Activity of Collecting Contributions, Spending towards Meeting and Administrative Expenditures only, is ‘Business’ under GST: AAR [Read Order]

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The Maharashtra Authority of Advance Ruling (AAR) ruled that the activity of collecting contributions, spending towards meeting, and administrative expenditures only, is ‘business’ under GST.

‘Rotary’ is an International organization engaged in humanitarian and charitable services and one of its member clubs is the applicant i.e. M/s. Rotary Club of Bombay Queen City. The applicant arranges meetings for its members and in order to defray its expenditure for such meetings, communications, and administration, fees are collected from members. No facilities/benefits are provided such as recreation, etc by the applicant. The applicant also sends fees to the International Institution in the USA for service activities and International administration. The applicant further sends fees to its District Clubs.

The applicant has sought the advance ruling on the issues of whether the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is ‘business’ as envisaged u/s 2(17) of the CGST Act, 2017 and 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.

The coram of members Ranjiv Magoo and T.R.Ramnani ruled that the activity of the applicant i.e. collecting contributions and spending towards meeting and administrative expenditures only, is ‘business’ as envisaged u/s 2(17) of the CGST Act, 2017.

The AAR further ruled that 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.

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