The Maharashtra Appellate Authority of Advance Ruling (AAAR) has ruled that the Rotary Club is not liable to pay Goods and Service Tax (GST) on membership subscription and admission fees.
The bench of Sungita Sharma and Rajiv Jalota has observed that activities of the Appellant to be supply, then the membership fee collected by the Appellant, which is purely in the nature of a reimbursement for the meetings and administrative expendituresincurred by the Appellant to sustain and propagate their inherent programs, would be subject to the double taxation as the amount spent towards the meetings and administrative expenditures is already subjected to GST at the hands of the suppliers of these input services or goods used in the meetings, events and other administrative functions of the Appellant. Thus, doing so would clearly be against the legislature’s intention of the formulation of GST, which certainly does not embrace the idea of double taxation.
The appellant, Rotary Club of Mumbai Queens Necklace is an unincorporated association of individuals. The club is affiliated to Rotary International, a worldwide organization with [520+] districts, (35000+] clubs and [1.2million plus] members. The object of Rotary is to encourage and foster the ideal of service.
The normal functioning of the Rotary as a whole is summarized as under Rotary clubs bring together dedicated individuals to exchange ideas, build relationships, and take action. Rotary International supports Rotary clubs worldwide by coordinating global programs, campaigns, and initiatives.
The Club organizes events for the purpose of enabling members to meet and interact with each other. For such events the Club incurs various expenditures like banquet charges, catering services, etc. Club also incurs expenditure on banquet and catering services for its weekly/monthly meeting. The GST amount paid to vendors on such expenses is substantial.
The membership / subscription fees are collected from members only to cover meeting expenses, banquet expenses, catering expenses, printing and stationery expenses, etc. Collections pooled from members are not intended to accumulate any surplus fund / profit. Appellant, being a non-profit entity, aims only at furtherance of the object of Rotary. Membership / Subscription fees are only to cover up the expenses of the appellant.
The appellant filed an application before the advance ruling authority (Maharashtra) seeking a ruling on the questions as to whether the amount collected as membership subscription and admission fees from members is liable to GST as supply of services?
The AAR held that the amount collected as membership, subscription and admission fees members are liable to GST as supply of services. Input tax credit of tax paid on Banquet and catering services cannot be availed.
The appellant challenged the order passed by the AAR and contended that Advance ruling authority has erred in holding that the amount collected as membership subscription and admission fees from members is liable to GST as supply of services.
The AAAR set aside the rulings pronounced by AAR and held that the amount collected as membership subscription and admission fees from members is not liable to GST as supply of services.
Ruling Details
Applicant’s Name: Rotary Club of Mumbai Queens Necklace
Ruling Date: 06.11.2019
