Clubs, assns, societies to levy GST on member-fee retrospectively from 2017 – The Hindu BusinessLine

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Experts say this will over-rule judgements by SC, HC and AAR

Clubs and associations will have to levy Goods and Services Tax (GST) on fees collected from members retrospectively from July 1, 2017.

Experts say this is likely to run into litigation besides creating accounting logistical issues for these institutions.

The Finance Ministry has notified January 1 as the date for implementation of the amended Section 7 of the GST law. This amendment inserted a new clause that says the expression ‘supply’ will also include activities or transactions by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. This new clause comes into effect from July 1, 2017.

What this means is that a club, an association or a society and their members will be treated as two distinct persons. Transactions between these two will be considered taxable.

Although such a provision was part of the schedule, some clubs, associations and societies were taking shelter under the principle of mutuality and not levying GST.

Their stance was bolstered by the Supreme Court ruling in favour of the assessee in the matter of Calcutta Sports Club.

The Jharkhand High Court (in the matter of Ranchi Club) and some Authorities for Advance Ruling (Bowring Institute of Bangalore, etc) gave similar directives.


According to Jay Jhaveri, Partner at Bhuta Shah & Co, the Supreme Court judgment in the Calcutta Sports Club case related to the service tax era based on the doctrine of mutuality that states that if there are no members there will be no club and vice-versa. Hence, the decision that clubs need not charge, collect and pay service tax on services rendered to members.

With the amendment having retrospective effect, “this will lead to litigations,” he said.

MS Mani, Partner with Deloitte India, said, “For all similar matters in respect of periods since July 2017, it will now be very difficult to take a plea of mutuality of interests or supply between an association and its members as these would now be treated as taxable supplies for GST purposes.”

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