Sports club membership fees taxable under GST but coaching in sports arts culture exempt under Entry 80

The AAR Maharashtra ruled that a sports club's entrance/admission fees, annual subscription fees, and maintenance fees are liable to GST under amended Section 7 of CGST Act, 2017, as these constitute supply to members who are distinct persons. Regarding coaching fees, the authority held that training in Football, Basketball, Athletics, Cricket, Swimming, Karate, and Dance qualifies for exemption under Entry No. 80 of Notification 12/2017-CTR as these activities fall under sports, arts, or culture. However, physical fitness training and summer coaching do not qualify for exemption as they cannot be categorized under sports, arts, or culture, making them taxable under GST.

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Issues Involved:
1. GST liability on Entrance/Admission fees, Annual Subscription fees, and Annual Maintenance fees collected from members.
2. Exemption from GST for fees collected towards training/coaching in recreational and sports activities under entry no. 80 of notification 12/2017-CTR dated 28th June, 2017.

Detailed Analysis:

Issue 1: GST Liability on Fees Collected from Members
Applicant's Contention:
- The applicant, a non-government sports organization, argues that fees collected from members (Entrance/Admission fees, Annual Subscription fees, and Annual Maintenance fees) should not be subject to GST based on the principle of mutuality. They assert that the club and its members are the same entity, and therefore, transactions between them do not constitute a supply under GST law.
- They cite various legal precedents, including the Supreme Court's decision in State of West Bengal v. Calcutta Club Ltd., which upheld the principle of mutuality, stating that services by a members' club to its members amount to services to oneself and are not taxable.

Authority's Findings:
- The definition of "supply" under Section 7 of the CGST Act was amended to include transactions between a person (other than an individual) and its members as a supply, thereby nullifying the principle of mutuality for GST purposes.
- The amendment, effective from January 1, 2022, clarifies that clubs and their members are distinct persons, and transactions between them are deemed to be supplies.
- The term "business" under Section 2(17) of the CGST Act includes activities by clubs for a subscription or other consideration, regardless of profit motive.
- Consequently, Entrance/Admission fees, Annual Subscription fees, and Annual Maintenance fees collected from members are liable to GST.

Issue 2: Exemption from GST for Training/Coaching Fees
Applicant's Contention:
- The applicant provides training/coaching in various sports and recreational activities and claims exemption from GST under entry no. 80 of notification 12/2017-CTR, which exempts services by way of training or coaching in recreational activities relating to arts or culture or sports by charitable entities registered under section 12AA of the Income-tax Act.

Authority's Findings:
- The applicant is registered under section 12AA of the Income-tax Act and provides training/coaching in sports such as Football, Basketball, Athletic, Cricket, Swimming, Karate, and Dance.
- Entry no. 80 of notification 12/2017-CTR exempts training or coaching in recreational activities related to arts or culture or sports by charitable entities.
- Training/coaching in Football, Basketball, Athletic, Cricket, Swimming, Karate, and Dance qualifies for the exemption.
- However, training in Physical fitness and general "summer coaching" does not qualify for the exemption as they do not specifically relate to arts, culture, or sports.

Order:
1. GST Liability on Fees Collected from Members:
- Entrance/Admission fees, Annual Subscription fees, and Annual Maintenance fees collected from members are liable to GST.

2. Exemption from GST for Training/Coaching Fees:
- Exemption under entry no. 80 of notification 12/2017-CTR is applicable only to training/coaching in Football, Basketball, Athletic, Cricket, Swimming, Karate, and Dance.
- Training in Physical fitness and general "summer coaching" does not qualify for the exemption and is liable to GST.

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