No GST on Rotary Club Membership and Admission Fees: AAAR [Read Order]

The Maharashtra Appellate Authority for Advance Ruling (AAAR) ruled that no Goods and Services Tax (GST) is payable on membership subscription and admission fees collected by Rotary Club of Mumbai Queens Necklace, as such collections are not considered a “supply of services” under the CGST Act, 2017.

The applicant, Rotary Club of Mumbai Queens Necklace, a non-profit unincorporated association affiliated with Rotary International, submitted that the fees collected from members are purely meant to cover administrative expenses like meeting arrangements, stationery, and communication. The club explained that it does not offer any facilities or benefits in return, nor does it operate with a profit motive.

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The applicant’s counsel argued that there is no supply involved, as per Section 7(1) of the CGST Act, since the principle of mutuality applies to members and the club is not a distinct person. They argued that the relationship lacks the necessary consideration and supplier-recipient distinction required to constitute a taxable supply under GST.

The bench comprising Sungita Sharma and Shri Rajiv Jalota observed that the amounts collected were entirely used for internal administrative purposes, without conferring any individual benefits or services upon members. They observed that the club’s objectives, such as promoting peace, education, and sanitation, were social in nature and not in furtherance of business.

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The AAAR further referred to the Supreme Court judgments in Calcutta Club Ltd. and Ranchi Club Ltd., which upheld the mutuality principle and ruled that unincorporated member associations are not distinct from their members for taxation purposes.

The AAAR ruled that since the Rotary Club is not engaged in any business activity as defined under Section 2(17) of the CGST Act, the membership and admission fees collected cannot be treated as consideration for any supply. Therefore, these amounts do not attract GST.

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In light of this, the tribunal also clarified that the question of claiming Input Tax Credit (ITC) on banquet and catering services used for member meetings does not arise, as there is no underlying taxable supply.

To Read the full text of the Order CLICK HERE

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