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TMI Blog2021 (12) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. According to applicant, there is no commercial consideration involved in the process, just that the funds are collected in a common pool for meeting the expenses for the weekly meetings and other petty expenses incurred in meeting the common objective of betterment of society. According to applicant, the amount being collected from the members is reimbursement of expenses or share of contribution - The common pool is being spent back on the members only. According to applicant, in the absence of two distinct persons and also in absence of consideration, as defined under the Act, contributions received from the members in the Administration Account does not qualify as a Supply within the meaning of the term, as defined under the Act. The amendment to Section 7 (mentioned above) clearly treats the applicant and its member as two different persons where there is a supply of services from the applicant to its members and thus as per the applicant s own submission that two different persons have been envisaged in the law to tax a transaction as a supply made for a consideration, in the instant case there is a supply by the applicant to its members and consideration is received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held for the members to review existing activities and consider new projects for execution. In these meetings, the charitable proposals are considered, discussed approved or rejected for taking up as a likely cause for execution. No facilities/benefits are provided such as recreation etc. by club. 2.3 Furthermore, the administration and working of the Association and Implementation of policies are established and implemented on the concept of mutuality. 2.4 Apart from donations/charity the receipts are Receipts from Indian Member clubs (if any); Annual collection from Members; Entrance fees from new member and Bank Interest. Expenses are generally in the form of i) Meeting Expenses; ii) Printing of Circulars; iii) Stationary; iv) Postage. v) Greetings. vi) Fees payable to International District office. 2.5 The applicant believes that the doctrine of mutuality applies in the present case wherein the contributions are being collected merely to spend back on the members themselves. There is no other commercial consideration whatsoever. Going with doctrine of mutuality, two distinct persons are missing. There is no commercial consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 2(17) of the CGST Act, 2017. 2.11 Applicant also relies Orders of the Appellate Authority of Advance Ruling, Maharashtra in the case of Rotary Club of Mumbai Nariman Point as well as Rotary Club of Mumbai Queen Necklace where the said Authority have observed that the Appellant is not providing any specific facility or benefits to its members against the membership subscription charged by it, as the entire subscription amount is spent towards meeting and administrative expenditures only Hence, Appellant is not doing any business as envisaged under section 2(17) of the CGST Act, 2017 and since, Appellant is not doing any business in terms of section 2(17) of the CGST Act, 2017, it can be deduced that activities carried out by the Appellant would not come under the scope of supply as envisaged under Section 7(1) of the CGST Act 2017 and held that the amount collected as membership subscription and admission fees from members is not liable to GST as supply of services . 2.12 Co joint reading of the definitions of a supplier [Section 2(105) of the CGST Act, 2017] and a receiver [Section 2(93) of the CGST Act, 2017] provides that, where a consideration is inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es spend from Subscription dues is for providing facility of meetings to members. Direct purpose of meetings gatherings as per information on website of Rotary seems to facilitate personality development of members through opportunities of better communication, promoting friendship, trainings, entertainment, activities participation etc. These facilities are not available to non-members. Certainly personality development of members indirectly supports a service which is main objective of Rotary. Hence it is incorrect to say that Rotary doesn t provide any facility to members. 3.2 The term business under Section 2(17) (e) of the GST Act includes, Provision by a club, association, society, or any other body (for a subscription or any other consideration) of the facilities or benefits to its members. It is, thus, clear that the Applicant is doing business as defined section 2(17) (e) of the GST Act. And subscription dues are to be considered as consideration for the supply of such services, which are classifiable under SAC Heading 99959 under the category Services furnished by other membership organization . As per the definition of the term business under the GST Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no amount is utilized for administration purposes. Thus, meetings/ administration expenses are incurred from the fees received from its members. The applicant has strongly argued that the principle of mutuality is applicable in its case and therefore tax is not leviable on the fees received from members. 5.4 In view of the above we now take up both the questions raised by the applicant. 5.5 The first question is whether the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is business as envisaged u/s 2(17) of the CGST Act, 2017. The second query of the applicant is whether contributions from its members, recovered for expending the same for the weekly and other meetings and other petty administrative expenses amounts to or results in a supply, within the meaning of supply . 5.6.1 The term supply is defined under Section 7 of the CGST Act and was last amended in the Budget 2021. Prior to the amendment supply was defined as : 7 (1) 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, excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant to support its contention that GST is not leviable on the contribution collected from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received from its members. 5.7.1 According to applicant, there is no commercial consideration involved in the process, just that the funds are collected in a common pool for meeting the expenses for the weekly meetings and other petty expenses incurred in meeting the common objective of betterment of society. According to applicant, the amount being collected from the members is reimbursement of expenses or share of contribution. According to applicant, it does not function on commercial basis. The common pool is being spent back on the members only. According to applicant, in the absence of two distinct persons and also in absence of consideration, as defined under the Act, contributions received from the members in the Administration Account does not qualify as a Supply within the meaning of the term, as defined under the Act. 5.7.2 We find that the entire dispute raised by the applicant in respect of fees received from its memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of Hon AAAR in the cases of in the cases of Rotary Club of Mumbai Queens Necklace and Rotary Club of Mumbai Nariman Point is not proper as said order was passed prior to the afore mentioned amendment to Section 7 of the CGST Act, 2017. The words the activities or transactions, by a person, other than an individual to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration cover all types of activities/transactions of the present applicant. There is no list or limit or any restriction prescribed in this respect in this amendment. The fees/donation/subscription/ amount/contribution (by whatever name called), collected by the applicant, is nothing but the consideration for the such supply and is covered by the scope of the term business . The club and the member are two distinct persons. The principle of mutuality has no application after this amendment. The applicant merely contended that the position does not change after the amendment but failed to explain the said proposition of law. The applicant has further failed to explain as to for what purpose or to remove which particular mischief or cover which particular asp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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