In re Ms. Dream Runners Foundation (GST AAR Tamilnadu)
i. Whether the conduct of marathon events by the Trust through which donations are raised for charity is an exempted service under GST?
The conduct of Marathon event by the Applicant for the participants is a not an exempt supply under CGST/TNGST Act
ii. When the Trust is approved under Sec 12AA of the Income Tax Act 1961 which means that the service of the Trust is charitable in nature, does it not automatically become a charitable activity that is exempted under GST?
Only those activities of Applicant, who is a Trust is under Sec 12AA of the Income Tax Act 1961, which fall under the definition of “charitable activities” as per Clause 2(r) of Notification 12/2017 Central Tax(Rate) dated 28th June 2017 and Notification No.II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 are exempt.
iii. As the service rendered by the Trust is a charitable activity within the definition of Clause 2(r) of Notification No. 12/2017-Central Tax (Rate), is registration under GST required?
As the Applicant is supplying taxable supply of services such as organizing marathon etc. and has aggregate turnover in a financial year exceeding twenty lakh rupees, the Applicant is required to be registered under CGST/TNGST Act.
iv. Are donations received from participants of the marathon event exempted from GST as it is money paid for conduct of a marathon event for raising funds for charity?
The money collected from the participants for conduct of the Marathon in the event organized by the Applicant and therefore is not exempted from CGST/SGST.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING TAMILNADU
Note : Any Appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
M/s. Dream Runners Foundation, C/o Khuzem Lai, Mulberry II Floor, New No.6, Old No. 14, Second Cross Street, Karpagam Gardens, Adyar, Chennai-600020 (hereinafter called as Trust or Applicant) is not registered under GST. They have stated to have engaged in conducting public charitable activities such as Health care, Rural development, Women empowerment, Education facility etc, either directly or through various public charitable institutions for the common good of the general public of and in India, irrespective of caste, religion, creed, gender and without any motive for profit. The Applicant has sought Advance ruling on the following questions:
i. Whether the conduct of marathon events by the Trust through which donations are raised for charity is an exempted service under GST?
ii. When the Trust is approved under Sec 12AA of the Income Tax Act 1961 which means that the service of the Trust is charitable in nature, does it not automatically become a charitable activity that is exempted under GST?
iii. As the service rendered by the Trust is a charitable activity within the definition of Clause 2(r) of Notification No. 12/2017-Central Tax (Rate), is registration under GST required?
iv) Are donations received from participants of the marathon event exempted from GST as it is money paid for conduct of a marathon event for raising funds for charity?
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/-each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017.
2.1 The Applicant has submitted that the principal objects of the Trust along with other requirements, are covered by a Trust Deed dated 7th June 2013 that was duly registered and notarized. The principal objects of the Trust as per the Trust Deed is to organize events like Marathon, Blood Donation Camp, Organ Donation Camp, Eye Donation Camp, Health Awareness Camp etc and utilize the funds raised from such events for Charitable Cause like funding to Non-Governmental Organizations (NGOs), Hospitals, Trusts and other Charitable Organizations. Apart from the above the Applicant also conducts camps, seminars, meetings, publicity and prevention for terminal illness like cancer, AIDS etc., and they also promote, administer, support, maintain and or grant aid to any NGO’s institutions or organizations having similar objectives like the Applicant in India. The Applicant has also stated that each of the mentioned objectives shall be independent of each other and none of the objects involve carrying of any business, trade or any activity for profit.
2.2 The Applicant has stated that the Trust was registered under Sec 12AA of the Income Tax Act, 1961 vide the application entered at DIT(E)No.2(221)/13-14/SI.No.299/13-14 dated 30.12.2013 issued by the Directorate of Income Tax (Exemptions), Chennai. Donations to the Trust are also exempted from tax under Section 80G of the Income Tax Act 1961, Vide the approval of The Office of the Director of Income Tax (Exemptions) under reference DIT (E) No 2(221)/13-14 dated 16 July 2014. In line with the stated objects, the Trust had organized and conducted every year a marathon event named Dream Runners Half Marathon since 2012. The event involved collecting donations from the participating runners and also money pooled in through corporate donations for the event. The amount so received is utilized for the conduct of the event that includes permit and approval fees, fees paid to the government authorities, expenses for the conduct of the event that includes prize money for the winners and the balance left is paid as donations to the NGOs supporting the cause or directly to the beneficiaries.
2.3 The Applicant has further stated that they conduct event always for a public cause. The cause for the last three editions was for prosthetic legs. The net proceeds of the event were, for the last three years, donated to Freedom Trust, a NGO engaged in providing prosthetic limbs to the less privileged public in Tamil Nadu apart from direct beneficiaries like Awai Home, a school for poor and orphans and Olcott Memorial School. The accounts of the Trust are duly audited and annual audited statements are filed with the concerned authorities including the filing of return with the Income Tax authorities. The details of the donations raised from past three marathon events conducted for the cause and the net amount donated from the proceeds of the event as submitted by the Applicant is tabulated as under:
(Amount Rs)
