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CMA Final · Indirect Tax Laws and Practice · Supply under GST

Mahila Vikas Club, a body of persons (not an individual), provides facilities to its members and receives a monthly fee. Under Section 7(1)(aa) of the CGST Act, 2017, how is this transaction treated?

It is a supply. Section 7(1)(aa) covers activities by a non-individual person to its members for consideration, and its Explanation deems the club and members to be two separate persons despite any other law or judgment, so the mutuality principle gives no protection.

  1. ANot a supply, as a person cannot supply to itself
  2. BA supply, as the club and its members are deemed to be two separate personsCorrect
  3. CA supply only if the club is registered under another law
  4. DA supply only if the members are non-individuals

Explanation

Section 7(1)(aa) covers activities by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. The Explanation deems the person and members to be separate persons, notwithstanding any other law or court judgment. Option A reflects the old mutuality principle, which this clause overrides.

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