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Membership fee collected by Rotary Club attracts GST as being supply of service; is liable to be paid by Club and not office bearers: Maharashtra Authority For Advance Ruling

2019-TIOL-252-AAR-GST

IN THE MAHARASHTRA AUTHORITY FOR ADVANCE RULING
GST Bhavan, 1st Floor, B-Wing, Mazgaon, Mumbai-400010

(Constituted under section 96 of the Maharashtra Goods and Service Tax Act, 2017)

NO.GST-ARA-142/2018-19/B-88

GSTIN Number, if any/User-id URD/271900000172ARV
Legal name of Applicant ROTARY CLUB OF MUMBAI NARIMAN POINT
Registered Address/Address provided while obtaining user id
Corresponding Address
C/o Aashish Chitlangia
9, Parekh Vora Chambers
66, N M Road, Fort, Mumbai – 400023
Details of application GST-ARA, Application No. 142 Dated 29.03.2019
Concerned officer Division-IX, Commissionerate Mumbai South
Nature of activity(s) (proposed/present) in respect of which advance ruling sought  
A Category Service Provision
B Description (in brief) Rotary Clubs and rotary Districts consists of association of persons, joined together to undertake social activities without any profit motive. Funds collected as fees are pooled together to be expended for meeting expenses & forwarding to international office for administrative expenses. Surplus if any is used for charitable activities.
Issue/s on which advance ruling required (i) classification of goods and/or services or both
(v) determination of the liability to pay tax on any goods or services or both
vi) Whether applicant is required to be registered under the Act
(vi) Whether any particular thing done by the applicant with respect to any goods and/or services or both amounts to or results in a supply of goods and/or services or both, within the meaning of that term
Question(s) on which advance ruling is required As reproduced in para 01 of the Proceedings below.

B Timothy, (Member) & B V Borhade, (Member)

Dated: August 13, 2019

PROCEEDINGS

(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)

GST – Applicant, a Rotary Club, seeks a ruling as to whether contributions from members in the administration account, recovered for expending the same for weekly and other meetings and other petty administrative expenses including expenses for location and light refreshments amounts to supply under the Act and whether the said “supply” would be classifiable as supply of goods or services and who would be the taxable person etc.

Held: From the definition of “consideration” it can decisively be construed that the membership fee collected by the club from its members is not only meant for meeting administrative expenses but is also towards setting high ethical standards in business and profession etc. – thus any membership fee collected from its members will definitely be understood as “consideration” as the same has been paid for supply of services – both the conditions of s.7 of the Act having been fulfilled, the same will attract GST – facts of the case are similar to that involved in M/s Rotary Club of Queens Necklace  2019-TIOL-203-AAR-GST   which was decided by the Authority – GST is liable to be paid by the applicant Club and not the office bearers: AAR

Application disposed of

The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/S. Rotary Club of Mumbai Nariman Point, the applicant, seeking an advance ruling in respect of the following questions.

1. Whether contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, within the meaning of supply?

2. If answer to question no. 1 is affirmative, whether it will be classified as supply of goods or services?

3. Whether the applicant would be a Taxable Person under the provisions of the Act?

4. If answer to question no.3 is affirmative, who shall be person responsible under GST, as office bearers keep on changing every year?

5. Whether the said collection of funds under common pool and spending back on the same said contributors, would entail ‘supply’ as defined in the law.

6. If answer to Question no.5 is affirmative, whether the same would be supply of goods or services?

At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.

ORDER

For reasons as discussed in the body of the order, the questions are answered thus –

Question 1:- Whether contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, within the meaning of supply?

Answer :- Answered in the affirmative.

Question 2:- If answer to question no. 1 is affirmative, whether it will be classified as supply of goods or services?

Answer :- It will be classified as supply of services

Question 3:- Whether the applicant would be a Taxable Person under the provisions of the Act?

Answer :- Answered in the affirmative, subject to provisions of Section 22 of the GST Act.

Question 4:- If answer to question no.3 is affirmative, who shall be person responsible under GST, as office bearers keep on changing every year?

Answer :- The applicant is liable to pay GST and not the office bearers.

Question 5:- Whether the said collection of funds under common pool and spending back on the same said contributors, would entail ‘supply’ as defined in the law.

Answer :- Answered in the affirmative.

Question 6:- If answer to Question no.5 is affirmative, whether the same would be supply of goods or services?

Answer :- It will be classified as supply of services

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