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Services rendered by AOP/BOI to its members against subscription/membership fees are liable to GST

April 4, 2019[2019] 104 taxmann.com 87 (AAAR-WEST BENGAL)
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GST : Activities of applicant, Association of Inner Wheel Club of India, involve supply of services classifiable under SAC Heading 99959 against consideration received in form of subscription and membership fees

• The appellant, Association of Inner Wheel Club of India, affiliated to International Inner Wheel and the administrative body for all Inner Wheel Club spread in 27 Inner Wheel Districts all over India (two of which fall within West Bengal) sought a ruling on whether the activities that was undertaken by it might be termed as 'business' and 'supply of services' as defined under the West Bengal goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017.

• The Advance Ruling Authority ruled that the applicant's activities involve the supply of services classifiable under SAC Heading 99959 against consideration received in the form of subscription and membership fees. The services classifiable under SAC Heading 99836 were also supplied. The sale of souvenirs was to be considered as a supply of goods. The nature of supply for miscellaneous income as recorded in the financial accounts was to be determined by the nature of service.

• The appellant had filed an appeal against the above advance ruling with the prayer to set aside the impugned advance ruling on the grounds that the activities of the club were restricted to social welfare activities and did not grant any personal benefit or facilities to the members.

• The main activity of the club is charitable work as claimed by the appellant has no firm base to stand on.

• The applicant's membership can only be availed against payment of annual membership fees, renewable annually. Only the members are granted various facilities and/or benefits, enabling them to attend conventions/meetings for the furtherance of the objectives of the organization. Such facilities/benefits are not available to the non-members of the organisation.

• Goods and Services Tax is levied on intra-State and inter-State supply of goods and services. According to section 7, the expression '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, and includes activities specified in Schedule II to the GST Act. The definition of 'business' in section 2(17) of GST Act states that 'business' includes provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. The term 'person' as defined in section 2(84) of the GST Act includes an association of persons or a body of individuals, whether incorporated or not, in India or outside India. Further, Schedule II of GST Act enumerates activities which are to be treated as supply of goods or as supply of services. It states that supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of goods. A conjoint reading of the above provisions of the law implies that supply of services by an unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of services.

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