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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Supply under GST

The Sunrise Residents Club, a registered society (not an individual), provides facilities to its members for a monthly fee. Under Section 7(1)(aa) of the CGST Act, 2017, which statement is correct?

The society and its members are deemed two separate persons, and transactions between them for cash, deferred payment or other valuable consideration are supplies under Section 7(1)(aa). This applies despite any other law or court judgment, so the mutuality argument that they are one person does not work.

  1. AThe society and its members are deemed to be two separate persons, and activities or transactions between them for cash, deferred payment or other valuable consideration are suppliesCorrect
  2. BThe society and its members are one and the same person, so no supply arises between them
  3. CSupply arises only if the society is carrying on a business with a profit motive
  4. DSupply arises only where the society's members are individuals and the payment is in cash alone

Explanation

Clause (aa) covers activities or transactions by a person other than an individual to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Its Explanation deems the person and its members to be two separate persons notwithstanding any other law or court judgment. So the 'mutuality' argument of one person fails, and payment need not be only cash.

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