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TMI Blog2019 (3) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... oss Street, Karpagam Gardens, Adyar, Chennai-600020 (hereinafter called as Trust or Applicant) is not registered under GST. They have stated to have engaged in conducting public charitable activities such as Health care, Rural development, Women empowerment, Education facility etc, either directly or through various public charitable institutions for the common good of the general public of and in India, irrespective of caste, religion, creed, gender and without any motive for profit. The Applicant has sought Advance ruling on the following questions: i. Whether the conduct of marathon events by the Trust through which donations are raised for charity is an exempted service under GST? ii. When the Trust is approved under Sec 12AA of the Income Tax Act 1961 which means that the service of the Trust is charitable in nature, does it not automatically become a charitable activity that is exempted under GST? iii. As the service rendered by the Trust is a charitable activity within the definition of Clause 2(r) of Notification No. 12/2017 -Central Tax (Rate), is registration under GST required? iv) Are donations received from participants of the marathon event exempted from GST as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nations to the NGOs supporting the cause or directly to the beneficiaries. 2.3 The Applicant has further stated that they conduct event always for a public cause. The cause for the last three editions was for prosthetic legs. The net proceeds of the event were, for the last three years, donated to Freedom Trust, a NGO engaged in providing prosthetic limbs to the less privileged public in Tamil Nadu apart from direct beneficiaries like Avvai Home, a school for poor and orphans and Olcott Memorial School. The accounts of the Trust are duly audited and annual audited statements are filed with the concerned authorities including the filing of return with the Income Tax authorities. The details of the donations raised from past three marathon events conducted for the cause and the net amount donated from the proceeds of the event as submitted by the Applicant is tabulated as under: (Amount Rs) Financial Year Total Donations received Net Amount Donated 2015-16 53,85,500 6,90,000 2016-17 53,66,250 8,98,884 2017-18 (Estimated) 63, 11,967 7,69,250 2.4 The Applicant has also submitted that under the Service Tax regime Vide Notification No. 25/2012- Service Tax dated- 20t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipants to qualify for the 80G certificate of Income Tax. They have also informed that the money is collected by the registration partner who is paid a part of the collection for use of their portal. They submitted order under Section 12AA, approval under Section 80G of Income Tax Act, Trust Deed, balance sheets, income tax returns, sample receipts given for donations to the trust, publicity brochure for the dream runners marathon, sample receipt to a participant of the marathon. The Applicant have also submitted a write up for flow of donations and funds from both individuals and corporate sponsorships for the event. 3.2. In the write-up, they have stated that they have a service partner (youtoocanrun), who is engaged to provide registration portal, data from back end for flow of and number of runners registered by gathering all the personal data of the runners. As the Applicant does not have a payment gateway of his own, the payment gateway of the registration partner is used to collect the donation contribution by the individual runners registering for the event. The individual participants log in their website and through the registration link provided by the Registration part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased for Marathon event", "event management", "Misc. expenses", "and prize money for marathon events" and only a small portion is towards "Donations paid". The Applicant has also furnished the approximate amounts of Total donations received versus net amount donated as shown in Para 2.3 above. It is seen from the publicity brochure that it is being advertised as an annual fund-raiser event of the Dream runner Foundation to support the cause of providing prosthetic legs for the under - privileged and financial aid to schools in need. Around 5000 runners participate in the event, which was originally formed by a group of motivated runners. The Dream Runners halt Marathon was ranked number 2 in the India among all races. The event is meant to bring about awareness about wellness and health. There are also various dream runners chapters in various parts of Chennai. It is seen from the sample receipt for donation given, in some cases the Applicant is directly issuing letters to participants in the Dream Runners Marathon treating it as a "donation" and stating that such donations are qualified for deduction under Section 80G of IT Act. In other cases, emails are sent to those who reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om direct beneficiaries like Avvai Home, a school for poor and orphans and Olcott Memorial School. The activity in question is the Applicant organizing a Marathon. This is advertised as Dream Runners Marathon where a large number of persons participate. Though the money collected from the participants maybe donated or used for further charitable activities, organizing marathon itself is a separate supply of service by the Applicant for the various participants, individuals or runner groups etc. 5.3 As per Section 2(31) of CGST Act, "(31) "consideration" in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of in response to, or for the inducement of; the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;" The money collected by the Applicant, from the participant in the Marathon is used for the expenses of organizing the Marathon in terms of paying the registration partner, event management charges, prize money, publicity, other organizing expenses such as T-shirts, ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 12/2017-Central Tax(Rate) dated 28th June 2017 and Notification No. II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017,. Therefore, though the Applicant is an entity registered under Section 12 AA of the Income Tax Act and conducts the Marathon events for raising funds for charitable activities, the exemption under Sl.No. 1 of these notification does not apply to the activity of organizing the marathon by the Applicant. 5.5 As per Section 22 of CGST/TNGST Act, every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees. In the instant case, the Applicant's annual turnover is more than Rs. 20 lakhs and they are providing the taxable supply of organizing marathon events. Hence, they are liable to register under CGST /TNGST Act. 6. In view of the foregoing, we rule as under: RULING i. The conduct of Marathon event by the Applicant for the participants is a not an exempt supply under CGST/TNGST Act ii. Only those activities of Applicant, who is a Trust is u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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