2018 (12) TMI 590 - AAR - GST

Requirement of registration - applicability of the GST Act - receipt of fees from members by the Lions Club of Poona, Kothrud - supply of goods/services or not - Held that - This subscription is for the facilities or benefits that would be provided. The definition requires that the club, association, society, or any such body has to provide facilities or benefits to its members. And these facilities or benefits are to be provided for a subscription or any other consideration - In the facts of the instant case, the amounts collected as fees from the members are not for the purposes of making any supply . All are aware that the definition of supply under the provisions of the GST Act is an inclusive one. However, it is one for supply and the supply is of goods or services. In the present case, the club is not formed to provide any facilities or benefits to its members. The fees collected are used for social causes and to meet the expenses incurred in furtherance of the objectives of the Club. The Club is not formed to provide services to members but people gather under the umbrella of the Club to perform socially relevant activities. A club, association or society as understood under section 2(17) is one which would provide goods or services or both to its members such as recreation, sports, food, etc. The club is not formed to provide any supply of goods or services to its members qua the fees received from them. There being no supply qua the fees received, there arises no occasion for us to visit the definition of Supply under the GST Act. The applicant club as per the facts put up before us does not render any Supply for the purposes of the CST Act. The amounts spent are for building and empowering a human resource to help perform the activities of the Club in a better way. The members pay fees to act as volunteers in the social causes. Besides, the club is not formed to build and empower or impart skills in leadership such that people would get themselves enrolled for acquiring the skills. By no means could it be said that the members pay fees to acquire services of training in leadership development. Ruling - No registration is required.

Summary

Issues Involved:
1. Whether the amounts collected by individual Lions clubs and Lions Districts for meeting and communication expenses necessitate GST registration.
2. The applicability of the principle of mutuality in the context of GST.
3. Whether the activities of the Lions Club constitute "business" under the GST Act.
4. The interpretation of "supply" under the GST Act concerning the fees collected by the Lions Club.
5. The relevance of past case laws and circulars under the GST regime.

Detailed Analysis:

1. GST Registration Requirement:
The primary issue was whether the amounts collected by Lions clubs and Lions Districts for meeting and communication expenses necessitate GST registration. The applicant argued that these amounts are pooled for convenience and do not constitute furtherance of business, nor do they involve the provision of goods or services. The ruling concluded that since the amounts collected are solely for administrative purposes and not for any business activity, GST registration is not required.

2. Principle of Mutuality:
The applicant contended that under the principle of mutuality, the club and its members are not distinct persons, and thus, transactions between them should not be taxed. The ruling referenced past judicial decisions and the absence of a deeming fiction in the GST regime, which previously existed under the Service Tax regime. The ruling upheld the principle of mutuality, stating that the club and its members are the same entity, and transactions between them do not qualify as taxable supplies.

3. Definition of "Business" under GST Act:
The ruling examined whether the activities of the Lions Club constitute "business" under Section 2(17) of the GST Act, which includes the provision of facilities or benefits to members for a subscription or other consideration. The ruling determined that the Lions Club does not provide any facilities or benefits to its members in the course of business. The fees collected are used for social causes and administrative expenses, not for providing any business-related services or benefits to the members.

4. Interpretation of "Supply":
The definition of "supply" under Section 7 of the GST Act includes all forms of supply of goods or services for a consideration in the course of business. The ruling concluded that the Lions Club does not engage in any form of supply of goods or services to its members. The fees collected are not for any supply but are used for social and administrative purposes. Thus, there is no taxable supply under the GST Act in this context.

5. Relevance of Past Case Laws and Circulars:
The ruling considered past case laws and circulars, particularly those under the Service Tax regime, which treated clubs and their members as distinct persons. However, it noted that such deeming provisions are not present in the current GST regime. The ruling also referenced Circular No. 35/9/2018-GST, which deals with services provided by joint ventures, and concluded that it is irrelevant to the present case. The ruling emphasized that the Lions Club's activities do not fit within the scope of taxable supply under the GST Act.

Conclusion:
The ruling concluded that the amounts collected by Lions clubs and Lions Districts for meeting and communication expenses do not require GST registration. The principle of mutuality applies, and the transactions between the club and its members do not constitute taxable supplies under the GST Act. The activities of the Lions Club do not qualify as "business," and the fees collected are not for any supply of goods or services. Therefore, the Lions Club is not liable for GST on the amounts collected from its members.