Case Law Details
In re Ranchi Club Limited (GST AAR Jharkhand)
Once it has been established that the applicant is not doing any business in terms of section 2(17) of the CGST Act, 2017, it can be deduced that activities carried out by the applicant would not come under the scope of supply as envisaged under section 7(1) of the CGST Act, 2017.
With regard to the contention that the applicant is governed by the principal of mutuality, the applicant submitted that the Club was established for non – profit motive and the club was and its members were distinguishable, and they do not have any right in any surplus, if any generated, by the applicant club and none of the activities of the club could be tainted with commerciality. Any reserves held by the club are also used for the purpose of furtherance of the activities of the club and cannot be used by any member for his/her own benefit.
In this regard, we find that the applicant is giving service to its members but the club is formed on the principle of mutuality and, therefore, any transaction by the club to its member is not a transaction between two parties. However, when the club is dealing with its members, it is not a separate and distinct individual. Further, we find that it is a mutuality which constitutes the club and, therefore, supply by a club to its member and its services rendered to the members, is not a supply or service by club to the members.
AAR held that
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