Puzzle of GST - KERALA IMA , THE GAME CHANGER !

 Supreme Court Notice on Union Government Petition Regarding GST on Clubs and Associations (July 25, 2025)

Background - "Kerala IMA -KERALA HIGH COURT- GOI -Supreme court "

• The Supreme Court of India, on July 25, 2025, issued notice to the Indian Medical Association (IMA) and other respondents after the Union Government petitioned against a recent Kerala High Court judgment.
• The Kerala High Court had struck down certain provisions of the Central Goods and Services Tax Act, 2017 (CGST Act), which allowed GST to be levied on goods and services supplied by clubs and associations to their members.

Key Points

• Notice Issued: The Supreme Court has not stayed the Kerala High Court judgment but has sought responses from the IMA, the party that challenged the GST provisions.
• No Immediate Recovery: The Supreme Court ordered that no GST recovery steps shall be taken against the IMA (respondent) pending the outcome of this case.
• Legal Context:
• The Kerala High Court ruled that services provided by clubs or associations to their own members cannot attract GST, invoking the “principle of mutuality.”
• The court had declared unconstitutional the provisions introduced in Section 2(17)(e) and Section 7(1)(aa) (and similar provisions in the Kerala Goods and Services Tax Act), which retrospectively deemed clubs and their members as separate entities for taxation purposes.
• Union Government's Argument: The government has challenged the High Court’s decision, contending that the amendments enabling GST on such supplies were valid and necessary.
• High Court’s Reasoning: The Kerala High Court found that artificially equating clubs/associations and their members as distinct entities, for the purposes of GST, is contrary to the constitutional scheme and the principle of mutuality recognized by law, such as the Supreme Court’s earlier Calcutta Club judgment.
• Wider Impact: This legal question affects nearly all member-based organizations and could have significant revenue implications for the government as well as compliance and tax burdens for clubs and associations.

Judicial Proceedings

• The matter is being heard by a bench including Justice PS Narasimha and Justice AS Chandurkar.
• Additional Solicitor General N. Venkataraman appeared for the Union Government, with Senior Advocate Arvind Datar representing the IMA.
• The Supreme Court will next consider the responses before deciding whether to uphold, modify, or overturn the High Court’s judgment.

This ongoing case will determine whether the levy of GST on transactions between clubs or associations and their own members is constitutionally valid. The Supreme Court’s final decision will set a significant precedent for the taxability of mutual organizations nationwide.

Our deepest appreciation goes to Team Kerala IMA for their truly steadfast and relentless battle against the imposition of GST on professional associations. This tireless advocacy has not merely been about challenging a tax; it has been a courageous stand for the very principle of fostering professional growth, ethical practice, and community service, which such associations embody.