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TMI Blog2019 (10) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods and Services Tax At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a reference is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- A. Statement of the relevant facts having a bearing on the question(s) on which the advance ruling is required. 1.1 The Children of the World (India) Trust, Bombay (hereinafter referred to as the "Applicant") is a non-political Charitable Trust established in India pursuant to an Indenture of Trust dated 29.03.1982 (hereinafter referred to as "The Trust Deed"). Clause 3 (iii) of the Trust Deed provides about 26 (A to Z) objects/ purposes of the Trust, of which, the relevant objects/ purposes are reproduced below: *3(iii)........ a. To provide help, assistance and guidance for the benefit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found without any home, or settled place of abode and without any ostensible means of subsistence; or (ii) ............ (iii) ............ (iv) ............ (v) Who has parents or guardian and such parent or guardian is found to be unfit or incapacitated, by the Committee or the Board to take care for and protect the safety and well being of the child; Or (vi) Who does not have parents and no one is willing to take care of, or whose parents have abandoned or surrendered him; or (vii) (viii) (x) (xi) This definition encompasses the term "abandoned, orphaned, or homeless children" as mentioned in the Exemption Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 as amended. 1.5 The Applicant is registered as a Specialized Adoption Agency (hereinafter referred to as The SAA') under Section 41 of the JJ Act read with Rule 21 of the JJ Rules. The copies of Certificate of Recognition bearing No.13-7/2001 CARA dated 28.02.2012 issued by Central Adoption Resource Authority for Inter-country adoption and Certificate of Recognition Hearing No. RIPA-8/2011 dated 25.05.2011 issued by Central Adoption Resource Authority for In-country adoption are submitted. 1.6 Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls - a medical term which denotes ability or skill in coordination of small muscles in movements - usually synchronization of hands and fingers - with the eyes. Development of fine motor skills involves clay activities, paper sticking, joining and separating links and blocks. Development of cognitive skills involves naming and identifying objects, body part recognition, identifying colours building blocks, shape sorter, etc. It's an educational as well as a skill development for a child in that age group. Professional persons and volunteers are engaged to teach these children. (iii.) Children in the age group of 3 to 6 years are enrolled in the school. During the academic year 2018-19, 11 children were enrolled in the municipal school and 4 children in a private school. A letter bearing No. 482 dated 03.04.2019 from the Principal of the Municipal School confirming the enrolment of 11 students is submitted. These Children are also provided in-house computer training, sports facilities, library facilities, etc. The Applicant therefore, says and submits that the services provided by him to these Adoptive Children are in the nature of advancement of educational programme and skill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 13 of the Adoption Guidelines shall continue to remain in force with effect from 16-1-2017 till the further orders." 1.15 on 5th April, 2017, CARA issued an Office Memorandum No. IP03/20/2016/CARA dated 5th April, 2017 ("The April Memorandum") wherein CARA has notified that "Payment of Adoption fees (earlier known as CCC) is under revision and awaiting Govt. approval. However, the existing Fee has been continued as intimated vide our circular dated 23rd March, 2017, shall be made by the Prospective Adoptive Parents in the following instalments: (a) In-Country Adoption (i) At time of acceptance: Rs. 24,000/ (ii) At time of handing over the Court Order: Rs. 16,000/ Total: Rs. 40,000/ Note: The legal fee is included in the above amount and the expenditure by Specialized Adoption Agencies (SAA) on this head shall not exceed 20% of total Adoption Fees received. The ratio of payment shall also be similar i.e. Rs. 4,800/- on filing of application & Rs. 3,200 after obtaining the Court Order. (b) Inter-country Adoption (i) At time of acceptance: US$ 3000/ (ii) At time of handing over the Court Order: US$ 2000/ Total: US$5000/ Note: The legal fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Applicant is a charitable, philanthropic and social welfare activity with no business or commercial interest at all. It is also true that a Child under the JJ Act is not a 'goods' nor is any service rendered to him. POSITION UNDER THE GST ACT B.1 The Central Government has, pursuant to the powers vested under Section 11 of the CGST Act, issued a Notification No. 12/2017-Central Tax Rate dated 28.06.2017 (hereinafter referred to as 'The Exemption Notification') whereby an exemption as specified therein is granted for intra-state supply of services of services specified therein. The said Exemption Notification provides that: Services by an entity registered under section 12AA of the Income Tax Act, 1961 by way of charitable activities are exempt front whole of the GST. Section 2 (r) of the said Exemption Notification defines charitable activities means activities relating to- (i) public health by way of....... (ii) advancement of religion, spirituality or yoga (iii) advancement of educational programmes or skill development relating to, (A) abandoned, orphaned or homeless children (B).............. (C).............. (D).............. (iv) preservation of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business: (b) import of services for n consideration whether or not in the course or furtherance of business, [and] (c) The activities specified in Sch. I, made or agreed to be made without a consideration; [***] [(d)****] [(1A) 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.) B.6 The Applicant states and submits that firstly, the activity of placing a child in adoption does not qualify either as supply of goods or services and secondly, complying with the legal formalities of adoption process in terms of the provisions of Adoption Regulations, 2017 and or the JJ Act, 2015 cannot be construed as an activity in the course or furtherance of business nor is it made for any consideration; Thirdly, the adoption activity can't be said to be covered under Schedule II of the CGST Act which enumerates "Activities (or Transactions) to be treated as supply of goods or supply of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration is not required to be present for treating certain activities as supply. However, the Adoption activity is, as stated above, NOT an activity covered under said schedule I. B.11 Another key element is whether any invoice is issued by the supplier in the transaction. As stated above, the Applicant do not issue any invoice. It therefore does not qualify as "Supplier". In fact, under the JJ Act, the Applicant is prohibited to do so. The amount to be reimbursed towards Adoption Expenses by the Prospective Adoptive Parents is prescribed under Rule 46 of the JJ Rules and the Applicant has no control or discretion on deciding such amount. B.12 In order to sum up, the Applicant submits that: (a) The adoptive child is certainly not "Goods" in terms of section 2(52) of the CGST Act; (b) No taxable supply of services as defined in section 2(108) is made by the Applicant to the Adoptive Child, and or to the Government and or to Prospective Adoptive Parents. (c) The activities of the Applicant are "Charitable Activities" in terms of the GST Exemption Notification dated 12/2017. (d) No consideration is received by the Applicant. What is received is only a partial reimbursement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verned by Central Adoption and Resource Agency (CARA) as child welfare committee. 05. OBSERVATIONS AND FINDINGS: We have gone through the facts of the case, documents on record and submissions made by the applicant. The Applicant seeking ruling on whether their activities are exempted under the Entry No. 1 of the Notification 12/2017-CT dated. 28.07.2017 (as amended) and in the second part of the question the applicant queried, whether the receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the applicant Trust is exempted from the levy of Goods and Services Tax. The question, whether or not the Exemption Notification 12/2017 applies to the Applicant's activities, would be relevant only if it is considered that their activities attract GST. Hence we will discuss whether their activities come under the purview of taxability under GST. The applicant has submitted that 'Children' are neither "goods" nor is there any "service" provided by them to the adoptive parents and therefore the essential element of supply namely "in the course or furtherance of business" is missing from the chain of activities, because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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. We now take up their query as to 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. As mentioned above, 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 affix ..... X X X X Extracts X X X X X X X X Extracts X X X X
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