SERVICE TAX ON RELIGIOUS / CHARITABLE ACTIVITIES

[Dr. Sanjiv Agarwal]

Services by a Person by way of (a) Renting of Precincts of a Religious Place meant for General  Public; or Conduct of any Religious Ceremony are exempt under Notification No. 25/2012-ST dated 20.06.2012 vide Entry No. 5.

Accordingly, services provided by a person in relation to religious ceremony by way of following shall be exempt from service tax—

(a) renting of precincts of a religious place meant for general public, or

(b) conduct of any religious ceremony

Religious place is a place which is primarily meant for conduct of prayers or worship pertaining to a religion. Renting has been defined in section 65B(41).

‘Precincts’ means an area within the walls or perceived boundaries of a particular building or place; an enclosed or clearly defined area of ground around a cathedral, church, temple, college etc.

Exemption is available only if the place is meant for general public. General public is also defined in the mega notification 25/2012-ST as the body of people at large sufficiently defined by some common quality of public or impersonal nature.

Conduct of religious ceremonies is exempt under Sr. no. 4 of mega exemption. Religious ceremonies are life-cycle rituals including special religious poojas conducted in terms of religious texts by a person so authorized by such religious texts. Occasions like birth, marriage, and death involve elaborate religious ceremonies.

Renting of precinct of a religious place as well as conduct of any religious ceremony, both shall be exempt. For example, if a marriage is performed in precincts of a church by renting of that place, it would be exempt. In certain decided cases, tribunals have held that marriage is a religious function.

While services provided by the charitable trusts are not listed in the negative list, mega exemption notification exempts charitable activities as defined therein if provided by any entity registered under section 12AA of Income Tax Act, 1961. Charitable trusts could be registered or unregistered organization. taxmanagementindia.com

Following services are covered under negative list –

a) Pre-school education, education as a part of curriculum for obtaining a recognized qualification and approved vocational educational course (66D-l)

b) Funeral, burial, crematorium or mortuary services (66D –q)

Notification No. 25/2012-ST dated 20.06.2012 contains following exemptions which may or may not be provided by unregistered charitable organizations –

a) veterinary clinic (clause 3)

b) renting of precincts of a religious place meant for general public or conduct of religious ceremony (clause 5)

c) training or coaching in recreational activities in arts, culture or sports (clause 8)

d) services to or by an educational institution in respect of exempt education services by way of auxiliary educational service or renting of immovable property (clause 9)

e) services provided to a recognized sports body by another recognized sports body (clause 10)

f) renting of hotel, inn, guest hose etc. meant for residential or lodging purposes with declared tariff below Rs. 1000 per day (clause 18)

g) serving of food etc. in a mess etc. (clause 19)

h) services provided to government authority in relation to functions carried out by municipality for water supply, public health, sanitation etc. (clause 25)

i) public libraries (clause 35)

j) public conveniences (clause 38)

It may be noted that charitable trusts and unregistered trusts do not enjoy blanket exemption towards the services received by them. Similarly, wherever reverse charge mechanism is applicable, there is no specific relief to charitable trusts and unregistered organizations. Whether trusts is a business entity or not can always be an issue of litigation if the department takes a different view.

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