Page 111 - GSTL_16 April 2020_Vol 35_Part 3

2020 ] IN RE : ROTARY CLUB OF MUMBAI QUEENS NECKLACE 325
mutuality, which is applicable to clubs qua sales tax for sup-
plies to members, was equally applicable “on all fours to ser-
vices.” Consequently, services by a members’ club to its members
amounts to services to self and would not qualify as a service that
attracts tax. This position was validated for both the pre-and post-
negative list.
(e) In view of the fact that the concept of mutuality is being upheld by
the Hon. Supreme Court during the service tax regime, the same
principle will also be applicable in the GST regime also as there is
no change in the legal position.
(f) The comparative chart of definition of services & supply under Ser-
vice Tax & GST are enclosed herewith. It can be observed that there
are no differences in the said definition. In fact, under service tax
there was a deeming clause i.e. “An unincorporated association or a
body of person, as the case may be, and a member thereof shall be treated as
distinct person”. The said clause is missing under GST. The intent in
GST was never to treat club and members are separate persons.
(g) Further unlike other clubs which offer facilities like swimming, res-
taurant, gymnasium etc., Rotary Club does not have any premises
for the said services. It conducts only meetings from third party
premises and does not offer any facilities. Hence the Rotary Club
cannot be covered under the Clause (e) of Section 2(17) of GST Act
which defines business to include “Provision by a club, association,
society, or any such body (for a subscription or any other considera-
tion) of the facilities or benefits to its members;”.
(h) Further the deeming fiction created under Entry 7 to Schedule II of
the CGST [Act] provides that goods supplied by unincorporated as-
sociations or body of persons to a member thereof for cash, deferred
payment or other valuable consideration shall be classified as goods
under the GST Law. No such deeming fiction has been created un-
der Schedule II with respect to supply of services.
(i) Hence following the ratio of the judgment, it can be strongly held
that :-
• Supply of goods and services by incorporated entities to its
members would not be taxable under GST
• Supply of services by an unincorporated entity to its mem-
bers would not be taxable under GST
(j) Further even the provisions of Indian Contract Act, 1872 require
consideration to be paid by one person to the other. However, in
this case, applying the doctrine of mutuality, it follows that supply
made to self and consideration made to self would not qualify as
consideration.
(k) The GST Act, defines “person” under Section 2(84) to include :
(a) ………………
(b) ………………
………………
GST LAW TIMES  16th April 2020  231