TMI Blog2019 (10) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be covered under the term business , not all activities of the trust can be kept out of the definition of supplies . Thus, if the person (supplier) makes a taxable supply, he shall be liable to get himself registered, if his aggregate turnover exceeds the threshold - 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. Whether the applicant is liable to pay tax on renting of temporary residential rooms as mentioned in five categories to the devotees to stay for the purpose of religious programmes where charges per room is less than ₹ 1000-00 per day? - N/N. 11/2017 - Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The plain reading of the entry 7(ii) of the above Notification reveals that the accommodation provided in commercial places meant for residential or lodging purposes having a declared tariff of a unit of accommodation of ₹ 1000-00 per day per unit or equivalent would be taxable at 6% under CGST Act. The main clauses to be considered is that the accommodation must be provided in a commercial place and such commercial place must be meant for reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umers - 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. Whether applicant is liable to pay tax for acting intermediary for booking hotel rooms to the pilgrims from outside? - HELD THAT:- It is observed that the applicant intends to book hotel rooms to the pilgrims from outside and the supply of service is by the hotel to the pilgrims and the applicant is facilitating the supply of accommodation service to the pilgrims by the hotel - 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 supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acilities. (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. c) 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? d) 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? e) 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? f) Whether applicant is liable to pay tax for acting intermediary for booking hotel rooms to the pilgrims from outside? 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that they are a religious charitable trust registered under Section 12 AA of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editing, translation, purchase and sale of literature, which echoes the thoughts of Terapanth Sect of Jain religion and which establishes high moral, spiritual and social values; xii. To collect and preserve literature, handicraft items, manuscripts, and old historical literature for preserving and enhancing the Jain religion and culture, for conducting comparative study with other religious philosophies and for research work; xiii. To work starting Department of Jainology in Universities; xiv. To organize Preksha meditation and Yoga etc., along with social and educational activities for physical, mental and emotional development of individuals; xv. To organize lectures and meetings for demonstrating the importance of philosophy of non-violence, philosophy of non-absolutism and other spiritual concepts and their relevance in the present day; to extend invitation to and provide proper hospitality to national and international scholars, writers and researchers in these events; xvi. To arrange, assist and to send shraman-shramanis, authorized people and scholars all around the world for spreading and popularizing the constructive activities like principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Charges per bed ranging from ₹ 250-00 per day. vi. Category-VI: Renting of space for stalls d. The applicant is also intending to provide food and beverages to the devotees at subsidized rates. Further the applicant is also intending to provide space without consideration to another registered person who supplies food and beverages to the devotees for consideration, which directly flows from devotees. 4. The applicant, with regard to the first question, states that Section 9 of the Karnataka Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017, is the main charging section which levies tax on all intra-State supplies of goods or services or both. The word Supply is defined under Section 7 of the Act, which reads as follows: 7. Scope of Supply - (1) For the purpose of this Act, the expression supply includes - (a) All forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; On perusal of the above provisions, the applicant is of the view that any transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancement of religion. Renting of residential rooms is only incidental to the main object, i.e. advancement of religion. Therefore the facility provided by the applicant in the form of renting residential rooms for consideration to the devotees and renting of space for shops and stalls does not attract tax under the GST law. 4.5 Further, the applicant also draws attention towards Notification No. 12/2017 dated 28.06.2017, wherein Sl.No.l, exempts the services provided by an entity under section 12AA of the Income Tax Act, 1961 by way of charitable activities. 4.6 The expression charitable activities has been defined in the notification as under: Charitable activities means activities relating to: (i) Public Health by way of: (A) Care or counselling of (I) Terminally ill person or persons with severe physical or mental disability; (II) Persons affected with HIV or AIDS; (III) Persons addicted to a dependence - Forming substance such as narcotic 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) .............. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, it is understood 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. 5.3 In the present case, the place where the applicant is intending to conduct meditation, spiritual activities and prayers, etc. falls under the expression religious place as defined under Notification No. 12/2017 dated 28.06.2017 and renting of residential rooms in such place at a price less than one thousand rupees per day falls under SI.No. 13 of Notification No. 12/2017 dated 28.06.2017 and therefore the activity of renting residential rooms under Category-I, Category-II and Category-III does not attract tax under the GST Law. 5.5 Further, the applicant submits that renting of dormitory under Category-IV at ₹ 250-00 per bed per day should also be exempt on the ground that monetary limit prescribed for exemption i.e. less than one thousand rupees should be made available for each person. 6. With regard to the question no.3, the applicant states that, without prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant is of the view that the activities conducted by the religious trust for the purpose 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. Reliance is placed on the judgements of the Hon ble Apex Court in the cases of Commissioner of Sales Tax v. Sai Publication Fund [2002] 4 SCC 7 (SC) = 2002 (3) TMI 45 - SUPREME COURT and CIT v. Gujarat Maritime Board [2007] 14 SCC 704 (SC) = 2007 (12) TMI 7 - SUPREME COURT . Hence for the reasons cited in the above relevant paragraphs, the applicant is not liable to tax for the supplies of food and beverages at subsided rates. 8. Regarding question no.5, the applicant states that one of the requirement for an activity or transaction shall fall under the scope of supply is consideration . Therefore, if an activity or transaction though falls in any one of the forms of supply, but without consideration does not fall under the scope of supply, thereby does not attract tax under GST. In the present case also, the applicant submits that providing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service: and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation .- For the purposes of this rule, the expression pure agent means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. 9.4 Reading of the above provisions, the applicant states that it is clear that an intermediary is a person who acts on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empted from tax. 11.3 The term charitable activities is defined in clause (r) of Para 2 of the Notification No. 12/2017 - Central tax (Rate) dated 28.06.2017 as under: (r) charitable activities means activities relating to - (i) public health by way of, - (A) care or counselling 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 substances 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 aged of 65 years residing in rural areas; (iv) Preservation of environment including watershed, forests and wildlife; The above definition, in the context of the applicant, is verified and found that an activity to be covered under the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly 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 whether the applicant is liable to pay tax on renting of temporary residential rooms as mentioned in five categories to the devotees to stay for the purpose of religious programmes where charges per room is less than ₹ 1000-00 per day, the entries in the schedules is verified and found as under: 12.1 As per the Annexure to the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, whether the services under question are covered under Heading 9963 or Heading 9972 is the main question. The applicant is obtaining the land on lease and constructing the rooms (though claimed to be temporary basis) and then letting out the accommodation. 12.2 Entry No. 7 of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, reads as under SI.No. Chapter, Section or Heading Description of Service Rate (%) Condition 7 Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of accommodation per day Rate of Tax Entry in Notification ₹ 1,000-00 to ₹ 2,499-00 6% Entry 7(ii) of Notn No. 11/2017- Central Tax (Rate) dtd 28.06.2019 ₹ 2,500-00 to ₹ 7,499-00 9% Entry 7(vi) of Notn No. 11/2017- Central Tax (Rate) dtd 28.06.2019 ₹ 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, for residential or lodging purposes, having a declared tariff of a unit of accommodation below one thousand rupees or equivalent is exempted from tax and these services must be of heading 9963. 12.4 The applicant s question is related to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered 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 supply of service is by the hotel to the pilgrims and the applicant is facilitating the supply of accommodation service to the pilgrims by the hotel. 16.1 The term intermediary is defined in clause (13) of section 2 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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