The Madras High Court issued the notice to the Central Government and the Central Board of Direct Taxes (CBDT) on plea seeking GST Exemption For Incorporated Members’ Clubs.
The Petitioner-club, Ootacamund Club, situated in Ooty, Tamil Nadu registered as a body corporate under the Companies Act, 2013, seeks exemption from levy of GST on the ground that the services rendered by members’ clubs in incorporated form, do not constitute ‘supply’ within the meaning of section 7 of the CGST Act.
The Petitioners also referred to the decisions of the Gujarat High Court in Sports Club of Gujarat Ltd. v. Union of India, 2013, and the the Jharkhand High Court in Ranchi Club Limited v. Chief CCE, upheld by the Supreme Court in State of West Bengal v. Calcutta where it was held that clubs are not under any obligation to charge and remit service tax with respect to any service that might have been availed by the customers of the club.
The Advocate Suhrith Parthasarathy appearing for the Club urged that “given that the principles of mutuality are applicable to the Petitioner and given that the Hon’ble Supreme Court in Calcutta Club Limited has held that the members’ clubs in incorporated form such as the Petitioner’s is not amenable to sales and service tax, the same principle must, by logical extension also apply to the CGST Act as well. This is especially so given that the CGST Act has replaced the erstwhile sales and service tax regime in a unified manner.
The petitioner further urged that CGST Act in purporting to levy GST on members’ clubs in an incorporated form violates the right to form associations and unions guaranteed by Article 19(1)(c) of the Constitution.
The income tax department has consistently accepted the Petitioner’s submission that the principles of mutuality are absolutely applicable to the Petitioner’s dealing with its members. Therefore, the same principle will squarely apply in the case of the Petitioner unnder the CGST Act as well.
Therefore, the Bench headed by Chief Justice Sanjib Banerjee decided to hear a petition seeking exemption for members’ club in an incorporated form, from levy/ payment of GST under the Central Goods and Services.
Support our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
