In re Jayshankar Gramin and Adivasi Vikas sanstha (GST AAAR Maharashtra)
On perusal of the dictionary meanings of the term subsidy, it is apparent that any money/amount granted by a government to any private person or company for undertaking any charitable activities, which are beneficial to the public, will be construed as subsidy. In the present case, the Appellant are being granted a fixed amount of money from the Government of Maharashtra under the “One stop crises Centre Scheme” for taking overall care of the destitute women who are litigating divorce, or homeless, or the victims of domestic violence. The said activities undertaken by the Appellant are clearly for the welfare of these destitute women, and thereby, serving the mankind in general. Hence, we are of the opinion that the said amount of money reimbursed by the government to the Appellant is nothing but subsidy as the entire money is being spent in the activities which are advantageous to the public.
Now, once it has been established that the subject amount reimbursed by the government to the Appellant is in the nature of subsidy, it is concluded that the said reimbursement amount cannot be construed as “consideration” in terms of its definition provided under Section 2(31) of the CGST Act, 2017. which has been reproduced hereinabove.
Further, in absence of any consideration, it is opined that the subject transactions/activities undertaken by the Appellant, wherein they are providing various assistances, such as food, shelter, legal assistances, medical assistances, etc., to the destitute women, would not be construed as supply in terms of Section 7(1)(a) of the CGST Act, 2017, which stipulates that for any transactions/activities to be considered as supply, there has to be an element of “consideration”. In absence of the same, such transactions/activities will not be considered as “supply”.
Since it has been established that the subject activities undertaken by the Appellant will not be construed as supply in terms of section 7(1 )(a) of the CGST Act, 2017, we will not proceed to examine the third moot issue as to whether the impugned activities undertaken the Appellant can be construed as “charitable activities” in terms of the clause (r) of the definition section of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 as the determination of the same will have no bearing on the applicability of GST on the impugned transactions/activities.
The appellate, set aside the Ruling passed by the MAAR vide Order No. GST-ARA97/ 2019-20/B-91 dated 10.11.2021, by holding that since the impugned activities undertaken by the Appellant are not construed as supply” in terms of section 7(I)(a) of the CGST Act. 2017, the reimbursement amount paid by the Maharashtra Government to the Appellant for undertaking the activities specified under “One stop Crises Centre Scheme” floated by the Central Government, will not be subject to the levy of GST. Thus, the Appeal filed by the Appellant stands disposed of in above terms.
Read AAR Order : GST registration not required by Trust if engaged in charitable activities
