Advance Ruling | Section 11 | Entry No. 13 | Exemption Related to Religious Activities

Exemption related to Religious Activities includes Services by a person by way of-

a) Conduct of any religious ceremony

b) Renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious

Entity registered as a charitable or religious under:- a) Section 12AA of the Income Tax Act, 1961 or;

b) A trust or an institution registered under sec 10(23C)(v); 

c) A body or an authority covered under sec 10 (23 BBA) of the income tax act, 1961

Exemption under (b) is not available in following cases:-

Renting  Exemption Not Available 
Renting of Rooms Where charges are 1,000/- or more per day
Renting ofPremises, Community halls, Kalyanmandapam or open area and the like Where charges are 10,000/- or more per day
Renting of shops or other spaces for business or commerce Where charges are 10,000/- or more per month

Advance Ruling

Name of the applicant: M/s Acharya Shree Mahashraman Chaturmas Pravas Vyavstha Samiti Trust

Advance Ruling No..: KAR/ADRG 102/2019

Dated : 10/05/2019

Authority: AAR (Karnataka)

Questions Sought by the applicant:

Whether the applicant is liable to pay tax on renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls for the purpose of religious programmers where the predominant object is not to do business but for advancement of religion?         

Whether the applicant is liable to pay tax on renting of temporary residential rooms as per the following categories, to the devotees to stay for the purpose of religious programmers where charges per room is less than one thousand per day, if answer to the question 1 is yes? 

Submission of Applicant:

1) The applicant states that they are of the view that the activities conducted by the religious trust for the purposes of advancement of religion, does not fall under the definition of business. Therefore the activities and transactions conducted by the religious trust with the predominant object of advancement of religion does not attract tax under the GST law.

2) The applicant states that they place reliance on the decision of the Apex Court in the case of Commissioner of Sales Tax v. Sai Publication Fund [2002] 2 SCC 7 (SC) wherein it was held that where the main activity is not business, then any incidental or ancillary transaction, unless established by the revenue department to be an independent business  transaction, will also be considered as charitable only and not business.

3)  The principle laid down in the above case, the applicant argues, is squarely applicable to his case, wherein the renting of residential rooms to the devotees for a consideration is not the main object of the Trust. The predominant object is advancement of religion. Renting of residential rooms is only incidental to the main object, ie, advancement of religion. Therefore the facility provided by the applicant in the form of renting residential rooms for consideration to the devotees and renting of space for shops and stalls does not attract tax under the GST law.

4) Further Applicant submits, the place where the applicant is intending to conduct meditation, spiritual activities and prayers, etc. falls under the expression “religious place” as defined under Notification No.12/2017 dated 28.06.2017 and renting of residential rooms in such place at a price less than one thousand rupees per day falls under SI.No.13 of Notification No.12/2017 dated 28.06.2017 and therefore the activity of renting residential rooms under categories of 2BHK, 1BHK, Single Rooms does not attract GST Law.

Facts and Findings- As per concerned officer :-

1) The facts and nature of the transactions before us have been examined and we found that the applicant is a charitable trust registered under Section 12-AA of the Income Tax Act. They are engaged in carrying out religious and charitable activities. It is also pertinent to note that providing accommodation services, renting out properties and booking accommodation, supplying of food and drinks for consideration are not directly related to religious activities.

2) The applicant, is verified and found that an activity to be covered under the definition of Charitable activities must be related to the advancement of religion, spirituality or yoga. The applicant is constructing buildings and giving it on rent, etc. which are not directly related to the advancement of religion, spirituality or yoga and hence the contention of the applicant that these are not in the course or furtherance of business cannot be accepted and held that these are covered within the meaning of “supplies” under section 7(1) of the CGST Act. What is not covered under the term business is the core activities propagating religious or spiritual activity and not the commercial activity of receipt and supply of goods or services or both, undertaken by a charitable trust.

Ruling

1. The applicant is liable to pay tax in renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls.

2. The applicant is liable to pay tax on renting of temporary residential rooms of all categories if the declared tariff of a unit of accommodation is Rs. 1000/- or more per day or equivalent.

Name of the applicant: M/s Sri Malai Mahadeshwara Swamy Kshethra Development authority

Advance Ruling No..: KAR/ADRG 29/2020

Dated : 28/04/2020

Authority: AAR (Karnataka)

Questions Sought by the applicant:

1. The Authority has approximately 100 shops which are given on lease through auction. Once in a year the Authority conduct public auction and the highest bidder is permitted to run the shop for a year. Whether KGST / CGST has to be collected on the same???

2. The Authority also conducts e-procurement auction for the service of tonsuring the head of the devotees. The highest bidder is given the right to collect fees for tonsuring the head. Whether KGST / CGST has to be collected on the tendered amount???

3. The Authority has 16 Cottages/ rooms with 242 rooms which are given on rent and collects “vasathi nidhi kanike” The Kanike ranges between Rs. 130 and Rs.750. Whether KGST / CGST has to be collected on the same. 6. The Authority collects seva fees and Utsava Fees ranging from Rs.50/- to Rs. 15,000-00 which are in the nature of religious activities. Whether KGST /CGST has to be collected on the same???

Submission of Applicant: Prasada items to the pilgrims in Sri Mahadeshwara Hills

1) It is pertinent to note that the applicant has been rendering various Seva services and supplies . It also rent out Male Mahadeshwara Swamy Temple at accommodation and other commercial place, either by itself or sells off the rights to provide such services and in lieu of this collects the money consideration.

2) The applicant had 4 to 5 lodges where it is providing accommodation services to the pilgrims and devotees visiting the temple and for this it is collecting money consideration where the value of such supply of service does not exceed Rs 1,000/- per day per unit of accommodation and hence the applicant Authority is not collecting any GST on the same.

Facts and Findings and Ruling

1) The applicant is charitable or religious trust under section 12-AA of the Income Tax Act and is providing shops for business and collecting rent by auctioning the same for a year. In case if the rent for such shops falls below Rs. 10,000/- per month, then such rentals are covered under the entry no. 13 of the Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 and therefore is exempted from the payment of GST on the same. In case, if the rent is more than Rs. 10,000/-per month, the same would be liable to tax at 9% CGST under SAC 9972 under entry no. 16 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017

2) Regarding the question no.2 related to auctioning of service of tonsuring the heads of devotees, the applicant is transferring the right to provide certain services for a consideration and is not itself providing the services. These are supply of services falling under SAC 9997 and are covered under the entry no 35 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and are liable to COST at the rate of 9%.

3) Regarding the accommodation services provided by the applicant to the pilgrims, which is related to the question 3, it is stated that the value of such service is less than Rs. 1000-00 per day per unit of accommodation. Even entry no. 13 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 allows exemption of the services by way of renting of precincts of a religious place meant for general public, owned and managed by an entity registered as a charitable or religious trust under section 12AA of the Income Tax Act, 1961 and the proviso to that entry states that the exemption is not applicable to renting of rooms where charges are one thousand rupees cr more per day. Hence both these exemption entries are applicable in case of the applicant if the rentals for rooms are less than Rs.1,000-00 per day.

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