AAR : Supply of Spiritual goods in Satsang organised by charitable trust constitutes ‘business’, liable to GST

Categories: Advance Ruling
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Facts: Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra is a religious charitable trust registered under Section 12AA of the Income Tax Act, 1961 carrying out religious and charitable activities in the field of spreading the knowledge of Jain Dharam and advancement of teachings of Param krupaludev Shrimad Rajchandra and spreading the knowledge of Jain Religion entrusted by Shri Mahavir Swami and other Tirthankars. The Trust holds various Satsangs and Shibirs for spreading the knowledge of the Jain Dharam and carries out the activities for helping people to understand the Jain Dharm and its Philosophy by publications of books Audio’s, CD’s, DVD’s and other materials for students and public in general and to set up organizations for helping people. The ancillary object also includes, protecting birds and animals from being killed in slaughter houses. The trust runs hospitals for giving medical help to people in general.

W.e.f July 01, 2017, the GST was brought into force and the existing registered dealers under the erstwhile MVAT Act, 2002 were migrated to GST. The Commissioner of Sales Tax, Maharashtra issued a Circular No. 357 of 2016 dated 12.11.2016 mandatorily requiring the existing registered dealers under the provisions of MVAT Act,2002 to enroll themselves for GSTIN. Thus, the applicant was also migrated to the GST and Registration Certificate was issued to applicant on 22-09-2018 in Form GST REG_06. Though the applicant has been registered under GST, the applicant has not filed any returns since the applicant is not engaged in any business transactions amounting to supply liable to GST.

Issue Involved: The following are the question for which the applicant had sought for advance ruling:

1) Whether the applicant which is a charitable trust with the main object of advancement of religion, spirituality or yoga can be said to be in business so as to attract the provisions of CGST Act/MGST Act, 2017?

2) Whether the applicant which is a charitable trust with main object of the advancement of religion, spirituality or yoga is liable to registration under the provisions of CGST Act/MGST Act, 2017?

3) Whether sales of spiritual products which is incidental / ancillary to main charitable object of the applicant can be said to be business of the applicant in terms of the definition in Section 2(17) of the CGST Act/MGST Act, 2017?

4) Whether the sale of spiritual products can be said to be supply under Section 7 of CGST Act, 2017 and equivalent provision of MGST Act, 2017 so as to attract GST?

Held: The Hon’ble, Maharashtra held that the applicant is registered under Section 12AA of the Income Tax Act but the activities being undertaken by the applicant in respect of services being provided by them are not covered under the definition of charitable activities. Further, we see that applicant trust generates income from sale of goods, provides for accommodation and foods in various Shibir/Satsang on payment/chargeable basis. Satsang is the only activity provided by the applicant free of cost to the participant.

As such arranging residential or non-residential Satsang /Shibir/yoga camps by accepting/charging some amount from the participants will not be covered under “charitable activities” within the meaning of definition provided at Definitions at 2 (r) of notification No. 12/2017 Central Tax (Rate) dated 28/06/2017 of the expression charitable activities and in particular advancement of religion, spirituality or yoga. Since we have come to the conclusion that the activities carried on by the applicant is in the nature of business as defined u/s 2(17) of the GST Act and further considering the GST Regulations that all services provided by the religious trusts and charitable institutions are not exempt from tax and the various case laws referred by the applicant are in different context and therefore cannot be considered and relied upon in the facts of the present case.

Citation: TS-402-AAR-2018-NT