2019 (10) TMI 1137 - AAR - GST

Exemption from GST - Charitable Activities or not - activities conducted by The Children of the World (India) Trust - receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust - benefit of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended - HELD THAT - On careful consideration of the definitions of business , supply and consideration contained in the CGST/SGST Act, we are of the opinion that the applicant, alongwith providing for advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children, is also providing a service of facilitating adoption and receiving consideration in the form of adoption fees for such facilitation services rendered by them. Therefore, their activities are covered within the scope of CGST/SGST Act. Whether the activities are covered under Exemption Notification 12/2017? - HELD THAT - The applicant is a Specialized Adoption Agency as defined under the relevant laws and they have established a shelter, namely, Vishwa Balak Kendra , in their own building and provide shelter, food, clothing, healthcare, foster care and basic education to abandoned, orphaned or homeless children below 6 years of age till the time of adoption. Further, their activities which are in the nature of Charitable Activities , also consists of advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children. Such activities are clearly covered under Sr. No. 1 of Notification No.12/2017-CT. (Rate) dated 28.06.2017 as amended from time to time and the applicant being an entity registered under Section 12AA of the IT Act, such activities carried out by the applicant are exempted by the said notification. Whether the receipt of the Adoption Fees paid to them by the Adopting parents, under Regulation 46 of the Adoption Regulations, 2017 is exempted under the Notification No-12/2017? - HELD THAT - The applicant is a Charitable Trust registered as a Specialized Adoption Agency and is an institution recognized under Section 65 of the said Act, for housing orphans abandoned and surrendered children placed there by order of the Committee for the purpose of adoption. Every aspect of their activity is controlled and processed by CARA. The applicant does not and cannot take any remuneration, donation or any other amount other than the Adoptions fees paid to them. The Adoption Fees as on the date is affixed amount of ₹ 40,000/- for Intra Country and US 5,000/-, in case of Inter-Country Adoption. The activities, including the activity of facilitating the adoption of the children by the Adoptive parents, are in the nature of Charitable Activities , which also consists of advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children. Such activities are clearly covered under Sr. No. 1 of Notification No. 12/2017- C.T. (Rate) dated 28.06.2017 and are exempted by the said notification - Therefore the receipt of the Adoption Fees by the applicant from the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax.

Summary

Issues Involved:
1. Whether the activities conducted by The Children of the World (India) Trust are "Charitable Activities" exempted under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended.
2. Whether the receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax.

Issue-wise Detailed Analysis:

1. Charitable Activities Exemption:
The applicant, The Children of the World (India) Trust, is a non-political Charitable Trust established under an Indenture of Trust dated 29.03.1982. The Trust is registered under Section 12AA of the Income Tax Act, 1961, and operates a shelter named "Vishwa Balak Kendra" providing care for abandoned, orphaned, or homeless children. The Trust is recognized as a Specialized Adoption Agency (SAA) under Section 41 of the Juvenile Justice (Care and Protection of Children) Act, 2015 (JJ Act) and the Juvenile Justice (Care and Protection of Children) Model Rules, 2016 (JJ Rules). The Trust's activities include providing shelter, food, clothing, healthcare, foster care, and basic education to children until they are adopted. These activities are strictly regulated by the Government through the Central Adoption Resource Agency (CARA).

The applicant argued that their activities are charitable in nature, as they provide advancement of educational programmes and skill development for abandoned, orphaned, or homeless children, which falls under the definition of "charitable activities" as per Notification No. 12/2017-Central Tax (Rate). The Authority for Advance Ruling (AAR) observed that the applicant's activities align with the definition of charitable activities under the said notification and are thus exempt from GST.

2. Exemption of Adoption Fees from GST:
The applicant receives adoption fees from prospective adoptive parents as prescribed under Regulation 46 of the Adoption Regulations, 2017. The fees are INR 40,000 for intra-country adoption and USD 5,000 for inter-country adoption. The applicant argued that these fees are not consideration for any services rendered but are partial reimbursements of expenses incurred for the care and protection of children.

The AAR examined whether the receipt of adoption fees constitutes a taxable supply under GST. It was determined that the applicant is providing a service of facilitating adoption and receiving consideration in the form of adoption fees. However, since the applicant's activities are charitable and include the advancement of educational programmes and skill development for abandoned, orphaned, or homeless children, they fall under the exemption provided in Notification No. 12/2017-Central Tax (Rate).

Conclusion:
The AAR concluded that the activities conducted by The Children of the World (India) Trust are "Charitable Activities" exempted under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended. Consequently, the receipt of the adoption fees paid under Regulation 46 of the Adoption Regulations, 2017 by the prospective adoptive parents to the Trust is also exempted from the levy of Goods and Services Tax.