interest, in the Land with buildings thereon; (b) To manage, maintain and administer the property of the Society; (c) To raise funds for achieving the objective of the Society; (d) To undertake and provide for, on its own account or jointly with Co-operative Institution, social, cultural, or re-creative activities; (e) To do all things necessary or expedient for the attainment of the objects of the Society, specified under the Bye-laws. 10. On careful consideration of the aforementioned activities performed by the Appellant, it is amply revealed that the activities performed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes of this Act, the expression supply includes- 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. 12. Now, to understand the term supply , we need to refer to the term service , the meaning of which is provided under Section 2(102) of the CGST Act, 2017. The relevant portion of the said term is reproduced herein under: service means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged ; 13. Thus, on perusal of the above definition of the term -service , it is adequately clear that the term -service under the CGST Act, 2017 has been rendered a very wide connotation, which is evident from the presence of the expression anything other than goods, money and securities . In view of this, it is clear that the activities undertaken by the Appellant wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, therefore, the activities would be construed as supply in terms of Section 7(1)(a) of the CGST Act, 2017, and accordingly will be liable for GST. 15. As the judgement of the Hon ble Supreme Court in the case of Calcutta Club (cited supra) has been time and again extensively quoted by the Appellant, we find it necessary to discuss it elaborately. A careful reading of the said judgement in the case of Calcutta Club (cited supra) shows that there are major differences in the provisions existing under the West Bengal Sales Tax Act and the Service Tax Act under the provisions of which the judgement is given. The definition of deemed sales under the Sales Tax laws was borrowed from the 46th Amendment in the Constitution which enacted Article 366 (29-A) of the Constitution. The Article 366 (29-A) (e) says the following:- (e) A tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. The Hon ble Supreme Court has referred to the Statement of Objects and Reasons which led to the 46th Amendment to see whether the doctrine of mutuality propounded in the judgement i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period from 15th June 2005 uptil 1 st July 2012, the Hon ble Supreme Court has observed that the definition of club or association contained in Section 65(25a) of the Finance Act, 1994 which sought to tax services by a person of body of persons to its members, expressly excluded clubs established or constituted by law i.e. incorporated clubs. Therefore, the Hon ble Court concluded that incorporated clubs were specifically excluded from taxation under the Finance Act. After the amendments w.e.f. 1 st July 2012, the Legislature sought to correct the situation and the definition of person was expanded to include an association of persons or body of individuals whether incorporated or not. Therefore, incorporated clubs were brought under the tax net. But an explanation - Explanation 3 to Section 65 of the Finance Act, was inserted which defined taxable service to Include any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration . By comparing this definition to the Article 366 (29-A) the Apex Court observed that though an explanation was added, it co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court judgement in the case of Calcutta Club (cited supra) does not apply to the facts of this case. On the contrary, we would say that the judgement helps the case of the revenue. The Supreme Court has referred as examples to the provisions of the Income Tax Act to show how a deeming fiction can be introduced to tax profits and gains made by a mutual insurance company and capital gains arising from a transfer by way of conversion by the owner of a capital asset despite the fact that there is no transfer in law by the owner of a capital asset to another person. By contrasting these provisions of the Income Tax Act with those of Article 366 (29-A) it again reiterated that the said Article does not do away with the principle of mutuality. However, such is not the case now. The provisions under the CGST law -definition of person , business and supply are now self-contained, unqualified and wide enough to include the supply by both-incorporated and unincorporated clubs to its members and by their extensiveness completely does away with the principal of mutuality. 19. As regards the Hon ble Calcutta High Court Judgement in the case of Saturday Club Limited Vs. Asstt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The society takes maintenance from its members as it provides a service. The fact that the payment is obligatory does not change the nature of the consideration. The society maintains the premises, looks after the day to day maintenance of - lifts, stairwell, security, car parking, manages the staff/ property in order to ensure the smooth functioning and charges for it. It cannot be therefore said that no services are provided. 21. As regards the Appellant s contention that a particular transaction, which cannot be considered as business under the Income Tax law, cannot be considered as business even under the GST law is not acceptable as the definition of the term business provided under the CGST Act, 2017 is much wider than the definition of the term business provided under the Income Tax Act, 1961. Therefore, any law declared by any Hon ble Court under the Income Tax Act,1961 is not compulsorily applicable even under the CGST Act, 2017. 22. We would also like to explore the intention of the legislature on this aspect as to whether the society charges are liable to GST or not. For this purpose, we would refer to the clause (c) of Sl. 77 of the Notification No. 12/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id question regarding the computation of the GST liability on the basis of the illustrative invoices raised by the Appellant cannot be answered as the said question is outside the purview of Advance Ruling in terms of the Section 97(2) of the CGST Act, 2017. Even though the Appellant have contended that the said question can be categorized under Clause (e) of Section 97(2) of the CGST Act, 2017, which deals about the determination of the liability to pay tax on any goods or services or both, it is stated that the Clause (e) does not speak about the computation or assessment of the tax liability of any transaction, but only the determination of the liability as to whether any supply of goods or services or both are liable for GST or otherwise. Hence, the contention put forth by the Appellant is not acceptable. 25. Now, in view of the above discussions, we pass the following order: ORDER 26. We do not find any reason to interfere with the ruling passed by the Maharashtra Advance Ruling Authority, vide their order GST-ARA-21/2019-20/B-34, dated 17.03.2020 = 2020 (7) TMI 200 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA , in light of the above stated reasons. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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