IMPORTANT POINT
The principle of mutuality exempts clubs from GST on services provided to members; amendments to tax laws undermining this principle are unconstitutional.

JUDGMENT :

A.K. Jayasankaran Nambiar, J.

These Writ Appeals, one preferred by the petitioner in W.P. (C).No.21297 of 2023 and the other two preferred by the GST Officials of the Union and the Kerala State, impugn the judgment dated 23.07.2024 of a learned Single Judge in W.P.(C).No.21297 of 2023.

The Facts in Brief:

2. The essential facts necessary for disposal of these Writ Appeals are as follows:

W.P.(C).No.21297 of 2023 was preferred by the Kerala State Branch of the Indian Medical Association apprehending coercive action from the Directorate General of GST Intelligence for recovery of tax on various services rendered by it to its members. While it was the petitioner's contention that it was not liable to pay tax on the supply of services to its members, it apprehended coercive action for recovery of tax when it was served with summons requiring it to produce details of the registration taken by it under the GST Act and their audited books of accounts and other financial documents for the financial years from 2017-18 to 2021-22.

3. The petitioner runs various mutual Schemes for the benefit of its member-doctors, e.g. Social Security Schemes or SSS (I, II, and III), Professional Disability Support Scheme (PDSS), Professional Protection Scheme, Kerala Health Scheme, etc. All the Schemes are to support fellow doctors, while one or two Schemes support their immediate family members. The member-doctors contribute an admission/annual fee, and in cases of certain Schemes (e.g. SSS, PDSS) also a fraternity contribution upon the death/disability of a fellow member doctor; the pooled sum is paid out to the widow of deceased doctors, disabled doctors, doctors afflicted with specified diseases, etc. Each Scheme is run by a separately elected committee, in which the Secretary and President of the petitioner are ex officio members. The Schemes have separate bank accounts, and accounts of each Scheme are drawn up and separately audited. A brief description of the Schemes is as given below:

“Social Security Schemes

i) Objects: The objects of the schemes are to provide financial assistance to the families of the medical practitioner in the event of his or her death, or in the event of a member suffering permanent disability that renders the member unfit to practice the profession for life. The objects also encompass undertaking various charitable/philanthropic activities such as providing medical aid to the needy and poor, family welfare programmes independently/jointly with the Government, organising blood donation camps, eye camps, promoting medical education, etc.

ii) Payment: Any doctor who is a member of the petitioner may become a member of these Social Security Schemes upon payment of an admission fee which is graded depending upon the age of the doctor. The member is then required to pay an annual subscription of Rs.300 to Rs.1,000 for a period of 20 to 25 years.

iii) Death/Permanent disability: Upon the death/permanent disability of a member, every other member of that scheme is to pay a specified “fraternity contribution” ranging from Rs.100 to Rs.500 depending upon the number of years for which the deceased member had been a member of the scheme. The fraternity contribution (calculated as a product of the individual fraternity contribution and the net membership of scheme concerned, subject to a maximum specified under the bye-laws) is handed over to the family of the deceased/permanently disabled member and the remaining portion, if any, is credited to the corpus of the scheme concerned to be paid out in future.

Professional Disability Support Scheme

i) Object: The object of the scheme is to provide financial assistance to a member of the scheme who has become so temporarily / permanently disabled that it renders him unfit topractice her / his profession.

ii) Payment: Any eligible member of the petitioner may become a member of this scheme upon payment of an admission fee that is graded based on age (Rs.5,000/- to Rs.15,000)/-. An annual fee