2018 (9) TMI 235 - AAR - GST

Charitable Trust - scope of the term Business - Whether the applicant which is a charitable trust with the main object of advancement of religion, spirituality or yoga can be said to be in business so as to attract the provisions of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017? Whether the applicant which is a charitable trust with main object of the advancement of religion, spirituality or yoga is liable to registration under the provisions of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017? Whether sales of spiritual products which is incidental / ancillary to main charitable object of the applicant can be said to be business of the applicant in terms of the definition in Section 2(17) of the Central Goods and Service Tax Act 2017 and option provision Of Maharashtra Goods and Service Tax Act 2017? Whether the sale of spiritual products can be said to be supply under Section 7 of the Central General Sales Tax Act, 2017 and equivalent provision of the Maharashtra Goods and Service Tax Act, 2017 so as to attract GST? Held that - There is no doubt that applicant Trust is a person as defined u/s 2(84) of the GST Act - the applicant is engaged in Trade and Commerce by way of selling of goods and services and are very well covered under the definition of business as given under Section 2(17) of the CGST Act and in view of this, their activities are very well covered within the scope of supply as given in Section 7 of the CGST Act, 2017 and are therefore liable to tax as applicable in respect of goods supplied or services rendered. The applicant is registered under Section 12AA of the Income Tax Act but the activities being undertaken by the applicant in respect of services being provided by them are not covered under the definition of charitable activities - From the information provided by the concerned Officer/ Jurisdictional officer, we see that applicant trust generates income from sale of goods, provides for accommodation and foods in various Shibir/Satsang on payment/ chargeable basis, The Charitable Trust organize Shibir/Satsang for participant and they are not free for the participants, as the trust charge some amount from the participants in the name of accommodation or participation. Satsang is the only activity provided by the applicant free of cost to the participant. As such arranging residential or non-residential Satsang /Shibir/yoga camps by accepting/charging some amount from the participants will not be covered under charitable activities within the meaning of definition provided at Definitions at 2 (r) of notification No. 12/2017 Central Tax (Rate) dated 28/06/2017 of the expression charitable activities and in particular advancement of religion, spirituality or yoga. Ruling - The applicant is a charitable trust with the main object of advancement of religion, spirituality or yoga can be said to be in business so as to attract the provisions of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. The applicant is liable to registration under the provisions of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. The sales of spiritual products which is incidental / ancillary to main charitable object of the applicant can be said to be business of the applicant in terms of the definition in Section 2(17) of the Central Goods and Service Tax Act 2017 and option provision of Maharashtra Goods and Service Tax Act. The sale of spiritual products can be said to be supply under Section 7 of the Central General Sales Tax Act, 2017 and equivalent provision of the Maharashtra Goods and Service Tax Act, 2017 so as to attract GST.

Summary

Issues Involved:
1. Determination of whether a charitable trust engaged in the advancement of religion, spirituality, or yoga can be considered as conducting business under the GST Act.
2. Liability of the charitable trust to register under the GST Act.
3. Classification of the sale of spiritual products as a business activity under the GST Act.
4. Determination of whether the sale of spiritual products constitutes a supply under the GST Act, thereby attracting GST.

Issue-Wise Detailed Analysis:

1. Charitable Trust as Business:
The applicant, a religious charitable trust, contended that its primary objective is the advancement of religion and spirituality, not business. The trust argued that activities such as selling spiritual products are incidental to its main charitable objectives and do not constitute business as defined under Section 2(17) of the CGST Act, 2017. However, the judgment clarified that the definition of "business" under the GST Act includes any trade, commerce, or similar activity, irrespective of profit motives. The trust's activities, including the sale of spiritual products, were deemed to fall under this definition, thereby classifying the trust as engaging in business.

2. Liability to Register under GST:
The trust argued against the necessity for GST registration, asserting that it does not engage in taxable business activities. The judgment, however, noted that the trust's aggregate turnover from the sale of goods and services, including accommodation and food provided during Shibirs/Satsangs, exceeded the prescribed threshold under Section 22 of the GST Act. Consequently, the trust was held liable to register under the GST Act, provided its aggregate turnover in a financial year surpasses the specified limit.

3. Sale of Spiritual Products as Business:
The trust maintained that selling spiritual products like books, CDs, and DVDs is ancillary to its main charitable purpose and should not be classified as business. The judgment referred to the inclusive definition of "business" under Section 2(17) of the GST Act, which encompasses ancillary activities. The sale of spiritual products was determined to be incidental to the trust's primary objectives but still constituted business activities under the GST Act.

4. Sale of Spiritual Products as Supply:
The trust argued that its activities do not amount to "supply" under Section 7 of the GST Act, which defines supply as transactions made in the course or furtherance of business. The judgment concluded that the sale of spiritual products by the trust qualifies as "supply" under the GST Act, as these transactions are conducted in the course or furtherance of business. Therefore, such sales attract GST.

Conclusion:
The judgment affirmed that the charitable trust's activities, including the sale of spiritual products and provision of accommodation and food during events, constitute business under the GST Act. The trust is liable to register under the GST Act if its aggregate turnover exceeds the prescribed limit. The sale of spiritual products is considered a supply, attracting GST. The judgment was delivered collectively without separate opinions from individual judges.