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TMI Blog2021 (4) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... e amended Section 7 of CGST Act, 2017 is notified, the applicant is not liable to pay GST on subscription fees and Infrastructure development fund collected from the members as per the Hon'ble Supreme Court judgment in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] - application allowed. - KAR ADRG 27/2021 - - - Dated:- 22-4-2021 - DR. M.P. RAVI PRASAD AND SRI. MASHHOOD UR REHMAN FAROOQUI, MEMBER Represented by : Sri K.B.S. Manian, Advocate ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 AND UNDER SECTION 98(4) OF THE KGST ACT, 2017 M/s. Bow-ring Institute (herein after referred to as the applicant'), No. 19, St. Mark's Road, Bengaluru- 560001 having GSTIN 29AAVFG2223Q1ZN, have filed an application for Advance Ruling under Section 97 of the CGST Act, 2017, read with Rule 104 of CGST Rules 2017 and Section 97 of KGST Act, 2017 read with the KGST Rules 2017, in FORM GST ARA-01 discharging the fee of ₹ 5,000/- each under the CGST Act and the KGST Act. 2. The applicant is a club is and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Ltd. Vs Union of India [2013 64 VST 191] and held that doctrine of mutuality applied to these clubs; (which are similar to that of applicant) and that the levy of admission fee and subscription fee are not exigible to service tax under the Finance Act, 1994. The Supreme Court further held that the judgment in Young Men's Indian Association [(1970)1 SCC 520] continue to hold the field. 2.2 The applicant submits that the provisions of CGST Act, 2017, in so far as it seeks to cover member's clubs as opposed to proprietary clubs are illegal in the light of the Supreme Court judgment in the case of M/s. Calcutta Club. Further, Supreme Court in Bangalore Club vs Commissioner of Income Tax reported in [(2013) 5 SCC 509] set out the essential conditions for the doctrine of mutuality, which are us under: There must be complete identity of contributors to the fund and recipients :the label or form by which organisation is known is of no significance. The action of the organisation must be in furtherance of its mandate for the benefit of its members. Determination of Mandate can be identified by the articles or MoA. When a club receives a surplus amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of not less than three-fifths of the members present personally or where proxies are allowed, by proxy at the time of the dissolution, or in default thereof by the principal civil court of original jurisdiction of the district. (2) Notwithstanding anything contained in sub-section (1), it shall be lawful for the members of any society dissolved, to determine by a majority of the votes of the members present personally or where proxies are allowed, by proxy, at the time of dissolution of such society that any property whatsoever remaining after the satisfaction of all its debts and liabilities shall be given to the State Government to be utilised for any of the purposes referred to in section 3. Therefore, in the event of dissolution of the society the members of the club will not be entitled to profits of the club and the same shall be given to other society. 3.2 It is also relevant to mention that the membership of the club is limited to Life Permanent Members, Corporate Associates, Long Term Associates. There are total 5,000 life permanent member and only 500 corporate associate and long terms associate. Corporate Associate and Long term Associates are not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iations is ultra vires. 3.6 It is submitted that Hon'ble Supreme Court in State of West Bengal v Calcutta Club Ltd.(Supra) upheld the Judgments of the High Courts of Jharkhand reported in Ranchi Club Ltd. vs Chief Commissioner of Central Excise and Service Tax ; (2012) 3 AIR Jhar R 255 : (2012) 51 VST 369 and that of the High Court of Gujarat reported in Sports Club of Gujarat Ltd vs Union of India; (2013) 64 VST 191 and reiterating the decision of the constitution bench of the Supreme Court in Young Men's Indian Association; 1970 (1) SCC 462 held that the doctrine of mutuality applied and these clubs which are similar to that of the Applicant are not exigible to service tax. Therefore, applying the principle of mutuality, this Hon'ble Authority may please to allow this petition in the interest of justice and equity. PERSONAL HEARING: / PROCEEDINGS HELD ON 29-01-2021 4. Sri. K B S Manian, Advocate Authorized Representative appeared for personal hearing proceedings held on 29-01-2021 before this authority and reiterated their arguments and also furnished written submissions. FINDINGS DISCUSSION 5. At the outset we would lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. 8. We observe that Finance Act, 2021 has over ruled what the Courts have held till now and has countered the Principle of Mutuality by way of Explanation which states that the members or constituents of the club and the club are two separate entities and persons for the purpose of Section 7 of CGST Act, 2017 which defines Supply. 9. We also note that by virtue of Section 1 of Finance Act, 2021, the amendment brought in Section 7 of CGST Act, 2017 by way of Section 108 of Finance Act, 2021, will only come into effect on the date when Central Govt notifies the same and then the same will be notified with the corresponding amendments passed by the respective States and Union territories in respective SGST/ UTGST Act. 10. Therefore, we conclude that unless the amended Section 7 of CGST Act, 2017 is notified, the applicant is not liable to pay GST on subscription fees and Infrastructure development fund collected from the members as per the Hon'ble Supreme Court judgment in the case of M/s. Calcutta Club Ltd. 11. In view of the foregoing, we pass the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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