Case Law Details
In re Assistant Commissioner, Central Tax (Respondent- Lions Club of Poona, Kothrud) (GST AAAR Maharashtra)
it is opined that the members of AAR have interpreted the definition of “business” by giving a restrictive meaning of “facilities and benefits” used in the inclusive definition of “business” by comprehending the same to be the activities such as recreation, sports, food etc., which are not there in the definition of the business provided in the CGST Act. Thus, they have not followed the literal rule of construction in so far as the interpretation of the definition of “business” under the CGST Act, 2017 is concerned. It is worth mentioning that the literal rule of interpretation is the most widely accepted rule of legal construction unless the meaning conveyed by literal rule is against the intent and spirit of the legislation. Thus, in the instant case, the AAR has erred by construing the term ‘facilities and benefits’ only to the extent of recreation, sports, food etc., by going beyond the text of the legislation. The CGST Act has expressly defined the term business, which, inter-alia, includes ‘provision by club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members’. Thus, any facility or benefits extended by the Club to its members for a consideration will get covered under the business in so far as the GST law is concerned. It is also difficult for us to comprehend the observation made by AAR, wherein they have opined that such activities as the one undertaken by the Respondent, wherein they organise the Leadership and other skill Development program for their subscribed members, do not appear to be for transforming members into leaders generally but for the members to become leaders to perform towards the causes of the club, as the objectives or the purpose for the transformation of the members into the leaders is inconsequential in the context of the GST Laws, since there is no mention of term such as objective or purpose in the definition of the term “business” under the GST Act. Accordingly, it is believed that under the GST Law, the intent or objective of any club or association is immaterial in so far as the leviability of GST is concerned. Therefore, provision by club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members will surely attract GST irrespective of the fact that such club is not set up with the objective of providing any goods or service to its members. Hence, the observation of AAR does not hold any legal ground. Therefore, the ruling passed by them on such grounds is not sustainable and merits to be set aside.
We, hereby, set aside the ruling made by AAR and subsequently hold that Lions Club of Poona Kothrud, on account of the activities undertaken by them, is liable for taking registration for discharging their GST liability.
Also Read-
AAR Order 28.08.2018 –Lions clubs not required to register under GST: AAR
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