2026-VIL-207-AAR
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SGST Advance Ruling Authority

GST – Karnataka AAR - Exemption to Non-Profit Entity on Membership Fee - Serial No. 77A of Notification No. 12/2017-Central Tax (Rate) - The Applicant, a non-profit entity registered under Section 12AA of the Income Tax Act, 1961 and established by the State Government, implements and administers a healthcare scheme for members of co-operative societies, providing cashless treatment through empanelled hospitals against payment of an annual membership fee, with an additional fee for additional family members - Whether the Applicant is eligible for the exemption under Serial No. 77A in respect of the annual subscription collected from members - HELD - Serial No. 77A exempts services provided by an unincorporated body or a non-profit entity registered under any law, engaged in the specified activities, to its own members against a membership fee up to the prescribed limit per member per year. The Applicant is a non-profit entity registered under Section 12AA/12AB, so the first condition is satisfied. The expression social welfare is not defined in the Act or the notification and must be interpreted in its ordinary, natural and purposive sense - Implementation of a healthcare scheme for economically vulnerable sections is aligned with the constitutional objectives of Articles 38, 41 and 47, the Applicant is not engaged in any commercial or profit-oriented activity, and the membership fee is merely incidental to the administration of the scheme. A provision intended to promote public welfare must receive a broad and liberal construction, so the Applicant is engaged in the promotion of social welfare. The benefits are available only to persons enrolled as members upon payment of the fee, and no services are provided to non-members - The contribution collected is in the nature of a membership fee, and when apportioned among the covered members it does not exceed the prescribed limit per member per year. The Applicant satisfies all the conditions of Serial No. 77A, and the services provided to its members are exempt from GST, subject to continued fulfilment of the conditions – Ordered accordingly
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