Non-profit farmer welfare association cannot claim GST exemption under Notification 14/2018 for member services

The AAR Tamil Nadu ruled that a non-profit association registered for farmer welfare cannot claim GST exemption under Notification No. 14/2018. The authority determined that services provided by the association to its members constitute taxable supply under GST Act Section 7(1), as the association and its members are deemed separate persons per retrospective amendments. The association's activities fall within the scope of supply, involving consideration through membership subscriptions. However, exemption applies only to subscriptions from natural person farmers where annual membership fees do not exceed Rs. 1000.

---

---

Issues Involved:
1. Eligibility for Notification No. 14/2018 - Central Tax.
2. Applicability of the doctrine of mutuality.
3. Impact of GST introduction on the doctrine of mutuality.
4. Distinction between the applicant-association and its members.
5. Coverage of transactions under Section 7(1) of the GST Act, 2017.

Summary:

1. Eligibility for Notification No. 14/2018 - Central Tax:
The applicant, a non-profit association registered under the Tamil Nadu Societies Registration Act, 1975, sought to determine eligibility for exemption under Notification No. 14/2018 - Central Tax dated 26.07.2018. The Authority ruled that the applicant is eligible for exemption under Serial number 77A of Notification No. 12/2017 Central Tax (Rate) as amended, but only for subscription received from natural persons who are "farmers simpliciter" and where the annual aggregate subscription amount for all membership is up to Rs. 1000/-. The Authority emphasized that the exemption is strictly interpreted and only applicable to natural persons who are farmers and not to entities involved in multiple activities.

2. Applicability of the Doctrine of Mutuality:
The Authority refrained from ruling on the applicability of the doctrine of mutuality, stating that interpretation of law is not mandated to the Advance Ruling Authority under Section 97(2) of the GST Act, 2017.

3. Impact of GST Introduction on the Doctrine of Mutuality:
Similarly, the Authority did not provide a ruling on whether the introduction of GST abrogates the doctrine of mutuality, as this also falls outside the scope of their mandate under Section 97(2).

4. Distinction Between the Applicant-Association and Its Members:
The Authority did not rule on whether the applicant-association is a person distinct from its members or a related person, citing the same limitation under Section 97(2).

5. Coverage of Transactions Under Section 7(1) of the GST Act, 2017:
The Authority confirmed that transactions between the applicant-association and its members are covered under Section 7(1)(a) of the GST Act, 2017. This was further clarified by the insertion of Section 7(1)(aa) and its explanation, effective from 01st July, 2017, which states that the person and its members shall be deemed separate and their transactions shall be considered as supply.

RULING:
1. The applicant is eligible for exemption under Notification No. 14/2018 - Central Tax for subscriptions from natural persons who are farmers and where the annual aggregate subscription amount is up to Rs. 1000/-.
2. No ruling on the applicability of the doctrine of mutuality.
3. No ruling on the impact of GST introduction on the doctrine of mutuality.
4. No ruling on whether the applicant-association is distinct from its members.
5. Transactions between the applicant-association and its members are covered under Section 7(1)(a) and clarified by Section 7(1)(aa) of the GST Act, 2017.

---