2022 (8) TMI 972 - AAR - GST

Maintainability of Advance Ruling application - Levy of GST - donation amount - rate of GST applicable on the said donation is 18% or not - HELD THAT - Advance ruling can be sought under Section 97 only for supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Supply, as per Section 7(1), includes all forms of supply of goods or services or both, made or agreed to be made for a consideration by the applicant in the course or furtherance of business. In the instant case the applicant admittedly is not involved in supply nor intends to supply any goods or services or both to the donor and thus the first limb of the Section 7(1) is not fulfilled. Also admittedly there is no quid pro quo involved to treat the amount as consideration and there is no business relationship between the donor and the applicant and hence the receipt of donation is not towards any supply - the applicant admittedly is neither undertaking nor proposed to undertake any supply of goods or services or both to the donor in respect of the donation received and thus there is no supply in terms of Section 7(1) of the CGST Act 2017 and hence the instant application does not qualify as an application for advance ruling in terms of Section 97 read with Section 95(a) and Section 7(1) of the Act, ibid, and is liable for rejection in terms of Section 98(2) of the CGST Act 2017. The application is rejected as inadmissible, in terms of first proviso to Section 98(2) of the CGST Act 2017.

Summary

Issues:
1. Whether a donation received by a golf club is taxable under GST?
2. If taxable, what is the applicable GST rate on the donation?

Analysis:

Issue 1: Taxability of Donation under GST
The applicant, a century-old golf club, received a donation of Rs.1 Crore from a non-member without any consideration or publicity for the donor's business. The applicant contended that the donation was out of natural love and affection towards golf, not aimed at advertising or promotion, and thus not taxable under GST. The Assistant Commissioner opined that the donation could be considered a supply, as it could be for future services, and hence taxable. The applicant relied on a ruling involving a charitable trust, but the authorities found it not relevant as the applicant was not a charitable trust. The authorities noted that there was no quid pro quo or supply involved in the donation, leading to the conclusion that the donation was not towards any supply, making it not taxable under GST.

Issue 2: Applicable GST Rate
The applicant sought clarification on the applicable GST rate if the donation was taxable. However, since the authorities ruled that the donation was not taxable under GST, the question of the applicable GST rate did not arise.

The ruling authority emphasized that advance ruling can only be sought for matters related to the supply of goods or services in the course of business. As the applicant was not involved in any supply to the donor and there was no consideration or business relationship, the donation did not qualify as a supply under the CGST Act 2017. Therefore, the application was deemed inadmissible and rejected under the first proviso to Section 98(2) of the CGST Act 2017.