9911796707
TMI Blog2022 (10) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... x, Veer Savarkar Marg, Sangamner, Ahmednagar-422605 ("hereinafter referred to as "the Appellant") against the Advance Ruling No. GST-ARA-97/2019-20/B-91 dated 10.11.2021, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). BRIEF FACTS OF THE CASE 3.1 The Appellant is a charitable trust registered under Maharashtra Public Charitable Trust Act, 1950, vide Registration No. F-2378 w.e.f. 15.02.1993. The Trust Jayshankar Gramin and Adivasi Vikas Sanstha Sangamner (hereafter referred to as 'trust') is also registered under Societies Registration Act, 1860, vide registration number Maha/2041/92 w.e.f. 23.12.1992. The Appellant is registered under Section 12AA of the Income Tax Act. 1961 w.e.f. 08.10.2009 vide Registration No. PN/CIT-I/REGN./12A(a)/63/2009-10/5304 & PN/CIT/80G/115/2009-10/5298. 3.2 The trust has its head office at Ist floor, Madhav Parvati Complex, Veer Savarkar Marg, Sangamner. The destitute for children is located at Akole bypass road, Sangamner. The trust undertakes services to orphans and homeless children by way of providing shelter, education, guidance, clothing, food and health, on behalf of the Women & Child De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re", an application was made with the Authority of Advance Ruling for the GST, Maharashtra (MAAR) for the purpose to ensure if the aforementioned transactions are liable to GST or not. 3.7 The MAAR passed an order bearing No.GST-ARA-97/2019-20/B-91 dated 10.11.2021 confirming the GST applicability on the impugned transactions. GROUNDS OF APPEAL 4 Aggrieved by the aforesaid Advance Ruling passed by the MAAR, the Appellant has preferred the present appeal before the Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax (hereinafter referred to as the "MAAAR") on the following grounds: 4.1 That MAAR, in their observations and findings in point numbers from 5.5 to 5.13 in the impugned Advance ruling order, has made a reference to the exemption Notification No. 12/2017 dated 28.06.2017 with regard to the charitable activities; that the MAAR has righteously noted that the main thrust is to identify as to whether the impugned activities are covered under the definition of charitable activities, or not. However, the MAAR has missed on the interpretation of the essence of the definition of religion and rather they have vested their thought process on the other ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on: some charities whose aims include advancing religion might choose to concentrate on promoting particular tenets of the religion in order to further what they believe to be an inherently important aspect of that religion. 4.5 Further, to be recognized as charitable, all organizations advancing religion must be able to show that there is a moral or ethical framework which is promoted by the religion. This moral or ethical framework is considered by many to offer benefits to wider society, as well as individual comfort, solace and a sense of purpose. 4.6 As per the Government of Canada - To advance religion in the charitable sense means to preach and advance the teachings of a religious faith, and to maintain the doctrines and spiritual observances on which those teachings are based, such as:- * establishing and maintaining buildings for religious worship and other religious use; * organizing and providing religious instruction; * carrying out pastoral and missionary work; 4.7 As far as the Indian religious belief is concerned, our religion preaches that the service to the needy, suppressed, homeless, orphans, destitute, etc., is of utmost importance. Our belief is based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BANGALORE), in which the Hon'ble Supreme Court upheld the decision of Tribunal that the assessee company had implemented welfare schemes consisting of training, technology facilitation, etc. for the Government for the benefit of the vulnerable / weaker sections of the society and grant in aid received from the Government was utilized for this purpose alone. Tribunal had held that in implementation of the Governmental schemes, the assessee as an implementing agency did not render any taxable "service" to the government. 4.13 The Judgment further stated that the department seems to be considering the Governments to be "clients" of APITCO. The question now is whether there was "service provider-client" relationship between the assessee and the governments. Here, again, the nature of the amounts paid by the governments to the assessee is decisive. A client must not only pay the expenses of the service but also the consideration or reward for the service to the service provider. Admittedly, in the present case, there was no payment, by any government to the assessee. of any amount in excess of what is called "grant-in-aid". Thus, any service provider-client relationship between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- per month was approved under the said scheme; wherein the trust will only act as an implementing agency and will use grant amount in specified manner. 4.19 Grant amount of Rs. 2.00.000/- is factually to be used as under: SI. No. Designation Required No. of People Honorarium (per month per person) Total Honorarium 1 Centre Administrator 01 25,000 25,000 2 Case Worker 02 15,000 30.000 3 Police Facilitation Officer (PFO) 01 15,000 15,000 4 ParaLegal/Personnel/La wyer 01 15,000 15,000 5 Para Medical Personnel 02 18,000 36,000 6 Counsellor 01 15,000 15,000 7 IT Staff 01 15,000 15,000 8 Multi-purpose Helper 01 9.000 9.000 9 Security Guard/Night Guard 04 10,000 40,000 Total 14 2,00,000 Further, amount up to Rs. 2,00,000/- is granted only after presentation of list of expenses incurred; therefore, grant amount is in nature of reimbursement of expenses incurred on behalf of Ministry of Women and Child Development. If monthly expenses incurred are less than the said limit, lesser amount is granted. Considering the modus operandi, here trust is only acting as a pure agent of government. 4.20 In the entire order the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. This is an ideal scenario since, for the activities as mentioned above that serves humanity and thereby saves the religion, it is transaction wise inefficient to levy, collect and pay GST on these activities; 5.5 There is unnecessary flow of transactions if. the Government (ministry of Women & Child Development) pays GST to the implementing agency & Implementing agency pays back to the Government (CBIC), and Government further uses these funds for promoting charitable activities. 5.6 To be precise the one stop crisis scheme was planned by the Central Government and implementation was left to the states. This scheme was funded vide the Nirbhaya Fund. As per the Central Government guidelines various parameters of the expenses to be made vide the schemes are mentioned. Under the said guidelines wherever there is construction activity involved, the Central Government has clearly worked out the GST portion to be paid (refer pg. 31 & 31 of central government guidelines). However, in case of the One Stop management centre (pg. No 25 of central government guidelines) NO GST liability is demarcated. Hence, even the Central Government while making scheme guidelines has clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request you to further clarify on the ambiguity raised due to the advance ruling order made in our issue. RESPONDENT'S SUBMISSIONS 7. The Respondent vide their letter dated 27.12.2021 have filed the written submissions in the subject Appeal, the extract of which is mentioned herein below: 7.1 That any activity carried out by the entity in the course or furtherance of business is included in the ambit of business definition, and hence, will be considered as "supply" under GST; 7.2 Although the phrase "in the course or furtherance of business" is not defined under the GST law, but the same is broad enough to cover any supply made in the connection of the business; 7.3 That from the foregoing, it is clear that GST provisions has not given a separate registration status to the charitable trusts. However, "persons" under the GST law includes charitable trust and the activities of charity are within the scope of the definition of business under the Act; Further, pecuniary benefit is not the determining criterion, and accordingly, charitable or philanthropical activities would also get covered under the definition of "business"; 7.4 That the activities undertaken by the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as subsidy, sanctioned by the Government; that as per the definition of the term "consideration" provided under section 2(31) of the CGST Act, 2017, subsidy given by the Central Government or a State Government shall not be included under the definition of the term "consideration", and hence, the subject transaction between the Appellant and the Government would not be considered as "supply" in terms of the Section 7(1)(a) of the CGST Act. 2017. and accordingly, the reimbursement amount under question paid by the government to the Appellant under the subject scheme will not be subject to levy of GST. 8.3 That in case the impugned transaction is held to be taxable, the Appellant would have to bear the additional cost of the levy of GST thereon for serving humanity; that they have also sought for the alignment of GST laws with the Women and Child Development Ministry of the State of Maharashtra so that they do not have to suffer the additional cost of the levy of GST on the subject transactions in case the subject transactions are held to be taxable. PERSONAL HEARING 9. The personal hearing in the matter was conducted on 28.07.2022 in the virtual mode via Video Conferencing, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the appeal memorandum encapsulating the facts of the case and the grounds of the appeal along with all the additional submissions made by the Appellant. We have also examined the impugned Advance Ruling passed by the MAAR, wherein it has been held that the reimbursement amount received by the Appellant from the Department of Women and Child Development, Government of Maharashtra under the subject "One stop Crises Centre Scheme" will be subjected to levy of GST. It is further noted that the MAAR has observed that the impugned activities undertaken by the Appellant will not be covered under the scope of the charitable activities defined under clause (r) of the definition section of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, and therefore, the said activities will not get covered under the entry at SL No. I of the said Notification No. 12/2017-C.T. (Rate) dated 28.06.2017. 13. On perusal of the case records and the impugned order passed by the MAAR, the moot issues before us are as under:- (i) Whether the impugned activities undertaken by the Appellant as an implementing agency of the Government can be construed as services; (ii) If yes, whether the same can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s got very wide connotation due to the presence of the clause "all forms of supply of goods or services or both". For any transaction to be qualified as "supply" under CGST Act, 2017. the said transaction is required to satisfy the following pre-requisites:- (i) that such supply should be made by a person for a consideration; (ii) that such supply should be made in the course or furtherance of business; 19. Now, we would like to refer to the definition of the term "consideration" as provided under Section 2(31) of the CGST Act. 2017. which reads as under:- "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 State Government; (b) ................. ................ 20. On perusal of the aforesaid definition of the term "consideration", it is seen that the term "consideration" shall not include any "subsidy" given by the Central Government or State Government. Now, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its definition provided under Section 2(31) of the CGST Act, 2017. which has been reproduced hereinabove. 23. Further, in absence of any consideration, it is opined that the subject transactions/activities undertaken by the Appellant, wherein they are providing various assistances, such as food, shelter, legal assistances, medical assistances, etc., to the destitute women, would not be construed as supply in terms of Section 7(1)(a) of the CGST Act, 2017, which stipulates that for any transactions/activities to be considered as supply, there has to be an element of "consideration". In absence of the same, such transactions/activities will not be considered as "supply". 24. Since it has been established that the subject activities undertaken by the Appellant will not be construed as supply in terms of section 7(1 )(a) of the CGST Act, 2017, we will not proceed to examine the third moot issue as to whether the impugned activities undertaken the Appellant can be construed as "charitable activities" in terms of the clause (r) of the definition section of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 as the determination of the same will have no bearing on the applicabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
