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TMI Blog2019 (10) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... a) 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? b) 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 one thousand 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-Ill: Single room, 100 sq.ft., including facilities such as water, electricity, cot, bed, pillow, bedspread, common rest rooms and toilets and no cleaning and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Terapanth Jain Sect of Jain Religion; vi. To manage, co-ordinate and co-operate in all possible ways to arrange place of stay, travel and other programmes for Acharyas of Terapanth Sect, and sadhus and Sadhvis initiated in this Sect, Shramans ad Shramanis initiated in Terapanth Sect and Mumukshu ladies and gentlemen and to provide proper arrangement for shravaks and shravikas who come for Seva and Darshan; vii. To arrange for the conduct of maryada Mahotsav of the Holy saints of Terapanth Sect of Jain Religion; viii. To assist graduate students and Researchers in pursuing their studies in presenting the principles of Jain Religion in scientific manner in the present day perspective; to kindle their interest in performing the comparative study with other philosophies; ix. To work towards giving education of fundamental principles of Jain Religion and the Philosophy of Terapanth Sect in Prakrit, Sanskrit, Ardhamagadhi, Hindi, Kannada and various languages; x. To honour those who work towards development of Jain Religion and especially the principles of Terapanth Sect; to honour persons of Terapanth Sect, who render their services for spreading and popularizing constructiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or collected for entry to the public. c. The applicant is intending to provide boarding and lodging facility to the devotees who are staying far away from the place of residence, for which the applicant is erecting temporary residential rooms consisting of the following categories and facilities: 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, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. 4.3 The applicant states that they place reliance on the decision of the Apex Court in the case of Commissioner of Sales Tax v. Sai Publication Fund [2002] 2 SCC 7 (SC) = 2002 (3) TMI 45 - SUPREME COURT wherein it was held that where the main activity is not business, then any incidental or ancillary transaction, unless established by the revenue department to be an independent business transaction, will also be considered as charitable only and not business. Further, it was also held that, where the main and dominant activity of the assessee trust in that case was to spread message of Sai Baba, then bringing out publications and sale thereof by the assessee trust to its devotees at cost price did not amount to business. 4.4 The principle laid down in the above case, the applicant argues, is squarely applicable to his case, wherein the renting of residential rooms to the devotees for a consideration is not the main object o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts services supplied by a person by way of: (a) conduct of any religious ceremony (b) renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income Tax Act or a trust or an institution registered under sub-clause (v) of clause (23C) of section 10 of the Income Tax Act or body or an authority covered under clause (23BBA) of section 10 of the said Income Tax Act. Provided that nothing contained in entry (b) of this exemption shall apply to (i) Renting of rooms where charges are one thousand rupees or more per day; (ii) Renting of premises, community halls, kalyana mandapam or open area, and the like where charges are ten thousand rupees or more per day; (iii) Renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month. 5.1 The term "religious place" as defined in clause (zy) of the said notification, means "a place which is primarily meant for conduct of prayers or worship pertaining to a meditation, or spirituality". 5.2 The applicant submits that reading of the above notification, it is understood tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above notification shows that renting of precincts of a religious place meant for general public owned by an entity registered under specified sections of the Income Tax Act subject to the consideration charged for such renting not exceeding the prescribed ceiling as given above is exempt from tax. 6.3 In the present case the place where applicant is intending to conduct meditation, spiritual activities and prayers etc., fall under the expression "religious place" as defined under Notification No. 12/2017 dated 28.06.2017 and renting of space for shops and stalls in such place at price less than ten thousand rupees per month, fall under SI.No. 13 of Notification No.12/2017 dated 28.06.2017 therefore the activity of renting space for shops where the charges per month is less than rupees ten thousand does not attract tax under GST Law. 7. Regarding question no.4 the applicant submits that section 9 of the KGST Act and CGST Act are the main charging section which levy tax on all intra-State supplies of goods or services or both and in the background of the definition of business in Section 2(17) of the GST Acts, the applicant is of the view that the activities conducted by the relig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account". (b) Sub-section (5) of section 2 of the CGST Act / KGST Act defines the term "Agent" as "a person, including a factor, broker, commission agent, arhatia, del-credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another". 9.3 Rule 33 of CGST/ KGST Rules, 2017 deals with value of supply of services in case of pure agent, which reads as under: "Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely: (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 11.1 The facts and nature of the transactions before us have been examined and we found that the applicant is a charitable trust registered under Section 12-AA of the Income Tax Act. They are engaged in carrying out religious and charitable activities. It is also pertinent to note that providing accommodation services, renting out properties and booking accommodation, supplying of food and drinks for consideration are not directly related to religious activities. 11.2 Further, the words in entry no. 1 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 state that "Services by an entity registered under Section 12AA of the Income Tax Act, 1961 (43 of 1961) by way of charitable activities" is exempt from CGST. This clearly implies these are "supplies" under the context of CGST Act and hence they are exempted from tax. 11.3 The term "charitable activities" is defined in clause (r) of Para 2 of the Notification No. 12/2017 - Central ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: "(105) "supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting on behalf of such supplier in relation to the goods or services or both supplied;" This has no condition that to be termed as a supplier, the person must supply the goods or services. (b) Section 7(1) of the CGST Act which provides for the scope of supply is an inclusive definition and hence it does not rule out other activities being termed as "supply" (c) The above activities are not excluded from the scope of supply in section 7(2) of the CGST Act. (d) Section 22(1) of the CGST Act which is related to the persons liable for registration states as under: "(1) Every supplier shall be liable to be registered under this Act in the State ...........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." This clearly emphasizes that if the person (supplier) makes a taxable supply, he shall be liable to get himself registered, if his aggregate turnover exceeds the threshold. 12. Regarding the second question relating to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial place must be meant for residential or lodging purposes. There is no doubt that the applicant is a supplier of service within the scope of section 7(1) of the CGST Act and they are providing accommodation services to the pilgrims and charging the persons on a monthly basis or daily basis for residential purposes and hence the activity of the applicant is squarely covered under this entry and hence the rates of taxes applicable on the declared tariff for the unit of accommodation per day are as under: Declared tariff per unit of accommodation per day Rate of Tax Entry in Notification Rs. 1,000-00 to Rs. 2,499-00 6% Entry 7(ii) of Notn No. 11/2017- Central Tax (Rate) dtd 28.06.2019 Rs. 2,500-00 to Rs. 7,499-00 9% Entry 7(vi) of Notn No. 11/2017- Central Tax (Rate) dtd 28.06.2019 Rs. 7500-00 or more 14% Entry 7(viii) of Notn No. 11/2017- Central Tax (Rate) dtd 28.06.2019 Accommodation services other than the above 9% Entry 7(ix) of Notn No. 11/2017- Central Tax (Rate) dtd 28.06.2019 12.3 Entry No. 14 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 states that "Services by a hotel, inn, guest house, club or campsite by whatever name called, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner whatsoever is taxable. Hence the supply of food and beverages at subsidized rates to the devotees is taxable under the GST Act. 15. Regarding the fifth question, it is seen that the applicant is providing space for registered person without consideration for supply of food and beverages to the devotees and the consideration for the food and beverages supplied by such registered person is received by him directly from the devotees. This would amount to a supply of usage rights of space without consideration and the devotees are consumers. Schedule I to the CGST Act which is related to the "activities to be treated as supply even if made without consideration" does not cover this item as long as the registered person and the applicant arc not related persons. In case the two are related persons as per definition of "related persons" as defined in Explanation to section 15 of the CGST Act, 2017, then the providing of space for registered person without consideration would be a supply liable to tax as per the provisions of the CGST Act, 2017. 16. Regarding the sixth question, it is observed that the applicant intends to book hotel rooms to the pilgrims from outside and the suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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