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No GST on Clubs & RWAs? That’s a WhatsApp Rumour.
Club, Association, RWA पर GST नहीं है, यह Whatsapp में फैली Rumour है।
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Introduction
Some mornings begin with silence.
Others begin with confusion.
Yesterday belonged to the second category.
I picked up my phone in the morning…
and instantly, a flood of notifications hit the screen —
ding… ding… ding…
as if someone had burst a WhatsApp cloud.
Every message was identical:
“No GST on Clubs–Associations–RWAs!”
“Supreme Court has cancelled everything!”
For a moment, even I stopped.
Because I’ve seen how one wrong forward can confuse an entire community.
But something felt off.
The message looked confident…
yet surprisingly empty.
❌ No party names.
❌ No judgment link.
❌ No date.
Just a message forwarded—then forwarded again.
When my team checked the details, the truth surfaced quietly.
The claim
“No GST on Clubs” was nothing more than a neatly packaged rumour
flying across WhatsApp like a bird of deception.
Once again, what was told loudly
was not the truth hiding underneath.
So let’s walk through the real story — slowly, clearly, and without the noise.
The Legal Background — Where It All Started
For many years, the government has attempted to bring Clubs and RWAs into the GST net.
But courts consistently pushed back.
Why?
Because of a simple, fundamental principle:
📌 Mutuality
A club and its members are not considered “two persons.”
They are one entity.
Like two names in the same family.
Money moving within the same entity
is not a “supply.”
This principle was reaffirmed strongly by the Supreme Court
in the Calcutta Club judgment (October 2019).
For the government, this was a setback.
So they went back to the drawing board.
Section 7(1)(aa) — The Game Changer
On 21 December 2021, the government introduced:
📌 Section 7(1)(aa)
and made it retrospective from 1 July 2017.
This changed the entire landscape.
The amendment said:
❗A club and its members are separate persons.
❗So their internal transactions are ‘supply’ and attract GST.
Imagine that.
Not only future collections…
even past collections would suddenly be taxed.
🎵 It felt like sprinkling salt on a wound and then being told to stay silent. 🎵
This sharp shift triggered confusion in every Club, Association and RWA.
Kerala High Court’s Intervention — The IMA Case
The Indian Medical Association (IMA) stepped in.
They challenged Section 7(1)(aa) before the Kerala High Court.
Their arguments were straightforward:
-
A club and its members cannot be treated as separate persons
-
Retrospective GST from 2017 is unfair
On 11 April 2025, the Kerala High Court delivered a clear, firm judgment:
✔ Mutuality stands
✔ Member contribution is NOT “supply”
✔ Section 7(1)(aa) is unconstitutional
✔ Retrospective GST is invalid
The Court also clarified:
Activities done for members, funded by members, without profit motive,
cannot be treated as “supply.”
That was the legal truth.
But What Went Viral?
Someone took the Kerala High Court judgment,
removed the words “Kerala High Court,”
added “Supreme Court” on top,
and circulated it.
Then others forwarded that version.
And soon, the entire country believed a different story.
It spread just like those fake “death news” rumours
that reach before the person even knows about them.
And this time, the rumour travelled faster than the truth.
Where Do Things Stand Today?
The government has already challenged the Kerala High Court judgment
before the Supreme Court.
✔ Case No. 18349–18350/2025
✔ Next hearing: 8 December 2025
This means:
❗ The Kerala High Court judgment is not applicable across India
❗ The GST law has not changed
❗ The Supreme Court has only stayed recovery in the IMA case
❗ The final judgment is still pending
But WhatsApp forwards left out this crucial part.
And that’s how confusion spread.
Practical Impact — What Should Clubs & RWAs Do Now?
This is the part everyone wants to know.
And the answer is simple.
1️⃣ Continue charging GST
If the Supreme Court later upholds GST,
Clubs and RWAs will be liable for tax + interest + penalty.
Recovering this from members afterward is nearly impossible.
2️⃣ Don’t expect refunds easily
GST was paid by members, not the club.
Each member would need to file a refund claim —
which rarely works in real life.
3️⃣ If retrospective GST demands arrive
This is where relief can be expected.
The Supreme Court has repeatedly expressed concern about retrospective taxation.
So the correct response is:
-
The matter is pending before the Supreme Court
-
The final judgment is awaited
-
The department should wait
A valid and strong defence.
Closing Thoughts
Truth doesn’t shout.
Rumors do.
And in GST, rumours often travel faster than the law itself.
But once you slow down and read carefully,
the difference becomes clear.
If this helped reduce confusion,
share it with someone who needs clarity today.
A single lamp of truth can guide many people through a storm of misinformation.
FAQ
Q1: What was the dispute in this case?
A: The dispute was whether member contributions collected by Clubs and RWAs should be taxed as “supply” under GST after Section 7(1)(aa), despite the principle of mutuality treating clubs and members as one entity.
Q2: How did the Kerala High Court rule?
A: The Court ruled that mutuality still applies. It held that member contributions are not supply, Section 7(1)(aa) is unconstitutional, and retrospective GST from 2017 is invalid.
Q3: Should Clubs and RWAs stop charging GST now?
A: No. The Kerala High Court decision is under challenge before the Supreme Court. If the Supreme Court later upholds GST, recovering tax from members will be nearly impossible.
Q4: Can Clubs or RWAs get refunds for GST already paid?
A: Refunds are unlikely. Members paid the GST, not the club. Each member would need to file individually, which is practically difficult.
Q5: What if retrospective GST notices are issued?
A: The taxpayer can respond that the case is pending before the Supreme Court and the final judgment is awaited. Courts have often discouraged retrospective taxation, so this is a strong defence.
Written by CA Vikash Dhanania | Reviewed by GST DOST Legal Research Team | Updated on 24/11/2025
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