No GST is applicable on fees collected by clubs for convenience of members : AAR
Ruling by Maharashtra AAR in matter of Lions Club of Poona
Maharashtra AAR concluded that activities of club, association, society or any such body where the amount is collected to meet expenses of its member meet to perform social relevant activities are district for convenience of members and thefore no GST registration is required when the club is performing these kind of activities only.
Such amount is collected for paying meeting expenses and communications expenses, being deposited in single bank account. Such fees collected are used for social causes and to meet expenses incurred in furtherance of objectives i.e. to perform social relevant activities.
Maharashtra AAR concluded that from such fees there is no supply been made under the GST Act, and such seminars being organized for members is not for transforming members into leaders but is for members to become leaders to perform the causes of the club.
The Extract of Ruling is given below for reference:
As can be seen, 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 CST Act. The applicant club as per the facts put up before us does not render any ‘Supply’ for the purposes of the GST Act. Having observed so, we refrain from any further discussion.
We find that the Departmental officer holds a different opinion. We would want to deal with one aspect discussed by the official about seminars for Leadership Development as organized for the members. Such activities does not appear to be for transforming members into leaders generally but for the members to become leaders to perform towards the causes of the club. Thus, here too, 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.
06. In view of the extensive deliberations as held herein above, we pass an order as follows:
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)