GST Caselaw

#GSTCase-69-Taxability of Services provided by Clubs to its Members-(AAR West Bengal)

#GSTCase-69-Taxability of Services provided by Club to its Members-(AAR West Bengal)

                                                                                                                                                                 CA Arpit Haldia

 Bengal Rowing Club [2019] 103 taxmann.com 451 (AAR-WEST BENGAL)

 

  1. Query:

Query 1: What is the rate of GST applicable on the services offered by the applicant club to its members, like restaurant service offered along with the supply of food, services like valet parking, music, decoration and other such services associated with organizing social gatherings etc.

 

Query 2: What is the admissible proportion of the input tax credit for services other than the supply of food.

 

  1. Facts:

The Applicant is stated to be a company limited by guarantee and registered with ROC as a non-profit making company. It is engaged in providing its members privileges and amenities of a club such as swimming facility, gymnasium, indoor games, restaurant service etc.

 

  1. Contention of the Applicant

The rates at which the Applicant charges GST on various supplies are provided in the table below.

 

Nature of the supply Percentage rate at which Tax is charged
Supply of food from the restaurant 5
Other services provided in the restaurant like booking of the personal dining area 18
Supply of food at the events organized in the club premises 5
Supply of other services being part of organizing the events in the club premises 18
Other services provided by the club  18

 

  1. Held by AAR

Query 1: Tax Rate applicable on Services supplied by the Applicant

 

Nature of Supply   SAC Code Entry No.
If applicant provides lodging facility and makes supply of food from its restaurant, along with eating facility and ambience and other amenities, whether or not the food is consumed at the restaurant or taken away 5%/18% 9963 No. 7(i) or 7(iii) of Notification No. 11/2017-Central Tax (Rate)
If applicant provides no lodging service and makes supply of food from its restaurant, along with eating facility and ambience and other amenities, whether or not the food is consumed at the restaurant or taken away 5% 9963 No. 7(i) of Notification No. 11/2017-Central Tax (Rate)
Food is supplied by way of or as part of services associated with organizing social events at club premises, together with renting of such premises 18% 9963 No. 7(vii) of Notification No. 11/2017-Central Tax (Rate)
All other services offered by applicant, being services of a membership organization, including swimming and other facilities and services that are not bundled with the supply of food and charged separately, whether or not provided at the restaurant or at any other place. 18% 9995 No. 33 of Notification No. 11/2017-Central Tax (Rate)

 

Query 2: Applicant should, apply the provisions under section 17(2) & (6) for apportionment of the input tax credit, treating supplies, if any, taxable under Sl No. 7(i) of the Rate Notification, as exempt supplies.

 

  1. Comment

The Ruling clearly lays down relevant rates to be charged by the applicant from its members for the various services offered by it.  The ruling also somewhere lays down the principal wherein services which have been specified elsewhere would be classified under the relevant SAC and not under SAC 9995 ia.e. services by membership organizations. Further, other services not elsewhere classified rendered by the applicants to its members would be taxable under SAC 9995.

 

Explanatory Notes to the Scheme of Classification of Services under Chapter Heading 9995 also provide that this group does not include: –

  1. Accommodation services provided by such organizations, except where mentioned, cf. group 99631 –
  2. Education services provided by such organizations, cf. Heading 9992 –
  3. Health and social services provided by such organizations, cf. Heading 9993
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