2019 (7) TMI 616 - AAR - GST

Levy of GST - supply of services - amount collected as membership subscription and admission fees from members - HELD THAT - Since the Applicant themselves have submitted that the facts in their case are similar to the case of Lions Club of Poona, Kothrud, which has been overruled by the Appellate Authority, the observations and findings made by the Appellate Authority in that case are squarely applicable to the instant case. In view of the above and in observance of the principles of Judicial discipline, we hold that the amount collected as membership subscription and admission fees from members is liable to GST as supply of services. Input tax credit - tax paid on Banquet and catering services for holding members meetings and various events - HELD THAT - The provisions of Section 1 7(5) (b) (i) are crystal clear. Unless and until the provisio to Section 17 (5) (b) (i) is satisfied the applicant is not entitled to Input Tax credit of Food beverages, outdoor catering. The applicant, other than mentioning that they are eligible for such credit has not substantiated the same with evidentiary material - Hence we cannot accept their contention - the applicant, cannot claim input tax Credit on the tax paid on banquet and catering services.

Summary

Issues Involved:
1. Liability of GST on membership subscription and admission fees collected from members.
2. Eligibility to claim Input Tax Credit (ITC) on banquet and catering services for holding members' meetings and various events.

Detailed Analysis:
Issue 1: Liability of GST on Membership Subscription and Admission Fees
Applicant's Contention:
- The Rotary Club of Mumbai Queens Necklace (the applicant) argued that the principle of mutuality applies, meaning the club and its members are not distinct entities. Hence, the fees collected should not be subject to GST.
- The club emphasized that it is a non-profit entity formed to carry out socially relevant activities and not to provide goods or services to its members.
- They relied on the Advance Ruling in the case of "Lions Club of Poona Kothrud," where it was held that membership fees collected by the club were not subject to GST.

Authority's Observations:
- The Authority noted that the decision in the "Lions Club of Poona Kothrud" case was overruled by the Appellate Authority, which held that the membership fees collected by the club are subject to GST.
- The Appellate Authority concluded that the club and its members are distinct entities under the GST Act, and the membership fees constitute consideration for services provided by the club to its members.
- The Authority highlighted that the GST law has a broad definition of services, which includes any activity other than goods, money, and securities. Thus, the activities of the club, such as organizing leadership programs, are considered services.
- The membership fees collected are seen as consideration for these services, fulfilling both conditions under Section 7 of the CGST Act, which defines 'supply' as requiring consideration and being in the course or furtherance of business.

Conclusion:
- The Authority ruled that the amount collected as membership subscription and admission fees from members is liable to GST as supply of services.

Issue 2: Eligibility to Claim Input Tax Credit on Banquet and Catering Services
Applicant's Contention:
- The applicant argued that since the banquet and catering services are used for members' meetings and events, they should be eligible for ITC.

Authority's Observations:
- Section 17(5)(b)(i) of the CGST Act, 2017, clearly states that ITC is not available for food and beverages, outdoor catering, etc., unless used for making an outward taxable supply of the same category or as part of a taxable composite or mixed supply.
- The applicant failed to provide evidence that their outward taxable supply falls under the same category of goods or services or as part of a taxable composite or mixed supply.
- The Authority agreed with the jurisdictional officer's view that the club or association cannot claim ITC on the tax paid on catering and other such services.

Conclusion:
- The Authority ruled that the club cannot claim Input Tax Credit on the tax paid on banquet and catering services for holding members' meetings and various events.

Order:
1. The amount collected as membership subscription and admission fees from members is liable to GST as supply of services.
2. The club cannot claim Input Tax Credit on the tax paid on banquet and catering services for holding members' meetings and various events.