In re Ms. Children of the World India Trust (GST AAR Maharashtra)
Question :- Whether the activities conducted by The Children of the World (India) Trust are the “Charitable Activities” exempted under the Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended and consequently, the receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax.
Answer: – The activities conducted by the applicant are “Charitable Activities” which are exempted under Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended. The receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax exempted under Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s. CHILDREN OF THE WORLD INDIA TRUST, the applicant, seeking an advance ruling in respect of the following question.
Whether the activities conducted by The Children of the World (India) Trust are the “Charitable Activities” exempted under the Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended and consequently, the receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a reference is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
A. Statement of the relevant facts having a bearing on the question(s) on which the advance ruling is required.
1.1 The Children of the World (India) Trust, Bombay (hereinafter referred to as the “Applicant”) is a non-political Charitable Trust established in India pursuant to an Indenture of Trust dated 29.03.1982 (hereinafter referred to as “The Trust Deed”). Clause 3 (iii) of the Trust Deed provides about 26 (A to Z) objects/purposes of the Trust, of which, the relevant objects/purposes are reproduced below:
*3(iii) ……………….
a. To provide help, assistance and guidance for the benefit and welfare of children, women, particularly abandoned babies and infant children;
b. To set up, establish, maintain, run and operate welfare centers, houses, institutions and agencies for catering to children of all ages particularly new born infants, unmarried mother, destitute women and families;
c. To provide development aid and support to the needy children;
…………..
h. To open, establish, conduct, own, acquire, run, manage maintain, support and/or assist homes and or institutions for the destitute and/or the invalids including centers for women, widows, orphans and/or children, to arrange for the adoption of abandon children or children whose parents are unable to support them
…………
1.2 Applicant is registered under Section 12 AA of the Income Tax Act, 1961 (IT Act) as the Trust’s purposes/ objects activities are covered under the Charitable Purpose as defined vide Section 2(15) of the IT Act.
1.3 Applicant has established a “Vishwa Balak Kendra” in its own building constructed on Plot No. 9 and 10, Sector 12, Nerul, Navi Mumbai-400 706 where we provide shelter to abandoned, orphaned or homeless children. All the aspects regarding admission, registration, maintenance, nutrition, health, process of adoption (including fees on adoption) and handing over of the adopted children to the adoptive parents is strictly regulated to the minutest details by the Government of India under various provisions of The Juvenile Justice (Care and Protection of Children) Act, 2015 (hereinafter referred to as the ‘The JJ Act”) read with The Juvenile Justice ( Care and Protection of Children) Model Rules, 2016 (hereinafter referred to as “The JJ Rules’) as well as The Adoption Regulations, 2017 (hereinafter referred to as the ‘The Adoption Regulations”).
1.4. One of the avowed aims of the JJ Act could be noted in Section 1(4) of the JJ Act which states as under:
*Notwithstanding anything contained in any other law for the time being in force, the provisions of this Act shall apply to all matters concerning children in need of care and protection and children in conflict with law, including –
(i) ………………
(ii) Procedure and decisions or orders relating to rehabilitation, adoption, re-integration and restoration of children in need of care and protection”:
Section 2(14) of the JJ Act defines “Child in need of care and protection” means a child –
(i) Who is found without any home, or settled place of abode and without any ostensible means of subsistence; or
(ii) ………
(iii) ………
(iv) ………
(v) Who has parents or guardian and such parent or guardian is found to be unfit or incapacitated, by the Committee or the Board to take care for and protect the safety and well being of the child;
Or
(vi) Who does not have parents and no one is willing to take care of, or whose parents have abandoned or surrendered him; or
(vii) ………
(viii) ………
(ix) ………
(x) ………
(xi) ………
This definition encompasses the term “abandoned, orphaned, or homeless children” as mentioned in the Exemption Notification No.12/2017-C.T. (Rate) dated 28.06.2017 as amended.
1.5 The Applicant is registered as a Specialized Adoption Agency (hereinafter referred to as The SAA’) under Section 41 of the JJ Act read with Rule 21 of the JJ Rules. The copies of Certificate of Recognition bearing N0 13/7/2001 CARA dated 28.02.2012 issued by Central Adopation Resource Authority for Inter-country adoption and Certificate of Recognition bearing No. RIPA-8/2011 dated 25.05.2011 issued by Central Adoption Resource Authority for In-country adoption are submitted.
1.6 Section 2(57) of the JJ Act defines “Specialized Adoption Agency’ means an institution established by the state government or by a voluntary or non-governmental organization and recognized under Section 65 for housing orphans abandoned and surrendered children placed there by order of the Committee for the purpose of adoption.”
1.7 As such, the Applicant is a voluntary non-governmental organization recognized by the Government as “agency to implement the provisions of the JJ Act and the JJ Rules and The Adoption Regulations for housing, restoring & protecting, and facilitating adoption of the children on behalf of the Government and the society at large.
1.8 The Applicant says and submits that as an agency of the Government the Applicant has no control over the admission of a child in the SAA, nor has any control over selection of a child for adoption, nor has any control over selection of the prospective adoptive parents or their selection of any adoptive child, nor has any control over approving the adoption application. Every aspect is controlled and processed by the Government through its organ -Central Adoption Resource Agency (CARA) established by the Government under Section 68 of the JJ Act.
1.9 Under the said SAA registration, the Applicant is obliged, and duty bound to house the abandoned, orphaned or homeless children (as “The Adoptive Children”) only if approved by the CARA in the age group of 0-6 years. Presently, there are 44 children with the Applicant. Of these, 22 children are below 3 years and other 22 are in the age group of 3-6 years. Of these, 6 children are children with special needs, who require special care like physio-therapy, occupational therapy.
1.10 From the time of admission of a child till he/ she is given in adoption or transferred to other Government Organization, the Applicant provides shelter, food, clothing, foster care, maintenance, medical treatment and schooling to these Adoptive Children. The Applicant also looks after the mental, physical as well as psychological needs of these Adoptive Children for their social integration.
1.11 (i.) Children below 3 years old are provided with baby-sitting care. There are about 20 care taker lady-servants and nursing staff around 9 who look after these infants adoptive children round the clock for all the days, (ii.) Children in the age group of 2-3 years are taught fine motor skills – a medical term which denotes ability or skill in coordination of small muscles in movements – usually synchronization of hands and fingers – with the eyes. Development of fine motor skills involves clay activities, paper sticking, joining and separating links and blocks. Development of cognitive skills involves naming and identifying objects, body part recognition, identifying colours building blocks, shape sorter, etc. It’s an educational as well as a skill development for a child in that age group. Professional persons and volunteers are engaged to teach these children, (iii.) Children in the age group of 3 to 6 years are enrolled in the school. During the academic year 2018-19, 11 children were enrolled in the municipal school and 4 children in a private school. A letter bearing No. 482 dated 03.04.2019 from the Principal of the Municipal School confirming the enrolment of 11 students is submitted. These Children are also provided in-house computer training, sports facilities, library facilities, etc. The Applicant therefore, says and submits that the services provided by him to these Adoptive Children are in the nature of advancement of educational programme and skill development relating to the abandoned orphaned or homeless children.
1.12 Formerly, the adoption process in India was regulated, controlled and supervised by the Central Government under the Guidelines Governing Adoption of Children, 2015 (hereinafter referred to as ‘The Adoption Guidelines’) issued by it on 17th July, 2015. In terms of Para 47 of the said Adoption Guidelines, the Prospective Adoptive Parents were required to bear the expenses for adoption in the SAA’s Child Care Corpus (Hereinafter referred to as ‘The CCC’) up to the amount as prescribed in Schedule 13 of the said Adoption Guidelines. The Adoption expenses to be borne by the Prospective Adoptive Parents as provided in Schedule 13 were INR 40,000 in case of the intra-country adoption, and US$5,000 in case of inter-country adoption. The SAA was NOT permitted to accept any donation in cash or kind directly or indirectly, for adoption of a child from the prospective adoptive parents. Enclosed and marked as Exhibit ‘G’ is a copy of the said Adoption Guidelines 2015
1.13 On 16th January, 2017, the Government of India notified The Adoption Regulations. Regulation 2(3) defines “Adoption Fee” means the fee as prescribed by the authority to be received from the prospective adoptive parents directly, in case they are living in India and through Authorized Foreign Adoption Agency or Central Authority or the Government Department, as the case may be, in cases of inter-country adoptions;
Regulation 46(1) provides: Adoption fees – The prospective adoptive parents shall bear the expenses for adoption, as prescribed by the Authority from time to tune.
Regulation 46(2) provides: The Specialized Adoption Agency and the Authority may receive adoption fee from the prospective adoptive parents and utilize the funds in accordance with norms prescribed by the Authority from time to time.
Regulation 46(3) provides: The Specialized Adoption Agency is not permitted to accept any donation in cash or kind, directly or indirectly, from the prospective adoptive parents for adoption of a child.
1.14 On 23rd March 2017 CARA issued an Office Memorandum No. IP03/20/2016/CARA dated 23rd March 2017 (“The March Memorandum”) wherein it was notified that
“in accordance with Regulation 46(1) & (2) of the Adoption Regulations 2017 and Section 61 of the JJ Act, CARA notifies that the Adoption Fee as prescribed under Schedule 13 of the Adoption Guidelines shall continue to remain in force with effect from 16-1-2017 till the further orders.”
1.15 On 5th April, 2017, CARA issued an Office Memorandum No. IP03/20/2016/CARA dated 5th April, 2017 (“The April Memorandum”) wherein CARA has notified that
“Payment of Adoption fees (earlier known as CCC) is under revision and awaiting Govt, approval. However, the existing Fee has been continued as intimated vide our circular dated 23rd March, 2017, shall be made by the Prospective Adoptive Parents in the following instalments:
