In recent days, a number of WhatsApp forwards, social media posts and informal discussions have circulated stating that GST is not applicable on clubs and associations, particularly in transactions with their own members.
Unlike many tax‑related viral claims, this narrative is not entirely baseless — but it is only a partial reflection of the legal position.
It arises from a judgment of the Kerala High Court in the case of Indian Medical Association (IMA) v. Union of India (April 2025),
which reaffirmed the doctrine of mutuality and its application under GST.
1. Kerala High Court Ruling — IMA vs Union of India (2025)
The Kerala High Court struck down Section 7(1)(aa) and Section 2(17)(e) of the CGST Act on the ground that transactions between clubs/associations and their members do not involve two separate persons.
Without duality of identity, there is no ‘supply’, and therefore GST cannot be levied on mutuality‑based services.
This judgment is the primary source of the circulated message suggesting that clubs and associations are outside the GST net in respect of activities with members.
2. Supreme Court Foundation — Calcutta Club (2019)
The above decision is not an isolated interpretation. It is firmly rooted in the judgment of the Supreme Court in State of West Bengal v. Calcutta Club Ltd. (2019). The Supreme Court held that:
- A club and its members are not distinct persons.
- Mutuality survives even after the 46th Constitutional Amendment.
- Taxation is possible only where there are two legally separate entities.
- A person cannot transact or render services to himself.
The Kerala High Court extended this principle into the GST regime.
3. Constitutional Reasoning — The Real Basis
Article 366(29A) permits taxation of sale of goods between clubs and members under a legal fiction.
However, no such constitutional fiction exists for services.
Therefore, levy of GST on club‑member services lacks constitutional support unless the Constitution is amended.
In simple words:
GST cannot be imposed on mutuality‑based services without constitutional amendment.
4. What the Viral Message Gets Right — and What It Misses
What is correct:
✔ GST not applicable where mutuality exists between club/association and members
What is incomplete:
- Not every activity of a club is mutuality‑based
- Commercial, guest‑based and non‑member transactions may still attract GST
- The ruling has jurisdictional limits and is subject to Supreme Court review
The message is legally directional, but not comprehensive.
5. Wider Discussion Triggered (Not Yet Law)
The ruling has opened constitutional discussion around:
- GST on inter‑branch transfers (distinct person concept)
- Principal–Agent transactions under Schedule I
- ISD and internal credit flow
These are academic possibilities — not automatic exemptions as of today.
Conclusion
The correct legal understanding is:
GST is not applicable on mutuality‑based club and member services, as recognised in
Calcutta Club (Supreme Court) and reaffirmed in IMA (Kerala High Court).
This does not mean that all club transactions are exempt or GST is removed — only those
covered by mutuality principles.
Taxation in such cases would require a constitutional amendment, not merely amendment of the GST Act.
The message circulating online is therefore partly correct — but must be interpreted within its legal boundaries.