This Topic covers Chronological Sequence on the subject matter from British Regime to Indian regime including highlights on famous case laws and the need for 46th constitutional amendment in 1982, Synopsis on the case of Calcutta Club Ltd, Discussion on Issue in Service Tax Perspective (Pre or Post Negative List),Position under GST Regime, Need for Amendment in GST and what is Amended in GST.
Chronological Sequence on the subject matter from British Regime to Indian regime including highlights on famous case laws and the need for 46th constitutional amendment in 1982
♦ View during British Rule
♦ Key Indian Cases – Supported Doctrine of Mutuality
♦ Key Indian Case – Overruled Doctrine of Mutuality
♦ SC in 1970 in Young Men’s India Association
♦ 46th Amendment – 1982
♦ Issue Arises after 46th Amendment
Calcutta Club Ltd.
♦ Findings by the court – Definition of person under General Clauses Act includes association whether incorporated or not. However, Clause 29A uses the words ‘body of persons’, without the phrase ‘whether incorporated or not’. Hence, only unincorporated clubs are covered
Service Tax Perspective
♦ Law Prior to 2012
♦ Law after 2012
Position under GST Regime
♦ Schedule II specifies that supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration will be treated as supply of goods
♦ Definition of business specifically includes 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
♦ Exemption notification exempts service by an unincorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution
Need for Amendment in GST
♦ Schedule II does not deem a transaction to be a supply; it merely classifies supplies into goods or services
♦ No provision similar to Explanation 3 to Section 65 B(44)
♦ Schedule II refers only to unincorporated bodies
♦ Exemption is on the flawed premise that such transactions are taxable. Exemption is irrelevant if levy itself fails
What is Amended in GST
Insertion of new clause in charging section itself i.e. Section 7 of CGST Act as follows
♦ “(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 77 activities or transactions inter se shall be deemed to take place from one such person to another;”
Conclusion – Now the services provided by Body of Persons whether incorporated or unincorporated shall be liable to GST.