Sponsored
    Follow Us:

Case Law Details

Case Name : Aroh Foundation Vs Additional Commissioner (Delhi High Court)
Appeal Number : W.P.(C) 10621/2024
Date of Judgement/Order : 19/11/2024
Related Assessment Year :
Become a Premium member to Download. If you are already a Premium member, Login here to access.
Sponsored

Aroh Foundation Vs Additional Commissioner, Adjudication, Directorate General of GST Intelligence (DGGSTI) & Others (Delhi High Court)

In the case of Aroh Foundation vs. Additional Commissioner, the Delhi High Court examined whether a charitable institution’s activities are taxable under the Central Goods and Services Tax (CGST) Act, 2017. The petitioner, a registered charity under Section 12AA of the Income Tax Act, challenged an order that assessed its income as taxable under CGST. The Court highlighted the statutory provisions of Sections 7 and 9 of the CGST Act, which define “supply” as activities conducted in the course of or furtherance of business for consideration. The Court observed that charitable institutions’ activities, prima facie, do not align with these criteria, as they are not conducted as part of a business venture.

The Court placed the impugned order in abeyance, indicating that the activities of the petitioner might not qualify as “supply” under the CGST Act. The case was adjourned for further hearings, with the next date set for January 8, 2025. This judgment underscores the distinction between charitable and business activities in tax assessments, providing interim relief to the petitioner while the matter remains under judicial review.

Prima Facie Charitable Activities Not Taxable Under CGST Act Delhi HC

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. Since the respondents are duly represented by learned counsels let a reply be filed on the writ petition within a period of four weeks from today. The petitioner shall have two weeks therefrom to file a rejoinder affidavit.

2. Prima facie and bearing in mind the fact that the respondents do not dispute the charitable character of the petitioner by virtue of its registration under Section 12AA of the Income Tax Act, 1961, we find ourselves unable to sustain the Order-in-Original which holds its income assessable to tax under the Central Goods & Services Tax Act, 2017 [“CGST Act”].

3. We bear in mind the provisions which are made in Sections 7 and 9 of the CGST Act and which read as follows:-

7. Scope of supply.—(1) For the purposes of this Act, the expression “supply” includes—

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.

Explanation.—For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;]

(b) import of services for a consideration whether or not in the course or furtherance of business; [and]

(c) the activities specified in Schedule I, made or agreed to be made without a consideration;[* * *]

[* * *]

(1-A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.]

(2) Notwithstanding anything contained in sub-section (1),—

(a) activities or transactions specified in Schedule III; or

(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

(3) Subject to the provisions of [sub-sections (1), (1-A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as—

(a) a supply of goods and not as a supply of services; or

(b) a supply of services and not as a supply of goods.

xxxx xxxx xxxx

9. Levy and collection.—(1) Subject to the provisions of sub­section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption [and un-denatured extra neutral alcohol or rectified spirit used for manufacture of alcoholic liquor, for human consumption], on the value determined under Section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.

(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

[(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.]

(5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:

Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:

Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.”

4. As is manifest from the above, a tax under the CGST Act is envisaged to be levied on all inter-state supplies of goods or services or both. This takes us back then to Section 7 which defines the expression “supply” and connects the supply of goods or services to the activities undertaken by a person in the course of or in furtherance of business. The activities undertaken by a charitable institution would, prima facie, not fall within the ambit of activities undertaken in the course of or in furtherance of business. The matter requires consideration.

5. We, accordingly, place the impugned order dated 30 April 2024 in abeyance till the next date of listing.

6. Let the matter be called again on 08.01.2025.

Sponsored

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Sponsored
Sponsored
Ads Free tax News and Updates
Sponsored
Search Post by Date
February 2025
M T W T F S S
 12
3456789
10111213141516
17181920212223
2425262728