The year 2020 has experience a changed outlook for Societies, Trusts as also Clubs incorporated under the respective statutes with the pronouncement of a celebrated and encomious decision of the Hon’ble Supreme Court by a Three Judge Bench. This decision obviously and indisputably impacted the liability to service tax as also income tax at the hands of the entities mentioned supra. This is how I have perceived a new look or face for the glorious federation in regard to its liability under the present GST regime as also the Income Tax under Income Tax Act,1961. To pen down further lines as a fortiori to my view are indispensable to be narrated.

On 11th November 1976 the All India Federation of Tax Practitioners, herein after for brevity called AIFTP was incepted in the presence of towering personalities in Judiciary, Legal Profession as well as Accountancy. As is known to everyone, The stalwarts, a Treo namely Justice JC Shah of the Supreme Court, a renowned Jurist A Nani Palkiwala and a national reputed charted accountant N. C. Mehta and objects for which federation was founded as premier association of multi color fabric namely Advocates, Chartered Accountants, Tax Practitioners, Company Secretaries and Cost and Management Accountants, are laudable. It is thus a Unique organization with an inclusive concept.

However AIFTP was registered under the provisions of Societies Act, 1860 and also under the provisions of Bombay Public Trust Acts, in 1996. Being public trust, AIFTP has been claiming exemption from payment of Income Tax by virtue of proceedings of exemption in terms of 12 of Income Tax Act.

Service Tax for the first time was administrated in our country through Finance Act, 1994 and on the basis of the expansion of tax net, in respect of the amounts collected towards delegate fee in connection with organizing National Tax Conferences as well as National Tax Conventions. The federation was also required to take out a centralized registration for the purpose of payment of service tax. AIFTP is designed to function through five zones comprising of different states falling within the respective regions.

While the taxation liability at the hands of federation stood on the lines explained above there has been a well textured revolution in indirect taxation by way of emergence of Goods and Service Tax Law on 01-07-2017.

However even under GST regime, AIFTP has taken out registration under the Act and also been paying tax on the transactions of supposed supply of services to its enrolled members in large number and handsome of non members. Though the federation by virtue of registration under two different enactments, claimed the status of the society as well as a public trust at the same time and as already explained above in the status of registered trust, exemption from Income Tax was being claimed. At any point of time before the decision of Supreme Court by a Three Judge Bench in the case of State of West Bengal and Others Versus Calcutta Club Limited was pronounced and reported, the Doctrine of Mutuality Interest between the federation and its members, it was never considered to put forth a claim of exemption either from service tax or for that matter GST. It is well known fact, that federation is “for the members of profession, of the members and finally by the members”. Therefore as a matter of fact, a valid and justifiable claim of exemption from tax ought to have been put forth and maintained. However the reason behind perhaps might be payment of tax by virtue of collection from the members and other participants, despite a big rate of tax that ultimately impacted potentially the aspect of determination of delegate fees.

Be that as it may, not being troubled to the discharge of liability, AIFTP comprising of professionals, a section of elite of the society, shall at least now consider as its duty to implement the principles of Law evolved by the Judiciary especially in the recent decision of three judge bench of Supreme Court as enshrined in Article 141 of the Constitution of India. Therefore let us keep aside the point of payment of GST on collection basis and employ all best and concerted efforts to give a new face to the organization with a beneficial share to the members that would in the final analysis slice down delegate fee at a reduced competitive cost. For this purpose through this editorial contribution, I would honestly suggest to the management to take up the issue with the Union Government including GST Council that would serve the members at large and there are considerable number of personalities to take care of the plea of federation for a positive and fruitful decision.


Dr. M. V. K. Moorthy,
Member, Editorial Board

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