Partly allowed

07/WBAAAR/APPEAL/2019 of The Bengal Rowing Club

GST AAAR8 Jul 201907/WBAAAR/APPEAL/2019

Case brief

AI extract

What is this about?

The West Bengal Appellate Authority for Advance Ruling modified the Advance Ruling regarding tax classification for The Bengal Rowing Club. The Authority held that food supplied at occasional social get-togethers in club premises falls under serial no. 7(v) of the Rate Notification (SAC 9963) and is taxable at 5% instead of 18% as initially ruled, provided no rental of premises is charged.

What did the court decide?

Modified Advance Ruling No. 48/WBAAR/2018-19 dated 28.03.2019 to tax food supplied at social gatherings under serial no. 7(v) of the Rate Notification at 5% GST rate.

07/WBAAAR/APPEAL/2019 of The Bengal Rowing Club — GST and Indirect Tax | GST AAAR (2019)

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WEST BENGAL APPELLATE^{AUTHORITY FOR ADVANCERULING} AT 14, BELIAGHATn^{ROAD,KOLKATA-700015}

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Before:

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Mr. A.P.S Suri, Member

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Ms. Smaraki Mahapatra,^Member

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In the matter of

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Appeal Case No . 07 /WBAAAR/Appeall2}l^{9 dat ed 29 .04.2019}

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And -

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In the matter of:

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An Appeal filed under^{Section100(l) of the West Bengal Goodsand ServicesTax Act,2017l} Central Goods and^{Services Tax Act, 2077, by The BengalRowingClub, 1312Batoi Road,} Rabindra Sarobar, Kolkata-^{700 029}

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Present for the Appellant:^{Sri Shovendu Banerjee, Advocate}

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Present for the Respondent:^{Sri DebdutDas,Superintendent,} CGST & CX, TollYgunge^Division

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Matter heard on 17.06 .2019 Date of Order: 08.07 .2019

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This Appeal has been flled^{by The Bengal RowingClub (hereinatter referredto as "the} Appellant") on 29.04-2019^{againstAdvance Ruling No. 48/WBAAR/2018-19dated} 28.03.2019,^{pronouncedby the West BengalAuthorityfor Advance Ruling (hereinafter} referred to as the WBAAR)^{in the matter of The BengalRowingClub.}

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The Bengal Rowing Club locatedat^{1312Baroj Road,Rabindra Sarobar,Kolkata- 700} 029, holding GSTIN I9AABCTL321MLZC,^{statedto be a non-profit makingcompany,} is engaged in providing^{its membersprivilegesandamenitiessuchas swimmingfacility,} gymnasium, indoor games, restaurant^{service, etc.}

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J.a The Appellant sought^{an advanceruling under section 97 of the West Bengal Goods and} Services Tax Act, 2}l7l^{the Central Goods andServicesTax Act,2017,(hereinafter} collectively referred to^{as "the GST Act") on the followingquestions:}

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Page 1 of 5

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(a) The classification and rate of tax^{on various services provided by the Appellant} which are listed below:

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Sl. no.	S.rppll,elqg
1	Supptyoffuodno*t
2	Otherservicesprovidedir."tt
aJ	Supplyoffoodateventsorganised^{intheclubpremiseslikeget-togethers} andoartieshostedbvrnembersoftheClub
4	Supplyofotherservicesbeing^{partoforganisingtheget-togethersand} partiesinthe clubpremiseslikevalet^{parkingcharge,decorationcharge,} music charse.etc.
5	Otherservices^{providedby the club}

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(b) The admissible proportion of input^{tax credit for servicesother than the supply of} food.

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The WBAAR observed^{that the Appellant'sservicescould be broadlyclassifiedinto two} categories, namely, supply of^{food, by way or as part of the servicesprovided at its} restaurant or at social events^{organised in the club premises and the other servicesto the} members and the^{gueststhat are not bundled with the supplyof food and are charged} separately. The WBAAR^{furtherobserved thatthe supply of food,by way or as part of} any service or any other^{manner whatever,was a compositesupply. The WBAAR} clarified that reference to "food"^{in its ruling includes articlesof human consumption} and drink, whether or^{not alcoholicliquor. The WBAAR pronouncedits advanceruling} by an order dated 28.03.2019^{as under:}

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(a) The supply of food, by way or as^part of^{any serviceor any othermanner} whatever, from the Appellant's^{restaurantare classifiableunder SAC 9963and} taxable under S1. No. 7(i) or^{7(iii) of the Notification no. lll2}l7-C.T(Rate)} dated 28-06-2017 under the^{Central Goods and ServicesTax Act, 2017 &} Notification No. 1135-FT^{dated 28-06-2017 under the West Bengal Goods and} Services Tax Act, 2017^{(hr:reinafterreferred to as "the Rate Notification")} depending on the criteria^{mentionedtherein.}

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(b) If food is supplied by way of or as a^{part of the servicesassociatedwith} organisation of sociai events^{at the club premises, it will be classifiableunder} SAC 9963 and taxable under^{Sl. no. 7(vii)of the Rate Notification.}

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(c) All other services offered by the Appellant^{arc classifiable under SAC 9995 and} taxable under Sl. no. 33 of^{the Rate Notification.}

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(d) The provisions under sub-section 2^{and sub-section 16 of section17 of the GST} Act read with Rules 42 and⁴³ of^{the GST Rules are applicablefor reversal of} input tax credit, treating supplies, if^{any, taxable underSl. No. 7(i) of the Rate} Notification as exemPt^suPPlies.

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Page 2 of 5

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The Appellant has filed the instant Appeal against the above^{AdvanceRuling} with^the prayer to set aside/modify the impugned Advance Ruling^passed by the WBAAR or^pass any such fuither or other orders as may be deemed fit and^proper in the facts and circumstances of the case on the following^grounds:

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(a) The WBAAR failed to appreciate that food supplied for social gatherings cannot be categorised as composite services and taxable @ 18%. The club raises separate bills for food and beverages for social gatherings. Further as per the Rate notification all restaurant services are to be taxed @ 5% with no input tax credit.

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(b) The Appellant is a members' club and not a proprietary club. In the instant case a group of people formed a club to provide some facilities to themselves and for this purpose they contribute to a common fund. There is a complete^identity between the contributor and participator and any surplus fund resulting^from excess contribution is not a profit. This is in contrary to a^proprietary club where services or facilities are provided by the proprietor to the members for^a subscription or other amount by way of consideration with an intention of^profit making. In a proprietary club, the proprietor or the club is a separate and distinct entity from the members. A members' club should be excluded from taxation under the GST Act on the principle of mutuality.

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(c) The Appellant states that no person other than a member or the guests accompanied by a member or the spouse of the member can avail the facilities of the Club. The members can only pay for their guests. The^guests do not have any independent right to use or pay for the club facilities. No^part of surplus fund arising out of the activities of the Club is distributed to any member by way of dividend or otherwise.

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During the course of hearing the Appellant reiterated the^points as stated^{in the Grounds} of Appeal. The Appellant stated that the Club follows two types of^{pricing policy} for the members enjoying restaurant facility.

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(i) Members are charged item-wise separately following a price list as per order;

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(ii) For group meals especially fbr large gatherings they are charged per plate. There are various rates depending on number of heads or choice of meal type. Rates also vary if served on weekends.

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But whether it is a set meal (either sit-down or buffet) or an a la carte menu,^foodis served to the members in the restaurant. If there is space crunch in the^{restaurant,chair} and tables are placed in portico, lawn, hall, etc. The Appellant submitted that for small gatherings of 10-15 people, they are accommodated in the restaurant itself even if the meal ordered is charged per plate, but for larger get-togethers, a separate hall is designated for the party where required tables and chairs are^placed. The Appellant stated that places other than restaurant on the club^premises are converted into^makeshift restaurant as per requirement.

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Page 3 of 6

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The Appellant further argued that though^{social events like gettogethers take place} regularly events like banquets, conferences,^{birthday parties, engagements, etc. are not} allowed on the club^premises and^{no space is rented out for holdingevents. Further} being on the shores of Rabindra Sarovar^{Lake there are restrictionson construction,} lighting and sound levels. No decorations are done for^{thesemembers'get-togethers.} Further the per plate pricing^(set meals) do not have added^rentals of^{chair/table/space,} etc., in it. The Appellant furnished^{price lists and sample invoicesto supplement his} argument. The price list for^group meals show^{a variety of rates for breakfast, lunch,} high tea and dinner depending on number of^{heads, meal type, day of the weekand place} of service. Meals on weekends or served in the^{portico or loft havehighertariff rate.The} Appellant emphasized that the social events^{are usually members' get-togethersand} stated that they have a special meal called^{"silverThali Raj" sometimes served at} members' events where the food is served on^{silver utensils.}

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The Appellant submitted order dated 14.09.2017^{passed by Hon'le Calcutta High Court} in WP No. 534 of 2006 in the matter of Bengal^{Rowing Club} -vs-^{Commissionerof} Service Tax, Kolkata where the Hon'ble^{CalcuttaHigh Court held that the petitioner} namely Bengal Rowing Club was a members' club^{andthe concept of mutualityapplied} with regards to transactions between a member^{andthe Club and thus the petitioner was} not liable to pay service tax under the Finance^{Act, 1994 as amendedby the Finance Act,} 2005.

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The Respondent disputed the Appellant's argument^{regarding BengalRowing Club} being a members' club and submitted that^{the clubcharged annual subscriptions on the} members and additional charges are levied for other^{services like use of restaurant,} swimming pool, valet parking, etc.^{Further, goods and servicesprovided to club} members falls within the ambit of definition of supply^{under the GSTAct.}

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The matter is examined and written and oral submissions^{madebeforeus are considered.} As the ruling of the WBAAR is restricted to the^{questionof rate of tax on foodsupplied} at social gatherings, the discussion in this forum is also^{restrictedto this issueonly. The} issue of applicability of taxation on a members' club^{under the GST Act is not taken up} for discussion.

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I 1. The Appellant in his written submission before^the WBAAR^{statedat onepointthat the} Club organised parties and along with supply of^{foods also provided services suchas} valet parking, decoration, music, etc. The Appellant^{furtherstatedthat the Clubwas} charging tax @ 5o/o on the food served at such^parties but on^{services provided in} relation to catering such as valet^parking, decoration,^{music, etc., they were charging tax} @^{18%. However,in contrast to this submissionmade before the WBAAR,the} Appellant in the course of hearing of this appeal^{categoricallystatedthatno decorations} were done at any social event organised by^{the members and therewere restrictions on}

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Page 4 of 6

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sound level. The appellant thus made^{contradictorysubmissionsbefore the two} Authorities.

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For the sake of clarity the two entries^{of the Rate Notificationare reproduced below:} Entry at serial No. 7(v) (SAC 9963):

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Supply, by way of or as part of any service, o.f^goods, being food or^{any other} article for human consumption or ony drink, at Exhibition^{halls,Events,} Conference, Marriage Halls and other outdoor/indoor functions^{that are event} hased and occasional in nature.

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Entry at serial No. 7(vii) (SAC 9963):

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Supply, by walt oJ'or as part of-or as part o/'any service or in^{any othermanner} whatsoever, of goods, including but not limited to /bod or^{ony other article} for human consumption or any cirink (whether or not alcoholic liquor for^human consumption), where such supply of service^is .fbr cash,^{deferredpqyment or other} valuable consideration, in a premises ( including hotel,^{convention center,club,} pandal, shamiana or any other place, specially arranged for organizing^a function) together with renting of'such premises.

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It is clear from the entry under serial no. 7(vii) of the^{RateNotificationthat if any rental} is paid associated with the supply of food and beverages at^{social events then it will be} classified under this entry. On^going through the ruling of^the WBAAR^{dated28.03.2019} we find that the WBAAR has opined only on this^point. If the^{Appellant is not charging} anything for renting space to hold the social event and the^{price does not includeany} rental or ancillary charges, other than the food and beverages^served,then it^would unquestionably not fall under serial no. 7(vii) of the^{Rate Notification.The WBAAR in} its ruling is clear on the point that any food, by way of or as^part of any service^when supplied at the Appellant's restaurant will be taxable @ 5%^{only.The Appellanthimself} distinguished between the two supplies and sought ruling^{before the} WBAAR^on,

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(i) the food supplied as a part of restaurant serlice; and

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(ii) the food supplied at a social event like a members' get-together or a^party. The first entry is a regular service provided by the Club and the second one^{is occasional} by nature.

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Under the provisions of serial no. 7(v) of the Rate Notification it^{is seen that any supply} of food or beverage at any event, whether or not served at^{an outdoor or an indoor} function, squarely falls under the said category. A social^{get-togetherheld at the Club} premises as explained by the Appellant, is "an event or a function" of occasional^nature. An "event" is a planned public or social occasion^whereas, a "function"^{means an} official ceremony or a formal social event, such as a^{party or a specialmeal, at which a}

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Page 5 of 5

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lot l'people ar r.rsr"rall-y presnt.'l'hc pr:ol'isions oJ"scriaI n"7ir;)t:l'tlrc [{.ate hJr:tilicstir:r"r is nol rstrictcd tu i:lxltiL:itin Ilalls r-rr .'tar"riag* lfalls anrj inclLrdes 11 indour and utdot'lrncLiclns, tJnlilte the pnrvi.rirxr$ ol'scriai nu. Tti,iij ol'thc l{atcl\otiljcaticn therc is no restrictivc claus as {u rcntal l'ths piemiss rvhr t}re cvent is being hei11. f ulthr tlie pl:rase. "otiltlartriindrx;r.fitncti$tt.t thu! wc eyefit ha,tttl rrrul {i{'{'{rli{tnitl in tlttltu'{' ir:lr"lds all lbnctios lvl'ricli alc ticcasinal h1.' natilrr irespeclivc ol u4rthr ihcse al's held inclr:r or oritdoor.^'l'h* qualit;r,ing riteriil arc thr:t l'irslly" it r::nrst bc ar: cvent Lrsed fixrctitn ilnrl secndh,. it r:us{ lr occasional in l1,rlurc.^'l'h* soc,ial get-togethers ancl granis re special scciai lirns{ions ancl clcJinitell.' occlsional i:: ni:ture.^'l'ir scn'ics prr,idcil h_v thc Ciub at Lli,sse sacia] gct-trigtlrcrs arc uoi reguir re$tauraj]1 stjrvir's ;rs envisagcrl ll'rn th sui:misxins urrJc hy tht Appellant. S*. thc {iruJ sLrpplictl at vnls 'hicl'r are ccasiunal in nature Iil';e tlr se iul get-togrthcl'si arriinge<i at tlrc illi-rh prnriscs will unxrxbiguL:usl_1.'fali under serii.il n. 7{v)ttlTe Ilate N*tilicatiu:r.

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Iu viu, cl' ;iirve ilisussin it is held tht supplv r.,l- k'rocl at vents r-rrgiinisecl h1i tlr ;\ppllant in the lr-rh pr**rises is ter.r,zrhle u:uir rerial rru. 7(v) 1'thc Nntifjcation l:ri. li,/10.17-{:. f iltat) datd 2&-{)6-?"17 unrlr l}re Central^(ir:cris and Serviccs^'i'ax Act. 2{}17 &. Natiflcatiern l{. 1135-}rl'ciatccl 28-0f.r-?{Jr7 under t}rc West Bngai {iocls anrl Services'['ax &ct, 2$17 'at1 taxd CI ifl9'0. We lounci n* ot]rer inllrr:rit3'in th* rrcir oi' tlrc WlSA;\R. cnsirlcring the^q,ritten ancl urill subrnissin ol'the Appcllnt.

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Arcr:rriingl,r'. the Arivanc* RulinS, \o. 4{$,'WI};;\R,/ii}18-1-Q datccl 28.{)3.2{}1{} is mi:i1il'iEll ta this eflct ernri thc,,;r;realstands rlisprisrri ot as abr,c.

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Send r,op)'*f this orclcr tr-: the Appellant anii tlie l{"es;ronclcnt l'irr inli,rln:*tiuu.

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s"l l- {^{Sn:iir"alii h4t}hniratxl} i {^{;. P.} S^{S r"rri} } h,iru:l:r hrlnr l:r '#cst I:trqinHiii :\pp1 I t .,\r st.J:rl r"it3 \'st f lr'r g;r lr,.ppu I I at Authlr ri4, 1 t:r Aq-h'ilnu* I{rtIinu filr ;\rh,iir:c(: R u] iI lx

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[tag* & *{ #

07/WBAAAR/APPEAL/2019 of The Bengal Rowing Club

Case brief

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07/WBAAAR/APPEAL/2019 of The Bengal Rowing Club

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