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TMI Blog2023 (4) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... course of furtherance of business, i.e., there should be a supply of goods or service, recipient, supplier, consideration, in the course or for furtherance of business - In the instant case, it is evident from the submissions of the applicant that their activities are squarely covered under scope of supply and their contention that applicant association is neither a person distinct from the member nor a related person is laid to rest by retrospective amendment of Section 7 by insertion of clause (aa) to sub-section (1) and explanation with effect from 01.07.2017, which states that the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. As per the provisions of GST Law, the applicant being a registered society, providing services to their members, who are distinct from the applicant and registered as member on payment of any amount towards subscription/contribution, is a supply of service and is accordingly taxable except subscription received from natural persons who are farmers simpliciter and the annual subscription for all membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1. Whether the applicant is eligible to avail the benefit of Notification No. 14/2018 - Central Tax dated 26.07.2018 as the non-profit association registered under any law engaged for the welfare of farmers vide serial No. 77A, Heading 9995? 2. Whether the doctrine of mutuality as laid down by the Supreme Court in various cases is applicable in our case? 3. It is clear that the Finance Act, 1994 (as amended from time to time) does not abrogate or do away with the doctrine of mutuality. The question that now need to be answered is whether the introduction of GST abrogates or does away with the doctrine of mutuality as laid down by the Supreme Court in various cases. 4. Is the applicant-association a person distinct from the member or a related person? 5. Is there a transaction between the applicant-association and its members which are covered under Section 7(1) (a), (c) or (d) of the Central Goods and Services Tax Act, 2017? 1.2 The applicant submitted a copy of challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant M/s United Planters Association of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to only pay a one onetime life membership subscription of Rs. 1000 irrespective of the rate of annual subscription adopted by the Budget General Meeting from time to time. The Executive Committee of the applicant may also waive the subscription to such extent and for such period as deemed necessary. 2.5 On interpretation of law, to avail benefit of Notification No. 14/2018 CT dated 26.07.2018 vide SI. No. 77A, providing exemption for Services provided by an unincorporated body or non-profit association registered under any law for the time being in force engaged in activities relating to the welfare of industrial or agricultural labour or farmers, the applicant states that UPASI members comprise from small growers of tea, coffee, Rubber, Cardamom to large estates. All of them comes under the category of farmers. 2.6 The definition of farmer provided in section 2(1) of the Tamil Nadu Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2019 defines the farmer and agricultural produce as under:- farmer means a person, who is engaged in production of agricultural produce or rearing of livestock by himself or by hired labour or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to farmers, the AR replied that it is mainly agricultural research. In response to the query as to whether UPASI Tea Research Foundation is a part of UPASI, AR replied in the affirmative and added that management of UPASI TRF vests with Board of Trustees nominated by UPASI. AR emphasized on By Law 11(1) of UPASI which deals with the definition of subscription of UPASI members and requested to consider the submissions, including written submissions, given in the previous personal hearing. 3.2 The applicant, inter alia, submitted a write-up on UPASI, Balance Sheet, Income and expenditure account for the year ended on 31.03.2021, Note on Subscription, Tax Invoice copies and copy of certificate of registration of societies. 3.2.1 In the write-up, it is stated that,- The United Planters' Association of Southern India (UPASI) is an apex body of planters of tea, coffee, rubber, pepper and cardamom in the Southern States of India viz. Tamil Nadu, Kerala, and Karnataka in existence since 1893. There are 3 State Planters Associations and 13 District Planters' Associations affiliated with UPASI. It is the premier representative body of buyers, sellers, processors, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Member, Firm Member, Association Member, Pepper Member and Retired planter Member. Any member holding crop area above 20 hectares are categorized as Estate Member and subscription are also collected crop wise over and above the general subscription on the total planted area. Subscription collected on Tea from Estate Members are used for Research purpose through UPASI Tea Research Foundation which is established for the Research purpose in tea. The researched technologies on Tea are disseminated to tea Estate members. These members could also utilize the technical expertise available with the Association through UPASI Tea Research Foundation. Subscription is collected from Estate members holding Coffee and Rubber crop for the purpose of contingency which may arise subject to requirement. Capital subscription is collected from Estate member for the purpose of improving infrastructural requirement of the Association. Estate or small grower members owning Pepper crop within the plantation also subscribe for pepper membership. Subscription collected from Small Grower Members are fixed for all crops up to 20 hectares viz., holding up to 4 hectares, ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers mentioned the area in hectares with name of crop. The Invoices, issued to Estate Members, included details of subscription towards General, Research and Capital for separately for each crop, viz Tea, Coffee, Rubber and Cardamom. 3.2.5 As per copy of Certificate of Registration of Societies, United Planters Association of southern India has been registered under the Societies Registration Act, 1860 on 03.07.1963. 4. The applicant is under the administrative control of Central Tax. The said jurisdictional authority was addressed to report if there are any pending proceedings against the applicant on the issues raised by the applicant in the ARA application and for comments on the issues raised. The said authority furnished their comments vide letter No. GEXCOM/TECH/GST/1160/2022-Tech dated 04.05.2022 and stated that no pending proceedings against United Planters Association of Southern India and are eligible for exemption under Notification No. 14/2018 CT dated 26.07.2018. 5. The State Tax Officer vide letter Ref. No.214/2022/A2 dated 25.04.2022 stated that no pending proceedings in the assessment circle against M/s United Planters Association of Southern India. 6.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with farming by the member of the association. A member engaged only in farming cannot be equated with a member engaged in more than one activity including farming. Further, farming can be done by an individual, partnership firm, company or any other form of organization recognized by law, but qualify as a farmer. For instance, a company registered under Companies Act, 2013 can grow, harvest, process and sell tea to consumers, wherein tea farming is one of the activity in its tea business, but cannot qualify as a mere farmer. 7.2 It is also seen from the submissions enumerated in para 3.2.1 and 3.2.2 that the Association's operations cover economic research, market intelligence, industrial relations, liaison, public relations, scientific research, and publication. The applicant is also engaged in; Preparing action plans for the development of the plantation industry; Involving in international negotiations relating to plantation commodities; Interacting with Commodity Boards to orient decisions/action of the Boards to be conducive to the growth of the planting industry; Analyzing international trends in the plantation commodities covered by UPASI and suggesting appropr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Section 9 of the Central Goods and Services Tax Act, 2017 as there is no 'supply' as defined under Section 7(1)(a), (c), or (d) of the Central Goods and Services Tax Act, 2017. 7.4 Therefore, the applicant has prayed that all its members are farmers and eligible to avail exemption under Notification No. 14/2018 CT dated 26.07.2018; further the transaction between applicant association and its members cannot be covered within the scope of supply and therefore are not taxable. 8.1 The statutory provisions relevant to the above contentions of the applicant are discussed as under: Section 2(17) of the Act defines 'Business' as under (relevant portion extracted):- (17) business includes,- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; .............................;....................; (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;........... The definition is an inclusive definition and states that provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of CGST Act 2017 is given below for ease of reference:- 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, 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; (aa) 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. Explanation .-For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;] Section 7(1)(aa) was inserted with effect from 01st July, 2017 by Section 108 of the Finance Act, 2021 - brought into force on 01st January, 2022 vide Notification No. 39/2021-C.T dated 21st December, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessors, exporters, co-operatives, and all other market intermediaries of tea, coffee, rubber, and spices. (2) As per the written submission of applicant on Subscription , apart from Estate category, there are other categories of subscription viz, Firm member, Association member and Retired Planters member as narrated in para 3.2.2. (3) Even among Estate members, there are sub-classification on the basis of crop area and the amount of annual subscription also varies from Rs. 1000/- to 1750/-. (4) Estate or small grower member owning Pepper crop within the plantation also subscribe separately for pepper membership. (5) The exemption provided under Notification No. 12/2017 Central Tax (Rate) as amended by Notification No. 14/2018 Central Tax (Rate) vide serial number 77A is in respect of consideration in the form of membership fee up to an amount of one thousand rupees (Rs 1000/-) per member per year received by a non-profit entity registered under any law for the time being in force, engaged in activities relating to the welfare of agricultural labour or farmers. (6) It is a settled position of law that any exemption notification should be strictly interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n registered under any law engaged for the welfare of farmers vide serial No. 77A, Heading 9995? The applicant is eligible to claim exemption vide serial number 77A of Notification No. 12/2017 Central Tax (Rate) as amended by Notification No. 14/2017 Central Tax (Rate) in respect of subscription received from natural persons who are farmers simpliciter and the annual aggregate subscription amount for all membership, under various nomenclature, up to Rs. 1000/-, as discussed in para 8.4.2 supra. 2. Whether the doctrine of mutuality as laid down by the Supreme Court in various cases is applicable in our case? Interpretation of law is not mandated to Advance Ruling Authority under Section 97(2). Therefore, as discussed in para 6.1 supra, no ruling on the same. 3. It is clear that the Finance Act, 1994 (as amended from time to time) does not abrogate or do away with the doctrine of mutuality. The question that now need to be answered is whether the introduction of GST abrogates or does away with the doctrine of mutuality as laid down by the Supreme Court in various cases. Interpretation of law is not mandated to Advance Ruling Authority under Section 97(2). Therefore, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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