2018 (11) TMI 1574 - AAR - GST

GST Ruling: Inner Wheel Club Activities Classified as Business

In Re: The Association of Inner Wheel Clubs in India

In Re: The Association of Inner Wheel Clubs in India - 2019 (20) G.S.T.L. 119 (A. A. R. - GST) Issues:1. Determination of whether the activities undertaken by the Applicant can be considered as 'business' and 'supply of services' under the GST Act.Analysis:The Applicant, affiliated to International Inner Wheel, sought a ruling on the classification of their activities under the WBGST/CGST Act, 2017. The Authority noted that Advance Ruling cannot be given on the determination of 'business' under Section 97 of the GST Act. However, the question of whether the activities constitute 'supply of services' is admissible under Section 97(2)(g). The Applicant's claim that their activities are not considered 'business' is taken up for consideration. The Application was admitted as the questions raised were not pending or decided by any other authority.The Applicant detailed their involvement in social welfare work through Inner Wheel Clubs, emphasizing financial support to disadvantaged classes and fundraising activities. They argued that their activities do not fall under 'business' as they are ancillary to charitable services. Reference was made to a Supreme Court decision supporting this argument. The Applicant also contended that their activities do not fit the definition of 'supply' under Section 7(1) of the GST Act.The Authority analyzed the Applicant's Constitution, objectives, and financial transactions. It was observed that members pay annual fees for various benefits and facilities, indicating a business-like structure. The Inner Wheel Clubs provide services and benefits to members against subscriptions, enabling them to participate in global programs. Awards and financial transactions further supported the commercial nature of the activities.The Authority determined that the Applicant's activities fall under the definition of 'business' as per Section 2(17)(e) of the GST Act, involving provision of facilities or benefits for a consideration. Subscription and membership fees were considered consideration for services classified under SAC Heading 99959. Additionally, activities involving advertisements and sponsorships were deemed business transactions under Section 2(17)(b) and Section 7(1) of the GST Act.The Applicant's charitable activities were found to align with social welfare rather than strict charitable definitions. Such activities were considered an 'adventure' and could be treated as a business if consideration was charged. Transactions related to advertisements and sponsorships were classified under SAC Heading 99836. Sale of souvenirs was deemed a supply of goods. The ruling concluded that the Applicant's activities involve the supply of services and goods, subject to GST provisions.This Advance Ruling is valid unless declared void under the GST Act.