2018 (11) TMI 1574 - AAR - GST

Supply of Services or not - applicant is affiliated to International Inner Wheel and the administrative body for all Inner Wheel Clubs spread in 27 Inner Wheel Districts all over India - whether the activities undertaken by them may be termed business or not - Held that - The Inner Wheel Clubs have specific objectives and members are granted various facilities and/or benefits, enabling them to attend conventions/meetings for the furtherance of the objectives of the Organisation, against subscriptions or fees, renewable annually - It appears that the fund collected is mainly spent on organising meetings and conventions like Triennial etc. Clearly, such meetings and gatherings provide facilities and benefits to the members in the form of a platform for social mixing, networking, promotion of friendship etc. The term business under the GST Act includes, under Section 2(17), subclause (e) provision by a club, association, society, or any other body (for a subscription or any other consideration) of the facilities or benefits to its members. It is, thus, clear that the Applicant is doing business as defined under section 2(17)(e) of the GST Act - The subscription and membership fee is to be considered as consideration for the supply of such services, which are classifiable under SAC Heading 99959 under the category Services furnished by other membership organization . However, the Applicant also has activities which involve providing space for advertisements, raising sponsorship etc, and the transactions regarding these activities are, therefore, business transactions within the meaning of section 2(17)(b), being transactions undertaken in connection with or incidental or ancillary to the social welfare activities of the Applicant, and are supplies in terms of Section 7(1) of the GST Act - Such services are classifiable under SAC Heading 99836 under the category Advertising services . Sale of souvenirs is to be treated as a supply of goods. Ruling - The Applicant s activities involve supply of services classifiable under SAC Heading 99959 against consideration received in the form of subscription and membership fees. Services classifiable under SAC Heading 99836 are also supplied. Sale of souvenirs is to be considered as a supply of goods. The nature of supply for miscellaneous income as recorded in the Financial Accounts is to be determined by the nature of the supply.

Summary

Issues:
1. Determination of whether the activities undertaken by the Applicant can be considered as "business" and "supply of services" under the GST Act.

Analysis:
The Applicant, affiliated to International Inner Wheel, sought a ruling on the classification of their activities under the WBGST/CGST Act, 2017. The Authority noted that Advance Ruling cannot be given on the determination of "business" under Section 97 of the GST Act. However, the question of whether the activities constitute "supply of services" is admissible under Section 97(2)(g). The Applicant's claim that their activities are not considered "business" is taken up for consideration. The Application was admitted as the questions raised were not pending or decided by any other authority.

The Applicant detailed their involvement in social welfare work through Inner Wheel Clubs, emphasizing financial support to disadvantaged classes and fundraising activities. They argued that their activities do not fall under "business" as they are ancillary to charitable services. Reference was made to a Supreme Court decision supporting this argument. The Applicant also contended that their activities do not fit the definition of "supply" under Section 7(1) of the GST Act.

The Authority analyzed the Applicant's Constitution, objectives, and financial transactions. It was observed that members pay annual fees for various benefits and facilities, indicating a business-like structure. The Inner Wheel Clubs provide services and benefits to members against subscriptions, enabling them to participate in global programs. Awards and financial transactions further supported the commercial nature of the activities.

The Authority determined that the Applicant's activities fall under the definition of "business" as per Section 2(17)(e) of the GST Act, involving provision of facilities or benefits for a consideration. Subscription and membership fees were considered consideration for services classified under SAC Heading 99959. Additionally, activities involving advertisements and sponsorships were deemed business transactions under Section 2(17)(b) and Section 7(1) of the GST Act.

The Applicant's charitable activities were found to align with social welfare rather than strict charitable definitions. Such activities were considered an "adventure" and could be treated as a business if consideration was charged. Transactions related to advertisements and sponsorships were classified under SAC Heading 99836. Sale of souvenirs was deemed a supply of goods. The ruling concluded that the Applicant's activities involve the supply of services and goods, subject to GST provisions.

This Advance Ruling is valid unless declared void under the GST Act.