2018 (12) TMI 1086 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Levy of GST – supply of services or not – contribution made by Members towards “Annual Membership Fees and registration fees” to the Corpus Fund of BCSBI – recurring expenditure – Principle of Mutuality – whether the applicant is providing supply of services to their members and if so, is there any consideration received by them for such supply of services/ goods?
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Held that:- These activities are undertaken only for and in respect of the Member Banks, who have voluntarily become their members. Hence their primary objective is to guide the public and publicise about the Codes and Standards and Commitment of their Member Banks. Hence, the applicant is firstly developing and publishing and then publicizing Banking Codes and Standards for the banks who are their members and after this, they are monitoring its compliance, undertaking further research with regard to codes and standards and are also training bank em
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erest amounts which are further used for performing their activities. In other words if there is no fee there is no corpus fund and no interest payment which can be used to fund their activities which are in the form of supply of services to their member banks. Thus here there is no doubt that consideration is flowing from Banks to the applicant in the form of Annual Membership Fee and Registration Fee which are being utilized by the applicant for generating further income as found feasible by them. Thus the consideration is clearly in the form of Annual Membership Fee and Registration Fee.
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Principles of mutuality – Held that:- The essence of the principle of mutuality is present only in situations where a group of persons form an association and contribute to constitute income of the associations in the nomenclature of a common fund, which so collected is used for the benefit of the members. Here the member banks have not come together contributing their resources to form the bo
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tinct from each other.
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The “Principle of Mutuality” is non existent in the subject case.
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The activity of Applicant is to be termed as “Business” as provided under Section 2 (17) (e) of the CGST Act, 2017. – GST-ARA-24/2017-18/B-82 Dated:- 1-8-2018 – SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by The Banking Codes and Standards Board of India, the applicant, seeking an advance ruling in respect of the following question : Whether GST is liable to be paid on the contribution made by Members towards Annual Membership Fees and registration fees to the Corpus Fund of BCSBI and recurring expenditure being incurred. At the outset, we w
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of the Report of the Taraporewala Committee for the purpose of creating awareness and ensuring the correct following of the Codes and Standards for Services by the Banks in India. For the first 5 years i.e. from 2006 to 2011, it was fully funded by the Reserve Bank of India and the Applicant started to raise its own Corpus Fund for its activities from the Member Banks from 2007 by way of Annual Subscription Fees depending on the Gross Domestic Assets of the member Bank. From the year 2010-11 to 2014-15, the RBI has funded the Applicant Board to the extent of the shortfall between the expenditure and interest income of the Corpus. The Annual Subscription is collected only to run the day-to-day activities in the interest of Consumer Protection. Major part of the expenditure is spent on creating consumer awareness of their rights and the balance is towards overhead and salaries. No service is provided by the Applicant to the Member Banks. The Membership is voluntary. However, the Member
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monitor and to ensure that the banking Codes and Standards voluntarily adopted by Banks are adhered to in true spirit by Banks in delivering the services, as promised, to their customers. iii. To conduct and undertake research of the Codes and Standards currently in vogue in and outside India. iv. To enter into covenants with Banks on observance of the codes and standards and for that purpose to train employees of such Banks about the Banking Codes. vi. To advertise and publish promotional literature in newspapers and otherwise about the Codes and Standards for the guidance and knowledge of the public through Web site, advertisements in the newspapers, magazines, journals, TV/ Radio, hoardings or any other mode which the Society may deem fit. vii. To take up specific assignments, if any, in the areas coming under the Society s objects as projects, turnkey solutions or on any other terms of contracts with in-house resources or with the participation of outside agencies in order to fully
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icant carries out the various activities as detailed above. 4. Further, the moot question about the very taxability of the activity of the Applicant under the Goods & Services Tax arises on account of the following facts: a. The definition of Supply as per Section 7 of the Central Goods & Services Tax Act, 2017 and whether the activity of the same would be covered under the term Supply . b. The definition of Consideration as per Section 2 (31) of the Central Goods & Services Tax Act, 2017 and whether the amount received by way of contribution to the Corpus from Member Banks would be covered under the term Consideration . c. The activity of the Applicant Board is squarely Covered under the Principle of Mutuality . The various High Courts and Tribunals have consistently held that the activity Of Clubs & Associations for its own members does not amount to Service and the moneys collected by way of Membership Subscription, does not amount to Consideration . The Principle of
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PPLY: 7. (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a
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clude any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; The term Business is defined in Section 2 (17) of the CGST Act, 2017 as under: BUSINESS: (17) business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause
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does not fall under either of them, as discussed herein under: SUPPLY: It is clear from the definition of Supply that firstly the same involves all forms of supply of goods or services. In this regard, there is no question of any goods in this case. As such, it is to be seen whether any service is provided by the Applicant. As already stated above, applicant is collecting Corpus Fund from Member Banks and the entire activity is related to public awareness about the codes & standards followed by member Banks. This entire activity, including the salaries of the staff is paid only through the interest earned at present from the Corpus Fund, which is capitalized. There is no facility or benefit of any kind offered by the Applicant to Member Banks for their contribution to the Corpus Fund. Also, the entire activity of public awareness programmes and salaries is funded only through the interest earned by the Applicant at present. As such, there is no element of any supply by the Applica
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eating public awareness and consumer guidance/ protection programmes regarding their banking rights. BUSINESS: The Applicant is not doing any activity in the nature of any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity so as to constitute Business . Further, even if we consider clause (e) of the definition of Business i.e. provision by a club, association, society, or any such body (fora subscription or any other consideration) of the facilities or benefits to its members , then too, the activity of the Applicant is not covered in as much as there is no any kind of facility, benefit or service given to the Member Banks by the Applicant. The entire fund collected by way of contribution from Member Banks is towards the Corpus and only the interest earned from this Corpus is used for public awareness programmes and day-to-day expenses of the Applicant Board. Thus, there is no activity, which amounts to business to attract GST. 1. The ent
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either as a society or a company registered under Section 25 of the Companies Act, 1956, or even as managed by a public trust, with such activities primarily intended to be confined to its members. What is Principle of Mutuality? Often, we come across situations where a group of people forms an association (could be formal or informal) and pool in their surplus income in the association s common fund. The fund so collected is then used for the benefit of the members when needed. Take for e.g. where the members associate themselves together for the purpose of insuring each other s life on the principle of mutual assurance, that is to say, they contribute annually to a common fund out of which payments shall be made, in the event of death, to the representatives of the deceased members. Thus, should this monies received by the member be taxed? The answer is No, as principle of mutuality would be applicable. This doctrine rests on the principle that a person cannot make a profit from hims
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tioned within the four boundaries of the above mentioned principal conditions of the doctrine of mutuality. In fact, the Principle of Mutuality applies to all taxes i.e. Income Tax, VAT/ Sales Tax and Service Tax, alike. The more important case laws are as below: Principle of Mutuality was considered in C. I. T. V Bankipur Club 1998 (109) STC 427 (SC) = 1997 (5) TMI 392 – SUPREME COURT. These principles are applicable and have been applied by the Calcutta High Court in Saturday Club ltd. (2005 (180) E.L.T. 437 (Cal.)) =2004 (6) TMI 11 – HIGH COURT CALCUTTA as concurred to in Dalhousie Institute (2005 (180) E.L.T. 18 (Cal)) = 2004 (6) TMI 10 – HIGH COURT CALCUTTA. (EXHIBIT A-1 to A-3). 2012 (26) S.T.R. 401 (Jhar.) = 2012 (6) TMI 636 – JHARKHAND HIGH COURT IN THE HIGH COURT OF IHARKHAND AT RANCHI, Prakash Tatia. CJ. and Aparesh Kumar Singh. J. RANCHI CLUB LTD. Versus CHIEF COMMR. OF C. EX. & S.T.. RANCHI ZONE W.P. (T) No. 2388 of 2007, decided on 15-3-2012 Club – Incorporated as Comp
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f Finance Act, 1994. [para 18] Sale and service – Nature of – Sale entails transfer of property whereas service does not – However, both transactions requires existence of two parties – Sale requires seller and buyer, and Service requires service provider and service receiver. [para 18] 2013 (31) S.T.R. 645 (Guj.) = 2013 (7) TMI 510 – GUJARAT HIGH COURT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD, Ravi R. Tripathi and R.D. Kothari, JJ. SPORTS CLUB OF GUJARAT LTD. Versus UOI, Special Civil Application Nos. 13654-13656 of 2005. decided on 25-3-2013 Club – Finance Act, 1994 – Sections 65(25a), 65(105)(zzze) and 66 – Service Tax on club rendering service to its members – HELD : It was ultra vires and beyond legislative competence of Parliament – There was no loss of mutuality of club members even if club was incorporated under Companies Act, 1956 – Ranchi Club Ltd. [2012 (26) S.T.R. 401 (Jhar.)] = 2012 (6) TMI 636 – JHARKHAND HIGH COURT applied – Department s plea that they have not accepted
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given – Memorandum of association showing appellant not a commercial concern – Programmes conducted in the nature of continuing education – Objective is professional development and not to impart skills for particular job or examination – Programmes not covered under commercial training or coaching – Appellant not covered under relevant service – Sections 65(26), 65(27) and 73 of Finance Act, 1994. [paras 4.5, 4.7, 4.10] Club or Association service – Receipts without return – Member not entitled to any specific service in return – Institutions also become members – Membership fee to be paid without expecting any return – Revenue not brought out the services or advantages received by members on paying fees or other amount – Service tax not leviable on amounts received from members, member-institutions and trade – Sections 65(25a) and 73 of Finance Act, 1994. [paras 4.11, 4.12] Convention service – Commercial concern – Service tax liability attracted only if Convention service rendered
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and no GST is leviable on the activity of the Applicant under the Principle of Mutuality even under the CGST Act, 2017 and the Rules made thereunder. STATEMENT REGARDING INTERPRETATION OF FACTS: The following facts pertaining to the Applicant s organization and its activities are relevant to consider the activity of the Applicant as not eligible to GST: a. The Applicant Board is registered as a Charitable Pubic Trust under the Maharashtra Public Trust Act, 1950 and also registered as a Society under Societies Registration Act,1860. b. For the initial 5 years from 2006 to 2011, the Applicant was totally funded by the Reserve Bank of India, Thereafter, the RBI was funding the Applicant o the extent of short fall between expenditure and interest income till 2014-15. c. The income of the Applicant Board is only in the form of Corpus Fund from Member Banks, collected as Annual Subscription & Registration fees and which is totally deposited in the bank and capitalized. d. The entire acti
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to its own Members out of the subscription collected, on the Principles of Mutuality. The above facts, therefore, support the contention of the Applicant Board that they are not liable to Goods and Services Tax. Additional Submission in Advance Ruling Application for Banking Codes And Standards Board of India We are thankful for the patient hearing given on 25-04-2018. Our Clients have made submissions in their Advance Ruling Application pertaining to their activity i.e. collecting Membership Fees from all its Member Banks, which is neither falling under the definition of Supply nor under Consideration or under the definition or Business as provided under CGST Act, 2017, as explained in detail during the said hearing dated 25-04-2018. To elaborate the said legal provisions along with the factual matrix pertaining to our Clients Banking Codes and Standards Board of India (hereinafter referred to as BCSBI for the sake of brevity), as desired, we make the additional written submissions,
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relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; The definition of Consideration thus provides that the payment should be made in respect of the Supply from one person to another. As such, the definition of Consideration is not independent and should be read alongwith the definition of Supply , wherein the transaction is between two Distinct Persons . As such, if the transaction under question does not fall within the ambit of Supply , then the same cannot also come under the purview of Consideration as the Consideration has to be in Consonance with Supply. In the case of the Applicant there is no element of Supply as envisaged under CGST Act, 2017 as there is no transaction c
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s year and shall be of such amount, as the Governing Council may determine as payable by each Member. The Governing Council (CC) in its 103rd Meeting held on 31.01.2017 reviewed the financial position of BCSBI and has decided to retain the total membership subscription for 2017-18 at last year s level ₹ 800 lakh. Further, as the subscription is calculated based on individual member s gross domestic assets as on 31.03.2016, the overall Rate for computing the Annual Membership Fee for the year 2017-18 has reduced to********%) (previous year s rate was ******%) This annual membership will be credited to the Corpus Fund of BCSBI as hitherto. The Applicant, BCSBI collects contribution from its Member Banks, which is credited to their Corpus Fund. The interest earned on this amount is the only income of BCSBI (as mentioned in Para I above) which is spent for the activities of the BCSBI as per guidelines issued by the Reserve Bank of India. BCSBI issues this letter and while transferrin
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nt in public interest for meeting its objects. Firstly, it can be seen that the contribution of each member Bank is credited only to the Corpus Fund of BCSBI and the interest earned on such contribution is used for the activities of BCSBI. The Corpus Fund is needs to be understood in the right perspective, which will establish that the contribution to Corpus Fund by each Member will not constitute as Consideration , in any manner and the same cannot be taxed under GST. CORPUS FUND Corpus Fund is the fund generated and kept for the existence and sustenance of the Organization. For a charitable organization, Corpus Fund are of paramount importance. Normally a corpus fund denotes a permanent fund kept for the basic expenditures needed for the administration and survival of the organization. The corpus fund is generally not allowed to be utilized for the attainment of the purposes, but the interest/dividend accrued on such fund can be utilized for its activities as well as accumulated. Cor
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nner they wish to use the said contribution. In fact, the Corpus Fund cannot be used for fulfilling the Objects of the Trust but the same has to be kept intact for all times as being Capital of the Trust. Sample Copy of BCSBI Letter to Banks for Contribution and Direction of the Banks to imply their Contribution to Corpus Fund is annexed and marked as (EXHIBIT A-1 & A-2). The Annual Report of the Applicant i.e. BCSBI of the F.Y. 2016-17, have already been submitted during the Final Hearing which was held on 25-04-2018, which establishes that the Contributions received from Banks is not forming part of income of the Applicant i.e. BCSBI. In normal parlance if any person is receiving any consideration from another for any kind of Supply , can the Service Recipient have any control how the consideration paid by him to be used by the Supplier of Service or goods, as the case may be? The answer is a rhetoric NO . However, in this case, the Contribution made by the Banks is not Considera
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e conclusion of Principles of Mutuality . The said principle has its relevance in all the taxations laws i.e. Income Tax, Service Tax & VAT and has universal application. Principle of Mutuality has its implication in all statute as the foundation fact as there is no existence of two separate legal entities. The Applicant has relied upon various Judgments beginning from EXHIBIT A-1 to EXHIBIT B-3 and also certain latest Service Tax Judgments have been submitted during the hearing. The issue is no more res integra as decided by Hon ble Supreme Court, various High Courts and Tribunals throughout India for all taxing Statutes, Mere change in taxing Statute cannot make change in fundamental concepts. iii. IT SHOULD BE IN THE COURSE OF OR IN FURTHERANCE OF BUSINESS: For any activity to be considered as Supply , these 3 elements have to be fulfilled. From the submissions made above, it is clear that there is no Consideration involved in this activity and there is no existence of 2 persons
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meant to be in the course of business or furtherance of the same. As such, the definition of Business is very vital. In case of the Applicant Section 2 (17) (e) will be applicable. It provides that if any provision is made by Club, Association or similar Body, which should be for Subscription or other consideration and for provision of any facility or benefit to its Members. In this backdrop, the nature of activity of Applicant and facts of the issue at hand are to be appreciated, which are as under; The Applicant is not collecting any consideration from its Members, which has been established, above. Further, the Applicant is not providing any facility or benefit to its Members. The Applicant is an Association, which frames Codes of Bank s commitment to Customers for its Member Banks. If any Bank Opts to be a Member (this Membership is Optional and not mandatory to all Banks) of the Applicant they have to adhere to the Codes and guidelines as prescribed by the Applicant. The RBI is a
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ir Member Banks. There is no provision of any benefit or facility provided by the Applicant to its Members. From the above submissions, it is amply clear that the activity of the Applicant does not fall under the ambit of Business , at all. In view of the detailed submission made herein above and the submission made in the Application and the submissions made during the hearing in the matter, it is evident that the activity of the Applicant does not fall under the definition of Supply by any parameter and as such the Applicant are not required to obtain registration for such activity. In this backdrop, the issues which are requested to be addressed by the Advance Ruling Authority are as under: 1. Whether the activity of BCSBI I.e. The Applicant is falling under the definition of Supply , as per Section 7 of the CGST Act, 2017? 2. Whether the contribution made by Member Banks to Corpus Fund can be considered as Consideration , as per Section 2 (31) of the CGST Act, 2017, when the said i
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Sh. Anil Khude, Asstt. Commr. Of S.T. Mumbai received is as follows:- Going through the submission made by M/s. The Banking Codes And Standards Board Of India (hereinafter called as BCSBI) It is observed that the BCSBI was formed in the year 2006 by the RBI and initially it was fully funded by RBI, however from 2007 the BCSBI started collecting annual subscription fees from the member banks. BCSBI is registered under the Societies Registration Act, 1860 and also as a public trust under the Maharashtra Public Trust Act, 1950. BCSBI undertake various activities in relation to member banks. Some of them from angle of supply of services/goods can be enumerated as follows:- 1. To advertise and publish promotional literature in newspapers and otherwise about the Codes and Standards for the guidance & knowledge of the public through Web site, advertisements in newspapers, magazines, journals, TV/ Radio, hoardings or any other mode which the Society may deem fit. 2. To organize teaching a
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e, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made fora consideration by a person in the course or furtherance of business; Section 2(31) consideration in relation to the supply of goods or services or both includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; In this submission the BCSBI emphasized the principle of mutuality and on the basis of which pleaded that its activities are not taxable under the GST Act. It is to be noted the principle of mutuality is based on the doctrine that the person cannot make profit from himself. The essence of this principle of mutuality is present only in situation wherein the group of persons forms an association (formal or informal) and pull there surplus inco
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H. S, Sharma, Sr. V.P. appeared and made submissions orally as per details in the application and requested for admission of their ARA. No person as present from the side of Jurisdictional GST office. The application was accepted and was scheduled for final hearing on 04.04.2018 but the applicant requested for adjournment in the matter for personal reasons. Shri Jasbir Singh, Inspector appeared and stated that they had not received copy of application, however copy of notice was received by them. The copy of application was given and he was requested to ensure appearance or submission by next date of hearing. The final hearing in the matter was held on Ms. Kirti S. Bhoite, Advocate along with Sh. Phanraj Jain, C.A. and Sh. H. S. Sharma, Sr. V.P. appeared and reiterated the contention as made in their ARA and submissions made therewith. Sh. Anil Khude, Asstt. Commr. of SGST Mumbai appeared and stated that they would be making submissions within one week. The applicant also requested to
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pply which is as under:- Section 7 (1):- For the purposes of this Act, the expression supply includes – (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal lade or agreed to be made for a consideration by a person in the course or furtherance of business; (b). ………………; (c) the activities specified in Schedule 1, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1), – (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of good
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rds voluntarily adopted by Banks are adhered to in true spirit by Banks in delivering the services, as promised, to their customers. iii. To conduct and undertake research of the Codes and Standards currently in vogue in and outside India. iv. To enter into covenants with Banks on observance of the codes and standards and for that purpose to train employees of such Banks about the Banking Codes. v. To advertise and publish promotional literature in newspapers and otherwise about the Codes and Standards for the guidance and knowledge of the public through Web site, advertisements in the newspapers, magazines, journals, TV/Radio, hoardings or any other mode which the Society may deem fit. vi. To take up specific assignments, if any, in the areas coming under the Society s objects as projects, turnkey solutions or on any other terms of contracts with in-house resources or with the participation of outside agencies in order to fully implement the Code. vii. To organize teaching and trainin
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s and Commitment of their Member Banks. Hence we find that the applicant is firstly developing and publishing and then publicizing Banking Codes and Standards for the banks who are their members and after this, they are monitoring its compliance, undertaking further research with regard to codes and standards and are also training bank employees about these codes. We also find that the applicant is also advertising and publishing promotional literature in newspapers and are also organizing, teaching and training courses, conferences, seminars and lectures and also publishing journals, pamphlets, reports, books and booklets in this regard. Thus we find that the applicant are basically drafting certain codes and standards and are directly as well as indirectly ensuring that member banks adhere to these standards and codes and thus provide banking services as per these codes and standards and thus the credibility of services of member banks increases if they are able to provide services a
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a consideration or otherwise as we find that the second part of the definition says that …….all forms of supply of goods or services…….for a consideration. For performing the said activities, the applicant requires funds which are collected by them in the form of Annual Membership Fees and registration fees. Even though as per their submissions these fees are not used by them, it is clear that the said fees which are termed by them as corpus fund are used to generate interest amounts which are further used for performing their activities. In other words if there is no fee there is no corpus fund and no interest payment which can be used to fund their activities which are in the form of supply of services to their member banks. Thus here there is no doubt that consideration is flowing from Banks to the applicant in the form of Annual Membership Fee and Registration Fee which are being utilized by the applicant for generating further income as found feasible
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gistration Act, 1860 and can therefore be termed as a society, supplies service in the form of providing facilities or benefits to its Member Banks for a subscription (in this case Annual Membership Fees and registration fees). Such provision of facilities or benefits to its Member Banks, by the applicant is squarely covered under Section 2 (17) (e) of the GST Act. In their further submission, the applicant at one point has stated that Any Supply is meant to be in the course of business or furtherance of the same. As such, the definition of Business is very vital in case of the Applicant Section 2 (17) (e) will be applicable and services provided by them to member Banks would be covered in definition of business as given in section 2(17) (e) of GST ACT. Thus there is no doubt that their activity falls under the Section 2 (17) (e) as mentioned above. It is clearly seen from their submissions that they are collecting Annual Membership Fees and registration fees from their member banks an
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itment to Customers, which is in consonance with the basic frame work in line provided by the RBI related to consumer protection, but this supply of service is only to member banks and not to banks who have not become members. The applicant has also submitted that the Member Banks undertake to adhere to the Codes of Banks commitment to Customers and guidelines prescribed by the Applicant which clearly imply that adherence to codes and standards of the applicant gives further credence to the functioning and services of these banks. We find that they have submitted that the RBI guidelines are for the benefit of people who undertake any transaction with banks such as their Account Holders etc. This is an obligation on the Banks and the Applicant undertakes research and related work to prepare the Codes of Banks commitment to Customers that are required to be adhered to, by the Member Banks. It may be mentioned here that all the Banks are obliged to follow the guidelines issued by RBI with
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not make, in what is its true sense or meaning, taxable profit by dealing with himself . We find that the applicant body was formed in the year 2006 and then went on to enlist Banks as members. This argument put forth by the applicant does not hold good for the present facts. In the subject issue the member banks have not come together to form the applicant body. The applicant body had been formed by the RBI to prepare codes of commitment to customers of various banks and this activity is done by the applicant very selectively i.e. only to Banks who pay them some fees. The applicant is not performing any sovereign function. The essence of the principle of mutuality is present only in situations where a group of persons form an association and contribute to constitute income of the associations in the nomenclature of a common fund, which so collected is used for the benefit of the members. Here the member banks have not come together contributing their resources to form the board like t
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o the applicant s contention that as regards the Principle of Mutuality in Service Tax matters, which is now replaced by GST, the issue is now pending before the Honorable Supreme Court of India (Constitution Bench). As such, till such time as the issue is settled by the Apex Court, the Principle of Mutuality should be extended to the levy of GST and no GST is leviable on the their activity even under the CGST Act, 2017 and the Rules made thereunder . We find that the applicant has proceeded on the assumption that there exists a principle of mutuality in their case. However, for reasons mentioned above we find that since the said principle does not exist in the case of the applicant, their request for extension of the principle to the levy of GST is not sustainable. In view of the foregoing we find that the applicant is supplying services to their Member Banks, against a consideration received from them in the form of Annual membership fees and registration fees and their supply is in
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