Page 21 - Banking Finance March 2022

LEGAL UPDATE

Legal News

Club membership, sub- principle of mutuality is applicable in or vice-versa, for cash, deferred pay-
their case because the club and its ment or other valuable consideration.
scription, games fees are members have the same identity." It This new clause comes into effect from

subject to GST: argued that there is no profit motive, July 1, 2017.
Maharashtra AAR and the fee is collected for meeting What this means is that a club, an as-
various expenses such as administra- sociation or a society and their mem-
Membership fee, annual subscription tive, maintenance etc. It emphasised
fee and annual games fee collected that money collected through fees are bers will be treated as two distinct
from the members of club will now at- taken to a common pool, from where persons. Transactions between these
tract Goods & Services Tax (GST), the it is spent back on members. "In the two will be considered taxable. It may
Maharashtra Authority for Advance absence of two distinct persons and be noted that although such a provi-
Ruling (MAAR) has said. also in the absence of consideration, sion was part of the schedule, some
clubs, associations and societies were
This is the first ruling after the Centre fees received from members do not taking shelter under the principle of
notified an amendment in Section 7 of qualify as a supply," it said. mutuality and not levying GST. Their
the CGST Law which brings clarity on The applicant also highlighted a ruling stance was bolstered by the Supreme
the issue that club and members are by the Supreme Court in favour of the Court ruling.
two distinct persons. The amendment assessee in the matter of Calcutta
has been made effective from July 1. Sports Club. It may be noted that the Citing the notification, MAAR held that
GST is to be applicable on member-
Case study Jharkhand High Court (in the matter of ship, annual and games fees. Though
Ranchi Club) and some Authorities for
The applicant, Poona Club, collects the Authority has not specifically men-
Advance Ruling (Bowring Institute of
membership fees at the time of enrol- tioned about restrospectivity, going by
ment. All members have to pay annual Bangalore, etc) had given similar direc- the provisions of the law, GST may be
subscription and games fees. Services tives. collected from July 1, 2017.
and facilities provided to members are Defining 'supply'
charged at rates, as fixed by the club. Going through all the facts and after SC extends women's right
It moved the MAAR to seek advance hearings, MAAR highlighted the noti-
rulings on whether membership fee fication issued on December 21, 2021, to father's property to be-
collected from members at the time of related to the amendment in Section fore '56
giving membership, annual subscrip- 7 of the GST Act, which inserted a new The Supreme Court conferred daugh-
tion fee and annual games fee were clause that says the expression 'supply' ters with equal right to father's prop-
subjected to GST. will also include activities or transac- erty even prior to codification of Hindu
The applicant was of the opinion that tions by a person, other than an indi- personal laws and enactment of the
such fees are not liable to GST as "the vidual, to its members or constituents Hindu Succession Act in 1956 and said

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