Membership Subscription and Admission Fees collected from members not liable to GST – AAAR Maharashtra
by ReinHeads Team | Jul 20, 2020
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AAAR Maharashtra* – Membership Subscription and Admission Fees collected from members not liable to GST
| Facts |
- Rotary Club of Mumbai Queens Necklace (‘the Appellant’) is an unincorporated association of individuals and a non-profit entity which neither renders commercial service to its members nor to outsiders
- The Appellant works to promote peace, fight diseases, provide clean water, sanitation and hygiene, save mothers and children, support education etc.
- The Appellant collects membership subscription and admission fee from its member, which is used by the Appellant solely for incurring expenditure viz. meeting expenses, banquet expenses, catering expenses, administration expenses
- The Appellant had filed an application before the Maharashtra Authority for Advance Ruling (‘the AAR’) wherein it was held that the amount collected as membership subscription and admission fees from members is liable to GST as supply of services and denied input tax credit (‘ITC’) on banquet and catering services in respect meetings/ events organized for members
- Aggrieved by the ruling of the AAR, the Appellant filed an appeal before the Maharashtra Appellate Authority for Advance Ruling (‘the AAAR’)
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| Issue before the AAAR |
- Whether the amount collected as membership subscription and admission fees from members is liable to GST as supply of services?
- If the above receipts are liable to GST, can the Appellant claim ITC of the tax paid on the banquet and catering services?
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| Discussion and Findings of the AAAR |
- In light of Section 7(1) of the CGST Act, for any activity/ transaction to be qualified as a ‘supply’, the same should be undertaken in the course or furtherance of business
- Section 2(17) of the CGST Act defines the term ‘business’ to include provision by club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members
- The Appellant is not providing any specific facility or benefit to its members against the membership subscription fee charged as the entire amount is spent towards meetings and administrative expenditures and the same is also established from the financial statements. Thus, the Appellant is not doing any business under Section 2(17) of the CGST Act and thereby would not come under the scope of ‘supply’
- Taxing such fee collected by the Appellant (which is purely in the nature of reimbursement of administrative expenditures incurred by the Appellant) would amount to the double taxation as it is already subjected to GST in the hands of the suppliers. This would clearly be against the legislature’s intention of the formulation of GST, which certainly does not embrace the idea of double taxation
- The AAAR held that membership subscription fee and admission fees collected from its members would not be construed as ‘supply’ and thereby not liable to GST. Accordingly, the question regarding availment of ITC on the input services does not arise
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*Appellate Advance Ruling No. MAH/AAAR/SS-RJ/15/2019-20 dated 06 November 2019 (The Appellate Authority for Advance Ruling, Maharashtra) |
