LEVY OF GST ON SUPPLY OF GOODS AND SERVICES BY A CHARITABLE TRUST TO DEVOTEES

[Dr. Sanjiv Agarwal]

In Indian context, there are a large number of charitable and religious trusts which provide a widespread range of social, religious, educational and charitable activities which involve spreading knowledge about religion, culture, faiths and advancement thereof. During this process, they undertake a host of activities for a consideration which may or may not be commercial in nature or yield profit end gains while doing so. For example, there could be supply of goods or services for a consideration which may inter alia include :

• Sale of books
• Sale of other literature and reading material
• Sale of audio visual media / devices
• Sale of Prasadam / food
• Accommodation services
• Canteen services
• Transportation
• Renting of immovable and movable property / goods
• Education
• Health care etc.

In the instant case, the applicant / assessee  was a religious charitable trust engaged in the field of spreading knowledge and advancement of Jain  dharma. The applicant was conducting a religious function from July, 2019 to November, 2019, at Bengaluru. The main activities that were conducted are Pravachanas, Spiritual Speeches, Dhyana, Meditation, prayer, etc. The applicant was intending to provide boarding and lodging facility to the devotees who were staying far away from the place of residence, for which the applicant was erecting temporary residential rooms. The applicant was also intending to provide food and beverages to the devotees at subsidized rates. Further, the applicant was also intending to provide space without consideration. The applicant was of the view that the activities conducted by the religious trust for the purposes of advancement of religion, does not fall under the definition of business. Therefore the activities and transactions conducted by the religious trust with the predominant object of advancement of religion does not attract tax under the GST law.

The applicant trust sought advance ruling from the Authority for Advance Ruling on the following questions:

		Whether the applicant is liable to pay tax on renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls for the purpose of religious programmers where the predominant object is not to do business but for advancement of religion?
(2)		Whether the applicant is liable to pay tax on renting of temporary residential rooms as per the following categories, to the devotees to stay for the purpose of religious programmers where charges per room is less than ₹ 1000 per day, if answer to the question 1 is yes?

(i)		Category-I: 2 BHK 430 sq.ft., including facilities such as water, electricity, cot, bed, pillow, bedspread, one AC, and having two rooms, hall, kitchen, rest room + toilet, with cooking facility and no cleaning services.
(ii)		Category-II: 1 BHK 300 sq.ft., including facilities such as water, electricity, cot, bed, pillow, bedspread, one AC and having one room, hall, kitchen, rest room + toilet, with cooking facility and no cleaning services.
(iii)		Category-III: Single room, 100 sq.ft., including facilities such as water, electricity, cot, bed, pillow, bedspread, common rest rooms and toilets and no cleaning and cooking facility services.
(iv)		Category-IV: Single room, 150 sq.ft., including facilities such as water, electricity, cot, bed, pillow, bedspread, one AC and having rest room and toilet. No cleaning and cooking facilities.
(v)		Category-V: Dormitory consisting 12 beds, including facilities such as water, electricity, two AC, bed, pillow, bedspread, common rest rooms and toilets. Charges per bed ranging from ₹ 250-00 per day.

(3)		Whether applicant is liable to pay tax on renting of space for stalls, where the predominant object is not to do business but for advancement of religion, if answer to the question 1 is yes?
(4)		Whether the applicant is liable to pay tax on supply of food and beverages at subsidized rates to the devotees, where the predominant object is not to do business but for advancement of religion?
(5)		Whether the applicant is liable to pay tax on providing space for registered person without consideration for supply of food and beverages to the devotees, where consideration is received by registered person directly from devotees?
(6)		Whether applicant is liable to pay tax for acting as intermediary for booking hotel rooms to the pilgrims from outside?

The Authority for Advance Ruling, vide Order dated 30.09.2019, ruled as follows:

The applicant is liable to pay tax in renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls.

The applicant is liable to pay tax on renting of temporary residential rooms of all categories if the declared tariff of a unit of accommodation is ₹ 1000  or more per day or equivalent.

The applicant is liable to pay tax on renting of space for stalls.

The applicant is liable to pay tax on supply of food and beverages at subsidized rates to the devotees

The applicant is liable to pay tax on providing space for registered person without consideration for supply of food and beverages to the devotees, only if the applicant and such registered person are covered under the definition of "related persons" as defined in Explanation to Section 15 of the CGST Act, 2017.

The applicant is liable to tax for acting as an intermediary for booking of hotel rooms to the pilgrims from outside, if he does not satisfy all the conditions prescribed for a pure agent (i.e the services must be procured from suppliers of accommodation service in addition to the service he supplies on his own account).

[IN RE: M/S. ACHARYA SHREE MAHASHRAMAN CHATURMAS PRAVAS VYAVASTHA SAMITI TRUST - 2019 (10) TMI 1136 - AUTHORITY FOR ADVANCE RULING, KARNATAKA]

Being aggrieved by the advance ruling, the assessee filed an appeal u/s 100 of the CGST Act, 2017 before AAAR, Karnataka on the following two aspects:

1. Renting of dormitory consisting of 12 beds where the charges per bed is ₹ 250 per day, including facilities such as water, electricity, two AC, bed, pillow, bedspread, common rest rooms and toilets.
2. Renting of 2 BHK having 430 sq.ft. where charges per room is less than ₹ 1000/- per day, including facilities such as water, electricity, cot, bed, pillow, bedspread, one AC, and having two rooms, hall, kitchen, rest-room + toilet, with cooking facility and no cleaning services.

Since there was a delay of 23 days in filing the appeal, condonation of delay was also prayed for which was granted u/s 100(2) of the CGST Act, 2017 on showing satisfactory reasons.

The grounds of appeal raised included:

1. Entry No. 13(b) of Notification No 12/2017 CT (R) dated 28-06-2017 provides exemption to renting of room where the charges are less than ₹ 1000/-per day. It is generally accepted rule and normal business transaction that room shall be provided based on each contract with each person separately and that in the case of dormitory, it is not on basis of room but on the basis of each bed separately. Generally dormitory contains more than one bed. Therefore, in dormitory, the contract for renting shall be on the basis of bed only. Hence the exemption should be understood on the basis of each bed separately and not the whole dormitory.
2. With regard to the charges collected for renting of 2BHK, Notification No 12/2017 CT (R) dt 28-06-2017 provides exemption for renting of rooms and that if the premises contain more than one room, the exemption shall be made applicable for each room separately. For the above reasons, the Appellant pleaded that the charges per bed needs to be considered in respect of renting of dormitory and charges per room needs to be considered in respect of premises containing more than one room and on that basis exemption should be granted if the said charges are less than ₹ 1000/- per bed/room.

On exemption from GST, the AAAR observed that on a conjoint reading of the clause (b) of S.No 13 and the exclusions, it is evident that the exemption under clause (b) applies to renting of rooms where the charges are less than ₹ 1000/- per day, renting of premises, community halls, kalayana Mantapsor open area, and the like where charges are less than ₹ 10,000/- per day and to renting of shops or other spaces for business or commerce where charges are less than ₹ 10,000/- per month.

In the instant case, the Appellant had erected temporary accommodations at Kumbalagodu Village, Mysore Road, KengeriHobli, Bangalore North Taluk where the religious event was conducted. The Appellant is not renting out ‘rooms’ but rather is renting out units of accommodation comprising of 2 bedrooms, hall, kitchen, restroom, toilet. The entire unit with facilities like water, electricity, cot, bed, pillow, bedspread and air-conditioner is given out on rent. The devotee is also given cooking facility in this unit. Therefore, a unit of accommodation of this kind which is termed by the Appellant as a 2BHK Category I type of accommodation cannot be considered as renting of rooms and will not be covered in the entry S.No 13 of Notification No 12/2017 CT (Rate) dated 28-06-2017 - Similarly, the renting out of beds in a dormitory is also not akin to renting of rooms and hence it will not qualify for exemption under clause 13(b) of the said Notification. The AAAR agreed with the ruling of the lower Authority and hold that the renting of the 2 BHK unit and the dormitory will be chargeable to GST as a single unit where the value of supply will be the charges for the full 2BHK unit / dormitory and not the charges for each room / bed and is liable to tax. In terms of entry S.No 7 of Notification No 11/2017 CT(Rate) dated 28-06-2017 as amended by Notification No 20/2019 CT (Rate) dated 30-09-2019.

In view of the above, the AAAR upheld the advance ruling and dismissed the appeal. [IN RE: M/S. ACHARYA SHREE MAHASHRAMAN CHATURMAS PRAVAS VYAVASTHA SAMITI TRUST - 2020 (5) TMI 387 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA ].