GST Rates and Input Tax Credit for Social Clubs
The West Bengal Authority for Advance Ruling clarified GST rates for club services and the rules for reversing input tax credit.
- Ruling
- 48/WBAAR/2018-19 dated 28/03/2019
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Restaurant food is taxed under specific service accounting codes.
- Food served at social events is taxed differently than regular restaurant meals.
- Clubs must reverse input tax credit when providing both taxable and exempt supplies.
In short
The Bengal Rowing Club asked the West Bengal Authority for Advance Ruling (AAR) how to tax various services like restaurant meals, valet parking, and event hosting. They also needed to know how to calculate the input tax credit when providing a mix of taxable and exempt services. The authority provided a classification framework to help the club apply the correct GST rates and follow credit reversal rules.
What has changed
How it worked before
Clubs often struggled to determine whether their various amenities should be taxed as a single service or as individual components, leading to uncertainty in tax filings.
What has changed
The authority ruled that food services and event-related services fall under different tax categories. Crucially, it confirmed that if a club uses concessional tax rates for food, it must reverse a portion of its input tax credit. This means clubs cannot claim full credit on purchases if they are also providing exempt services.
Who this affects
Social clubs, sports clubs, and similar member-based organizations that provide both taxable services and exempt supplies.
An example
Imagine a local sports club that serves restaurant meals and also hosts wedding receptions. Under this ruling, the club would tax the restaurant meals and the wedding catering at different rates. Because some of their services might be exempt, the club must calculate and reverse a portion of the GST they paid on their own business expenses, such as kitchen equipment or maintenance.
What you should do
This ruling only applies to the Bengal Rowing Club and its specific tax office. Other clubs should use this as a guide to understand how the department views these services, but they should consult their own tax advisor to apply these rules to their specific operations.
If you do nothing
If you assume this ruling automatically applies to your club, you may miscalculate your tax liability or incorrectly claim input tax credit. A tax officer may disagree with your interpretation, leading to interest charges and penalties for underpayment. Always verify your specific tax position with a professional rather than relying on a ruling issued to another entity.
The terms explained
- Composite supply
- A set of services provided together where one is the main service and others are naturally bundled with it.
- Input tax credit
- The GST a business pays on its own purchases, which it can use to reduce the tax it owes on its sales.
- Reversal of input tax credit
- Paying back or giving up the tax credit you previously claimed because the goods or services were used for exempt activities.
The ruling in detail
Authority for Advance Ruling
The Bengal Rowing Club
48/WBAAR/2018-19 dated 28/03/2019 · West Bengal
Questions before the authority
- What is the rate of GST applicable on the services offered by the club, such as restaurant service, valet parking, music, decoration, and other services associated with organizing social gatherings?
- What is the admissible proportion of the input tax credit for services other than the supply of food?
Facts
The applicant is a non-profit company limited by guarantee that provides members with amenities including swimming, gymnasium, indoor games, and restaurant services. It also organizes social events involving the supply of food, valet parking, music, and decoration. The applicant sought clarity on the applicable GST rates for these services and the methodology for apportioning input tax credit.
Ruling
| Question | What the authority ruled |
|---|---|
| Restaurant food supply | Sl No. 7(i) or 7(iii) Depends on specific criteria in the Rate Notification |
| Food at social events | Sl No. 7(vii) Includes renting of premises |
| Other club services | Sl No. 33 Classified under SAC 9995 |
| Input tax credit | Reversal required Must treat supplies under Sl No. 7(i) as exempt |
The authority ruled that food supply from the restaurant is classifiable under SAC 9963 and taxable under Sl No. 7(i) or 7(iii) of the Rate Notification. Food supplied as part of social events at the club premises is taxable under Sl No. 7(vii). All other services are classifiable under SAC 9995 and taxable under Sl No. 33, and the applicant must apply sections 17(2) and 17(6) for the reversal of input tax credit.
Reasoning
The authority determined that the supply of food is a **composite supply** treated as a service under Schedule II of the GST Act. It relied on the Rate Notification No. 11/2017-CT to classify the services based on the nature of the supply. Regarding input tax credit, it invoked **Section 17(2) and 17(6)** of the GST Act, read with Rules 42 and 43 of the GST Rules, which mandate the reversal of credit when a taxpayer provides both taxable and exempt supplies. The ruling clarifies that supplies under Sl No. 7(i) must be treated as exempt for the purpose of calculating the reversal of input tax credit.
Provisions relied on
- Section 97(2)(b) of the GST Act
- Section 17(2) and 17(6) of the GST Act
- Schedule II of the GST Act
- Notification No. 11/2017-CT (Rate) dated 28/06/2017
- Rules 42 and 43 of the CGST Rules, 2017
For the practitioner
This ruling provides a clear classification framework for clubs providing mixed services, specifically distinguishing between restaurant services, event-based catering, and general membership services. It serves as a critical reminder for practitioners that opting for specific concessional rates on food services triggers a **mandatory reversal of input tax credit** under Section 17. It does not provide a specific numerical calculation for the credit reversal, leaving that to the applicant's compliance with the prescribed rules.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/wb_48_2018-19_the_bengal_rowing_club.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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