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TMI Blog2025 (2) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that for the purpose of this section, an association or a body of persons, whether incorporated or not as taxable supply w.e.f 01.07.2017. It is also proposed that such an association or a body of persons, whether incorporated or not and member thereof shall be treated as distinct persons under section 7 (1) of the CGST Act. Consequently, para 7 of Schedule II of the CGST Act is proposed to be deleted. GST laws expanded the scope of 'supply' to tax supplies between the club/association and its members, to overcome the principle of mutuality. The scope of supply clearly ascertains that supply made by a person registered under GST is exigible to GST if it falls under section 7(1) of GST Act - A retrospective amendment (w.e.f. July01,2017) has been made vide Finance Act, 2021 by inserting a new clause '(aa)' after clause (a), in Section 7 (1) of the CGST Act to widen the scope of term 'supply' by including therein activities or transactions of supply of goods or services or both between any person (other than individual) to its members or constituents or vice versa for cash, deferred payment or other valuable consideration. Consequently, Para 7 of Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices or both. A. SUBMISSION OF THE APPLICANT (in brief):- Brief facts of the case: * The applicant is a club which is engaged in providing various services such as short term accommodation, restaurant, recreational services and is having GST registration number 08AAABU0007F1ZZ. The applicant intends to seek clarification on the applicability of GST on various services provided by club to its members in light of recent decision given by the Hon'ble Supreme Court in the case of state of west Bengal & others vs Calcutta Club Limited in civil appeal No. 4184 of 2009. B. INTERPRETATION AND UNDERSTANDING OF APPLICANT ON QUESTION RAISED (IN BRIEF) * The landmark decision given by the apex court is applicable for the erstwhile service tax era but since the provisions in GST laws are similar, the ratio given by the Apex Court would be applicable for GST regime too. * Therefore, the present application for advance ruling is being filed to confirm the applicability of GST on services provided by club to its members in light of the decision given by the Apex Court. * The analysis of the decision of the Hon'ble Supreme court in the case of state of west Bengal & others vs Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or body of persons to a member thereof for cash, deferred payment or other valuable consideration. The Supreme Court analysed the term "body of persons" in detail in the judgment of Calcutta Club Ltd. Pertaining to sales tax and has held that according to the principle of "ejusdem generis" will apply and term body of persons used indicates reference to unincorporated body of persons. Therefore, incorporated body of persons will not be covered under the ambit of Article 366 (29A) (e) of the Constitution of India. Similarly, it was held that the same principle would apply for analyzing the provisions contained in explanation 3 (a) and so in the negative list era, the incorporated association or body of persons would not be liable to service tax. This is for reason that the explanation 3 (a) used the term "an unincorporated association or body of persons" instead of using the terms "person" or the term an "association of persons or body of individuals, whether incorporated or not". It was concluded that the legislature has continued with the pre-2012 scheme of not taxing member's club when they are in the incorporated form. The expression "body of persons" may subsume within it p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... club. Therefore, whether the conclusion drawn by the Hon'ble Apex Court that no service tax is payable by the incorporated clubs is applicable in GST regime also is required to be answered in the present application for advance ruling filed by them. C. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT: Question:-Whether service tax is payable on the services provided by clubs to its members? D. COMMENTS OF THE JURISDICTIONAL OFFICER: - Comments received from the Joint Commissioner, State Tax, Special Circle-1, Jodhpur vide letter dated 11.06.2020 are as under: - The Applicant has sought Advance Ruling to confirm the applicability of GST on Services Provided by club to its members. The applicant has taken the aid of Judgment delivered by the Hon'ble Apex Court in the case of State of West Bengal v/s Calcutta Club Limited in Civil Appeal No. 4184 of 2009. The applicant has relied on the above said judgment and has contended that as service tax was not leviable on the services provided by a club to its member under erstwhile Service tax regime, so the same will also apply in GST Regime. The applicant has also taken shelter of Section 7 (1) (A) and Schedule II of CGST/RGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early shows that supply made by a person Registered Under GST is eligible for GST if it falls under Section 7(1) of CGST/RGST Act whether it is a supply of goods or services. The shelter sought to be invoked under Section 7 (1) (A) and Schedule II of CGST/RGST Act is wholly misplaced and does not in way impose any fetter for imposition of Goods and Service tax enacted under the Article 246A of the Constitution of India. Furthermore, the shelter of Hon'ble Apex Court decision has no relevance in new GST Regime which encompasses both Goods and Services in one Umbrella and both Centre and state have exclusive power to levy tax on same base. The Applicant has Simplistically and ingeniously in self-serving manner concluded that no tax can be sought to be levied upon the services provided by the Club to its members on the basis of ratio of Judgment given by Hon'ble Apex Court in the erstwhile Service tax regime. This contention of Applicant is utterly wishful but plainly against the clear and explicit provisions of GST Act. So in my opinion the Service provided by the Club to it's members is taxable under GST and it is humbly requested to reject the relief sought by Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013; (h) any body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to co-operative societies; (j) a local authority; (k) Central Government or a State Government; (I) society as defined under the Societies Registration Act, 1860; (m) trust; and (n) every artificial juridical person, not falling within any of the above; * Section 2 (102) of CGST Act, 2017 reads as under:- 2 (102)-"services" 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. * Section 7 of the CGST Act, 2017 reads as under:- Scope of supply- (1) For the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons to a member thereof for cash, deferred payment or other valuable consideration." 5. In view of the above legal provision, GST laws expanded the scope of 'supply' to tax supplies between the club/association and its members, to overcome the principle of mutuality. A retrospective amendment (w.e.f. July 1, 2017) has been made vide Finance Act, 2021 by inserting a new clause '(aa)' after clause (a), in Section 7(1) of the CGST Act to widen the scope of term 'supply' by including therein activities or transactions of supply of goods or services or both between any person (other than individual) to its members or constituents or vice versa for cash, deferred payment or other valuable consideration. Consequently, Para 7 of Schedule II of the CGST Act has been deleted retrospectively (w.e.f. July 1, 2017) which was related to 'supply of goods by unincorporated associations or body of persons to a member thereof for cash, deferred payment or other valuable consideration' being activity/transaction treated as supply of goods. 6. Further, an explanation is added to say that the person and its members or constituents shall be deemed to be two sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce were not followed and the amendment on the basis of which the Authority of Advance Ruling decided the matter was not operational till the date when Ruling was pronounced. Therefore, before proceeding to issue to be decided, we find it imperative to discuss the contentions of the applicant, which were observed and noted by the Appellate Authority. 2.1 The applicant contended that the members who have decided the case were different than the members who have heard the case. Therefore, the applicant was again awarded the opportunity of Personal Hearing and this time the members who have heard the case are deciding the case and principles of natural justice are complied. 2.2. Further, they have contended that the amendment on the basis of which the ruling was pronounced on 27.09.2021 was brought into force vide Notification No. 39/2021-CT dated 21.12.2021 wef 01.01.2022. Thus, the case was decided on the basis of an amendment, which was made effective vide a Notification issued in future. To deep dive into the contention of the applicant, it is imperative to discuss the chain of events, which led the amendment issued vide the said Notification dated 21.12.2021. 2.2.1 Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this forum i.e. Authority for advance ruling (AAR) is meant for Goods & Service tax (GST) only. To decide a question pertaining to old era i.e. Service Tax is not in the scope of this Authority. However, on gone through the contention of the applicant in the instant case, the purpose of the applicant is to seek advance Ruling to confirm the applicability of GST on Services provided by club to its members. Hence, we will discuss the case in light of GST only. 5. The Applicant has sought Advance Ruling to confirm the applicability of GST on Services provided by club to its members. The applicant has taken the aid of Judgment delivered by the Hon'ble Apex Court in the case of State of West Bengal V/s Calcutta Club Limited in Civil Appeal No. 4184 of 2009. The applicant has relied on the above said judgment and has contended that as service tax was not livable on the services provided by a club to its member under erstwhile Service tax regime, so the same will also apply in GST Regime. The applicant has also taken shelter of Section 7(1) (A) and Schedule II of CGST/RGST Act to discriminate between Goods and Services and contented that as per schedule II the Supply of Goods by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions inter se shall be deemed to take place from one such person to another" (b) import of services for a consideration whether or not in the course or furtherance of business;[and] (c) the activities specified in Schedule I, made or agreed to be made without a consideration;[****] (d) [*****]. [(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.] (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of [sub-sections (1), (1A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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