2019 (1) TMI 25 - AAAR - GST

Public charitable and religious trust - scope of business - scope of supply - main object of the Appellant trust is to spread the knowledge of the Jain Dharam and advancement of teachings of Paramkrupaludev Shrimad Rajchandra - whether the activities carried out by them would fall under the definition of business as defined under the Section 2(17) of the CGST Act, 2017? - registration under the provisions of the CGST Act, 2017 and the MGST Act, 2017 - sale of spiritual products which are incidental and ancillary to main charitable object. Held that - he 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 - 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. The appellant sells goods and services for consideration and its various activities come within the ambit of definition of supply - it is already held as how the appellant can be said to be engaged in the business. Therefore, the said supply of spiritual products like books, CDs and DVDs are in the nature of supply in the course of business. Specific exemption from GST is given to charitable institutions registered u/s.12AA of the IT Act, 1961. It can be gathered 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. Ruling - The decision in Advance Ruling No. GST-ARA-41/201718/8-48 dated 14.06.2018 2018 (9) TMI 235 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA is upheld.

Summary

Issues Involved:
1. Whether the activities carried out by the appellant fall under the definition of "business" as defined under Section 2(17) of the CGST Act, 2017.
2. Whether the appellant is liable for registration under the provisions of the CGST Act, 2017 and the MGST Act, 2017.
3. Whether the sale of spiritual products incidental and ancillary to the main charitable object of the appellant can be considered as business under Section 2(17) of the CGST Act, 2017.
4. Whether the appellant's activities are exempt from GST under various notifications.

Issue-wise Detailed Analysis:

1. Definition of Business under Section 2(17) of the CGST Act, 2017:
The appellant, a public charitable and religious trust, contended that its main object is the advancement of religious and spiritual teachings, which does not constitute "business" under Section 2(17) of the CGST Act, 2017. The appellant argued that activities such as selling spiritual products at cost or lower than cost are incidental and ancillary to its main object and should not be considered business. The definition of "business" includes any trade, commerce, manufacture, profession, vocation, adventure, wager, or any similar activity, whether or not it is for pecuniary benefit. The appellant cited Supreme Court judgments to support its claim that activities for advancing charitable purposes do not amount to business.

2. Liability for Registration under CGST Act, 2017:
The appellant argued that since it is not engaged in business, it does not make taxable supplies and hence, is not liable for registration under Section 22(1) of the CGST Act, 2017. Section 22(1) mandates registration for suppliers whose aggregate turnover exceeds twenty lakh rupees. The appellant maintained that its activities do not constitute taxable supplies, and therefore, it is not required to register under the CGST Act, 2017.

3. Sale of Spiritual Products:
The appellant sells spiritual products such as books, audio CDs, DVDs, and statues, which it claims are for the advancement of religious teachings and sold at cost or less than cost. The appellant relied on the Supreme Court judgment in Commissioner of Sales Tax vs. Sai Publication Fund, where it was held that selling publications at cost price for spreading religious messages did not amount to business. The appellant also referred to CIT vs. Gujarat Maritime Board, where ancillary activities incidental to the main charitable object were considered charitable.

4. Exemption from GST:
The appellant argued that certain services provided by charitable trusts are exempt from GST under Notification No. 12/2017. This includes activities related to public health, advancement of religion, spirituality, yoga, and preservation of the environment. The appellant contended that its activities fall under these exemptions and should not be subject to GST.

Discussion and Findings:
The appellate authority concurred with the advance ruling authority that the definition of "business" under the CGST Act is broad enough to include the appellant's activities. The authority noted that the trust's objectives include trade and commerce, such as selling goods and services, which fall under the definition of business. The authority emphasized that the sale of spiritual products is a part of the trust's objectives and constitutes business. The authority also highlighted that specific exemptions are provided for certain charitable activities, but the appellant's activities do not fall under these exemptions.

Conclusion:
The appellate authority upheld the advance ruling, stating that the appellant is engaged in business as defined under Section 2(17) of the CGST Act, 2017, and is liable for registration under the CGST Act, 2017. The sale of spiritual products is considered a taxable supply, and the appellant's activities do not qualify for the exemptions provided under the GST notifications. The authority dismissed the appellant's reliance on Supreme Court judgments, noting that the context and statutory provisions under the CGST Act differ from those under the BST Act.