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TMI Blog2021 (11) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... o the definition. Further the supply of services by the applicant to destitute women who are litigating divorce or are homeless or are victim of domestic violence also are not covered under the definition of charitable activities - the applicant does not satisfy the conditions mentioned at Sr.No. 1 of Notification No. 12/2017 dated 28-06-2017 which provides exemption from tax to Services supplied by an entity registered under Section 12AA of the Income-Tax Act, 1961 (43 of 1961) by way of charitable activities and hence the supply undertaken by the applicant is not exempt on this count - Since the activities undertaken by the applicant do not conform strictly to the definition of a charitable activity, the applicant shall obtain registration under GST Act. If the activity is held to be taxable then, whether the applicant is liable to pay GST on amounts received as Donation/Grants from various entities including Central Government and State Government? - HELD THAT:- It may be noticed that there is no reference or mention of any business activity of the donor which otherwise would have got advertised. Thus where all the three conditions are satisfied namely the gift or donation is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention 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 2.1 The applicant is Charitable trust registered under Maharashtra Public Charitable Trust Act 1950 w.e.f. 15-02-1993. The Trust, Jayshankar Gramin VA Adivasi Vikas Sanstho Sangamner (hereafter referred as trust) is also registered under Societies Act vide registration number Maha/2041/92 w.e.f. 23/12/1992. The applicant is registered under section 12AA of the Income Tax Act 1961 w.e.f 08/10/2009. 2.2 The trust has it's head office at 1st floor, Madhav Parvati complex, veer savarkar Marg, Sangamner. The destitute home for children is located at Akole bypass road, Sangamner. 2.3 The trust undertakes supply of services to 50 orphans and homeless children by way of shelter, education, guidance, clothing, food and health for the Women and Child welfare. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id received from different sources by a charitable Foundation imparting free livelihood training to the poor and marginalized youth, will be treated as "consideration' received for such training and subjected to service tax under 'commercial training or coaching service'. 2. The matter has been examined. The important point here is regarding the presence. Or absence of a link between 'consideration' and taxable service. It is a settled legal position that unless the link or nexus between the amount and the taxable activity can be established, the amount cannot be subjected to service tax. 3. Donation or grant-in-aid is not specifically meant for a person receiving such training or to the specific activity, but is in general meant for the charitable cause championed by the registered Foundation. Between the provider of donation/grant and the trainee there is no relationship other than universal humanitarian interest. In such a situation, service tax is not leviable, since the donation or grant-in-aid is not linked to specific trainee or training. 2.8 Further, In the case of APITCO vs Commissioner of Service Tax, Hyderabad, the SC upheld the decision of Tribunal that assesse co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant is Charitable Trust registered under Maharashtra Charitable Trust Act, 1950. They are also registered under the Society Act and Income Tax Act, 1961 as a charitable trust. The trust is also registered under section 80 G(5) of Income Tax Act along with section 12AA of the Act. 3.2 Applicant undertakes supply of services to 50 orphans and homeless children by way of shelter, education, guidance, clothing, food and health for the Woman and Child welfare ministry of Govt. of Maharashtra. The Govt. of Maharashtra pays sum of ₹ 2000/- per month per child in form of Grants and other expenses for children are made from donations Vide letter dated 12/03/2020, applicant also informed that they are also rendering services to destitute women who are litigating divorce or homeless or the victim of domestic violence. They represent them before legal forms, they also arrange for counseling them through expert counselors. These services are being rendered to destitute women at One Stop Crises Center, Near Ladies Observation Home, Nasardi Bridge, Nashik-422001. No such service is being provided at Sangamner, Dist. Ahmednagar, as they are authorized to provide such service in Nashik Juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of the services provided by the applicant. Further, as per the details submitted the activities carried out by the appellant are specifically not covered under the exemption Notification serial no.1, Chapter 99 of notification no. 12/2017-Central Tax (Rate) dated 26-06-2017 though they are registered under section 12AA of Income-tax Act, 1961 (43 of 1961) by way of charitable activities, thus it appears that all the activities of the applicant are not covered under said notification. Thus on the basis of details submitted by the applicant it cannot be concluded that they are not liable to take registration. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 03.12.2020. Shri.Rajendra Hase, Chairman appeared, and requested for admission of the application. Jurisdictional Officer was absent. 4.2 The case was admitted and Final Hearing was held on 07.09.2021. Shri Durgesh Kalantri, C.A., appeared and made oral and written submissions. Jurisdictional Officer Shri B. Jadhav, Ahmednagar also appeared and made submissions. 4.3 The matter was heard. 05. OBSERVATIONS AND FINDINGS: 5.1 We have considered the submissions made by the Applicant as well as the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should by way of charitable activities. 5.7 The words "charitable activities" are defined in the said notification as, activities relating to: (i) public health by way of: (A) care or counseling of (I) terminally ill persons or persons with severe physical or mental disability; (II) persons afflicted with HIV or AIDS; (III) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or (B) public awareness of preventive health, family planning or prevention of HIV infection; (ii) advancement of religion, spirituality or yoga; (iii) advancement of educational programmes or skill development relating to: (A) abandoned, orphaned or homeless children; (B) physically or mentally abused and traumatized persons; (C) prisoners; or (D) persons over the age of 65 years residing in a rural area; (iv) preservation of environment including watershed, forests and wildlife 5.8 The above said notification exempts the charitable trusts available for charitable activities more specific. While the consideration from only those activities listed above is exempt from GST, while from the activities other than those mentioned above is taxable. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-Tax Act, 1961 (43 of 1961) by way of charitable activities. Since we have found that the activities undertaken by the applicant do not conform strictly to the definition of a 'charitable activity, the applicant shall obtain registration under GST Act. 5.14 The second question raised by the applicant is, If their activity is held to be taxable then, whether the applicant is liable to pay GST on amounts received as Donation/Grants from various entities including Central Government and State Government. To answer this question we discuss the present issue as under:- 5.14.1 The scope of supply is as per section 7 of the GST Act and same is as below,- 7. Scope of supply. - (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; 5.14.2 Section 7 (1) (a) refers to a supply 'made or agreed to be made for a consideration by a person in the course or furtherance of business'. Section 2 (17) of the CGST Act defines 'business' and Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplier), the service receiver (recipient) and the consideration for the service. In the instant case, if we refer to definition of "supply" (which is very much exhaustive), it covers almost all activities of the applicant. Moreover, definition of "consideration" includes grants and excludes only "subsidy". The profit motive is not important, if we make combined reading of all above definitions, including that of the "business". 5.14.4 The above provision provides that if there is supply of goods and services, made for a consideration in furtherance of business, then it is liable for GST. In present case all these ingredients are met. The receipts are from Government in the form of grants and the activities for which the grants are received are not charitable activities as discussed above. 5.14.5 Regarding applicant's query with respect to donations received, we have not found any donation receipts or details as to what sort of donations are received (even after detailed perusal of the submissions made by the applicant). However, it is necessary to refer to Circular No. 116/35/2019-GST dated 11.10.2019 issued vide F No 354/136/2019/TRU, by the Government of India, Ministry of Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) and not advertisement, GST is not leviable. 5.15.1 The third question raised by the applicant is if the applicant is liable to pay GST on the amounts received in the form of Donation / Grants from various entities including Central Government and State Government, what will be the rate at which the GST would be charged. 5.15.2 To find the rate of tax we need to classify the services supplied by the applicant. 5.15.3 The services supplied by the applicant as per its submissions includes supply of services to 50 orphans and homeless children by way of shelter, education, guidance, clothing, food and health for the Women and Child welfare. 5.15.4 The Service Accounting Code (SAC) is a system of classification framed by the Central Board of Indirect Taxes and Customs (CBIC) and these codes are used to identify services and GST Rates to compute tax liabilities. 5.15.4 SAC 9993 covers Human Health and Social Care Services. From the submissions made by the applicant, in respect of orphans and children it provides social services along with provision of accommodation. These types of services provided by the applicant are covered under SAC 999332 and this SAC includes, residential s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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