10
Jul “GST Applicability on Clubs & Associations”

• (Category: GST, GST UPDATES)

Reference: Order of the Maharashtra Appellate Authority for Advance Ruling in the case of Rotary Club of Mumbai Queens Necklace.

In this case the Authority for Advance ruling has originally held that The amount collected as membership, subscription and admission fees from members is liable to GST as supply of services, Against this order Rotary Club of Mumbai Queens Necklace has gone before the Appellate Authority for Advance Ruling.  The AAAR held that We, hereby, hold that the amount collected as membership subscription and admission fees from members is not liable to GST as supply of services.

Though this decision is favourable to the assessee it has to
be carefully applied to the facts of every case.

Arguments of the Assessee

The basic argument in this case is that there is no service rendered to the members. The appellant heavily relied on the Section 7(1)(a) of the CGST Act. According to Section 7(1)(a) the supply should be for a consideration by a person in the course or furtherance of business. The definition of business as per section 2(17) includes, “provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members.” The appellant argued that there is no facility or benefit provided to the members. The appellant also brought in the concept of Mutuality.

The above factors only made the AAAR to observe in Para 47, Now, once it has been established that the Appellant is not doing any business in terms of section 2(17) of the GST Act, 2017, it can be deduced that activities carried out by the Appellant would not come under the scope of supply as envisaged under section 7(1) of the CGST Act, 2017.

Opinion of CA. P.Paul Thangam

In my opinion similar arguments cannot be taken in all the
cases. This decision has been arrived at due to the peculiar facts of the case.
The same arguments cannot be taken in case of Clubs like Cosmopolitan Club,
Gymkana Club, Presidency Club etc., This is due to the reason these clubs
provide various facilities to the member like Table Tennis, Tennis, Card games,
canteen etc., In these cases we cannot say that no service is provided to the
members. The trade Associations like Wheat Dealers Association, Hardware
Merchants Association have a clause in their Bye laws that the purpose of the
association is for the purpose of collectively putting the case of the members
before the government authorities and others. This too can be taken as the
service to the members.

Click the bellow link to Download “Order of the Maharashtra Appellate Authority for Advance Ruling in the case of Rotary Club of Mumbai Queens Necklace.”