In re Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra (GST AAAR Maharashtra)
Appellant has contended that it is a public charitable trust with the main object of advancement of religious and spiritual teaching and is not engaged in any trade, commerce, manufacture, profession, vocation, wager or in other similar activities. Also, it is put forth by the appellant that as the main object cannot be considered as business, the ancillary or incidental object also cannot be considered as business. The incidental activity as per the appellant is that it sells various spiritual products such as books, audio CDs, DVDs, statutes, calendars etc. which are for the advancement of the religious objectives of the Trust. The books are based on the teachings of their Gurudev and the DVDs and CDs contain the religious pravachan, satsang, spiritual songs and bhajan for those who could not be personally present at the event.
Held by AAAR
Definition of ‘business’ under the CGST Act is wide enough to include trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activities. The term ‘trade’ is a comprehensive term which covers the activity of buying, selling or exchanging goods or services. The terms ‘trade and commerce’ by themselves mean the buying or selling goods or services between people. The charitable trust may be formed with the fundamental objectives of carrying out spiritual activity and salvation. But it also, at the same time, sells goods and services under the auspices of the trust. The trust sells various goods and services to the people desiring to buy them and such an activity by itself forms a part of the objective of the trust. Under the heading – ‘OTHER OBJECTIVES OF THE TRUST and the heading “ACTIVITY OF SPREADING THE KNOWLEDGE’ the trust has printing and publishing as one of the objectives of the trust. In the various objectives of the trust listed it is also seen that the trust can dispose its property, buy and sell securities, sell the trust property by public auction or let it out on lease etc. Therefore, we see from the above objectives of the trust that though it is public charitable religious trust by name, activities of trade and commerce also form a major part of the objectives of the trust. We do not agree with the contention of the appellant that there is main activity and incidental activity in the said case. The main activity or object of the trust includes trade and commerce and as the definition of ‘business’ under the CGST Act includes the words ‘trade and commerce’ it can be said that the appellant is engaged in supply of goods and services and is therefore liable to get itself registered.
Thus, it is seen that certain services supplied by charitable trust are exempt from GST. A CBIC flier on ‘GST on Charitable and Religious Trust’ explains the scope of charitable activities which are exempted from levy of GST. It is clarified in the said flier that services of transportation of passengers, granting of advertisement rights, publication of the trust admission to event, all will be leviable to GST. There are also other notifications under CGST Act which provide specific exemption to certain services by charitable trusts. Entry No.10 of the Notification No.9/2017, dt. 28.06.2017 under IGST Act, exempts the services received by charitable trust registered u/s.12AA of the IT Act, 1961, from the provider of services located outside India and the trust is not liable to pay GST on import of such services under Reverse Charge Mechanism. However, the exemption is not extended to OIDAR services received by charitable trust. There is also a specific exemption on services provided by charitable institution registered u/s.12AA of the IT Act, 1961, by way of advancement of religion, spirituality or yoga. Any fees or consideration charged from the participant for participating in religious program or Yoga meant for advancement of religion, spirituality or yoga is exempted.
Further there is entry No.15 of Notification No.12/2017 dt. 28.06.2017, where no GST is applicable on activities of public library including those run by charitable or religious trust.
What can be seen from the above notifications is that specific exemption from GST is given to charitable institutions registered u/s.12AA of the IT Act, 1961. It can be gathered from the above that the intention of the legislature is to tax all the activities of supply goods and services by charitable trust except those specifically exempted. This is with the background that charitable institutions qua their activities of charity do not lend themselves to any specific concession or exemption from the definition of ‘supply’ or ‘business’ or ‘taxable person’. The very fact that certain services have been carved out and given out a special treatment makes it clear that all trade and commerce transaction of selling books, statutes, CDs and DVDs etc. done commercially for consideration come within the broad ambit of ‘business’ under the CGST Act.
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