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2019 (10) TMI 452 - AAR - GSTClub membership - Supply of goods/services or not? - amount collected by Rotary club towards convenience of members and pooled together for paying meeting expenses communication expenses RI per capita dues subscription fees to the Rotarian or Rotary regional magazine district per capita assessment and the same is deposited in single bank account - HELD THAT - The facts of the subject case is similar to the facts of the case in Lions club of poona Kothrud 2018 (12) TMI 590 - AUTHORITY FOR ADVANCE RULING MAHARASHTRA wherein the appellate authority for advance ruling Maharashtra has held that fees collected from members cannot be brought within purview of GST. However only membership fee recovered by them from their members spent towards incurring various administrative expenses only will be exempt from GST. Expenses other than administrative expenses - HELD THAT - This authority has already held in similar cases of Rotary Club of Queens Necklace 2019 (7) TMI 616 - AUTHORITY FOR ADVANCE RULING MAHARASHTRA and Rotary Club of Nariman Point 2019 (8) TMI 819 - AUTHORITY FOR ADVANCE RULING MAHARASHTRA that the amount collected by the Rotary clubs are towards convenience of members and poled together for paying various expenses and are leviable to GST - there are no grounds to deviate from the said decisions made by this authority since in the facts of the subject case are very much similar to the facts of Rotary Club of Queens Necklace and Rotary club of Nariman Point. The said transaction by the applicant to its members is a supply of goods/services and is liable to GST.
Issues Involved:
1. Whether the amount collected by the Rotary Club from its members can be considered as a supply of goods or services under GST. Issue-wise Detailed Analysis: 1. Nature of Amount Collected by Rotary Club: The applicant, Rotary Club of Mumbai Western Elite, collects fees from its members to cover expenses such as meeting costs, communication, RI per capita dues, subscription fees to the Rotarian or Rotary regional magazine, district per capita assessment, etc. These funds are pooled into a single bank account. The club argues that these transactions are not in furtherance of business and do not involve the supply of goods or services. 2. Definition of Supply under GST: As per Section 7 of the CGST Act, the term "supply" includes all forms of supply of goods or services or both, such as sale, transfer, barter, exchange, license, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. The applicant contends that their activities do not fit this definition as they are not in furtherance of business and do not provide any facilities or benefits to members. 3. Definition of Business under GST: The term "business" under Section 2(17) of the CGST Act includes any trade, commerce, manufacture, profession, vocation, adventure, wager, or any other similar activity, whether or not it is for pecuniary benefit. The applicant argues that their activities are purely for social causes and do not constitute business activities. 4. Principle of Mutuality: The applicant claims that under the principle of mutuality, the club and its members are the same entity, and thus, transactions between them cannot be considered as supplies. They cite various judicial precedents supporting this view, including the Supreme Court's decision in Commissioner of Income-tax v. Bankipur Club Ltd., which emphasized the identity between contributors and participators in a mutual association. 5. Previous Rulings and Judicial Precedents: The applicant references previous rulings, such as the Maharashtra AAR's decision in the case of Lions Club of Poona Kothrud, which held that membership fees collected for administrative purposes are not subject to GST. They argue that their case is similar and should be treated likewise. 6. Use of Collected Funds: The applicant's receipts include annual membership fees, entrance fees, contributions from members, and bank interest. These funds are used for meeting and communication expenses, RI dues, subscription fees, district dues, and other administrative costs. They assert that any surplus is used for charitable activities, not for providing services or goods to members. 7. Jurisdictional Officer's Position: The jurisdictional officer did not make any submissions in this case. 8. Final Hearing and Observations: During the hearing, the applicant reiterated their position and referenced the Lions Club of Poona Kothrud case. The authority noted that similar cases of Rotary Club of Queens Necklace and Rotary Club of Nariman Point had been decided, holding that membership fees are liable to GST. The authority observed that the applicant's funds are used for various expenses, not just administrative ones. 9. Conclusion and Order: The authority concluded that the amount collected by the Rotary Club from its members constitutes a supply of goods/services and is liable to GST. The decision was based on the fact that the collected funds are used for more than just administrative expenses, aligning with previous rulings that similar transactions are taxable under GST. Order: The transaction by the applicant to its members is considered a supply of goods/services and is liable to GST.
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