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TMI Blog2023 (1) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... l and marginal farmers, fishermen, salt and charcoal makers belonging to schedule class and tribe. The activities include plantation of mangroves and other salt tolerant varieties of plants along the coastal belt and terrestrial regions of Gujarat. * Empowerment of women from economically and socially marginalized communities through organizing self-help groups and providing legal services to address domestic issues * Sanitation (Construction of toilets) and organizing solid waste management programmes by collecting and managing domestic waste. 1.2. The applicant has submitted the details of main objectives of the trust and the activities being carried out as under: Name of the Trust VIKAS Centre for Development Regd. Address 'Ishavasyam', Opp. Lajpatnagar Society, Eeshita Towers Road, Navjeevan P.O., Navrangpura, Ahmedabad 380 014 Status * Public Charitable Trust registered under Bombay Public Trusts Act, 1950. * Charity Commissioner :Trust Registration no. E3183, Ahmedabad dated 04/01/1978. * >12A Registration No.AAATV2880KE20214. * >80G Approval No. AAATV2880KF20214. * >PAN No. AAATV2880K. Object of the Trust 1. To undertake, promote and support s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o better productivity in agriculture. Environmental benefits: * The mangrove plantation will lead to reduction of soil erosion and salinity ingress. * Absorption of the impurities including heavy metals improving the quality of the seawater. * Plantation leads to increase in green cover across the region improving the air quality. * The mangrove plantation would absorb 06 MT of Co2 annually per hectare of land area. i.e. 1200 MT of Co2 annually for 30 years. * The plantation would provide protection to life and domestic and industrial assets against natural calamities including cyclone, Tsunami, floods etc. Social benefits: * VIKAS CFD promotes marginalized community led planation. This increases awareness about the climate change and its impact. * This helps in reducing the vulnerability of the local community and enhances their socio-economic status. * They get skilled in plantation process from seed collection to full establishment of plantation. * The local leadership gets nurtured and acquires skills in managing projects. * Furthermore, the entire plantation process by VIKAS CFD is driven largely by women from marginalized communities which aim to reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to,- (A) abandoned, orphaned or homeless children; (B) physically or mentally abused and traumatized persons; (C) prisoners; or (D) persons over the age of 65 years residing in a rural area; (iv) preservation of environment including watershed, forests and wildlife; 3.2 The applicant submits that the activities of the applicant relating to Afforestation, which includes plantation of mangroves are activities relating to "preservation of environment". 4. The applicant submits that a significant percent of global greenhouse gas (GHG) emissions is caused by forest destruction and poor agricultural practices. Boosting carbon sequestration in forestry sector is an effective approach to reduce and remove emissions from the atmosphere. Through afforestation and reforestation of degraded mangrove habitat the applicant aim to establish and maintain a sustainably managed mangrove ecosystem for carbon sequestration, natural disaster risk reduction, poverty reduction with sustainable livelihoods in the coastal communities. 4.1 Mangroves are one of the earth's most important ecosystems and serve many critical functions: buffering coasts from storm surges, preventing coastal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020 (36) GSTL.104 (A.A.R-GST-Guj) (Annexure-B) wherein it is held that activities related to 'disaster prevention', 'disaster mitigation' and 'disaster management' are activities relating to 'preservation of environment' as defined in clause 2(r) of Notification No.12/2017-C.T (Rate) and considered as charitable activities. In the present case, the activities being carried out by the applicant viz. plantation of mangroves arc directly related to 'disaster prevention' as it protects the environment from erosion by sea. It also protects the coastal areas from Tsunami and other kind of natural disasters. 4.7 The applicant submits herewith published articles by Planning Commission of India (NitiAyog) about the benefit and role of growing 'mangroves' in protecting environment and some other articles as per Annexure-C. 5. The applicant submits that a person who is a supplier is liable for registration as per Section 22(1) of the GST Acts if his aggregate turnover in a financial year exceeds Rs. 20 lakhs. The phrase "aggregate turnover" has been defined under Section 2(6) of the GST Acts as under :- "2(6) "aggregate turnover'' m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged as public authorities;" 5.3 Thus while the term "business" has been elaborately defined, except for a few activities which have been specifically incorporated, the activity should be in the nature of trade, commerce, manufacture, profession, vocation, adventure or similar activity in order to qualify as "business". 5.4 It is submitted that since the applicant is not engaged in "business", the transactions of the applicant are not "supply" transactions as defined under the GST Acts. Hence the applicant does not have any "turnover" and therefore it is not required to take registration under the GST Acts. From a plain reading of the above Clause (a) of Section 7(1) it is clear that supply will be liable to GST only when it is made for a consideration in the course or furtherance of business. As submitted above, since in the present case, the Appellant is not carrying out any business, there can be no supplies liable to GST at the hands of the Appellant. 5.5 Since the aggregate of taxable supplies of goods and services does not exceed Twenty Lakh Rupees, the Appellant is not liable for registration under Section 22(1) of the CGST Act, 2017. 5.6 The Appellant submits that Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Financial Report is also presented Sr.No. Activity Action 1 Proposal of the Pilot Project sent to Funder. The Proposal includes the Financial Budget also. The Funder goes through the Project and understands the financials and then approves of the Pilot Project on actual expense basis. 2 VIKAS CFD signs a Service Agreement with the Funder (Goodcarbon Impact, GmbH, Germany) VIKAS CFD will implement the Pilot Project of Afforestation of Mangroves in 200 Hectare area in the Jambusar Taluka villages of Malpur and Devla. The Fund disbursement will happen on achievement of three(03) Milestones: a. M-l (Milestone-1): July 2022 On signing of agreement by both parties. (Release of Euros 31,050) b. M-2 (Milestone-2): August 2022. On identification of Land and Nursery Setup.( Release of Euros 91,695) c. M-3 (Milestone-3): January 2023. Obtaining all approvals for the Pilot Project, sufficient plants available for plantation from the nursery, and finalization of the Plan for the Plantation work. (Release of Euros 76,194) A total of Euros 1,98,939 for the 1st year of the Plantation Cycle. In INR the figure is Rs. 169,09,815/- (@ Conversion rate of 1 Euro = Rs.85). 3 VIKAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts & the applicant's interpretation of law. 11. At the outset we would like to make it clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act. 12. The issue here is to decide (i) whether the activity of afforestation which include mangrove plantation carried out by the applicant are covered under charitable activities as defined under clause 2(r) of the Notification No. 12/2017-CT (Rate) dated 28-6-2017 as amended and (ii) whether the such activity falls within the ambit of Supply and consideration received for carrying out such activity falls within the term business as defined under Section 2(17) of the GST Acts. Determination of nature of activity of the applicant 13. We find that the applicant is registered under Section 12AA of the Income Tax Act, 1961 as a Charitable Trust to carrying out the Charitable activities. The applicant in support has submitted the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned to explore various plantation densities from 2,500 up to 10,000 plants per hectare. This will allow the Implementing Agency to identify the optimal plantation densities and plant size for the future scope of the Project. This will lead to better estimates of Carbon Credit realisation. 2. This Pilot Project is expected to generate about 38,500 person-days of employment by planting 12,50,000 plants. 3. Furthermore, this Pilot Project will help both the Parties develop and establish the data collection, measurement, analysis, documentation and reporting mechanism for certification of Carbon Credits. 4. Further, with a potential future scope of 10,000 hectare plantation, the Implementing Agency will use this Pilot Project for internal capacity building. 5. This Pilot Project will help build a stronger partnership and working relationship between the Parties and other stakeholders involved. 15.1 We find that the applicant has undertaken the project of afforestation which include plantation of Mangroves covering 200 hectare area along coastal belt of Jambusar taluka, Bharuch district, Gujarat. Mangroves are one of the earth's most important ecosystems and serve many cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in by the incoming freshwater from land run-off are trapped to form the source of energy for many organism. A mangrove ecosystem constitutes a reservoir, refuge, feeding ground and nursery for many useful and unique plants and animal confined to this region. Through the export decomposable organic matter into adjacent coastal waters, the mangroves provide an important nutrient inputs and primary energy source for many tropical estuaries. The mangroves ecosystem also protects coastal areas from sea erosion and from the violent effects of cyclones and tropical storms. The warm, calm waterways of mangroves provide shelter and rich food for many juveniles and larvae of finfish and shellfish. Social and Economic benefit Mangroves provide socially and economically important materials such as fodder for live stock, medicines and dyes. It provides nurseries for commercially important fish and prawn stocks; replenishing estuarine and coastal fisheries. Mangroves are source of firewood, of wood product such as timber, poles and posts, and of non-wood produce such as fodder, honey, wax, tannin, dyeand plant material for thatching. They serve as good webs and enhance the fishery produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply defined under Section 7 of CGST Act, 2017 16.1 The term "supply" has been defined under Section 7(1) of the GST Acts, 2017. Relevant extract of the definition reads as under :- "7. (1) For the purposes 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, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business." 16.2 The term 'Supply' includes all forms of supply (goods and/or services) and includes agreeing to supply when the supply is for a consideration and is in the course or furtherance of business. The term business has been defined under Section 2(17) of the GST Acts as under :- "Business" includes - (j) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (k) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (I) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 7,500 Mapping of the Plot area with GPRS Points, after the selection of the area. B Soil and Water Testing 1500 1 3 1,500 4,500 Samples of Water and Soil to be given for Lab Testing Total- 1 4,000 12,000 Against Invoice, through Bank Transfer 2 NURSERY A Mangroves Nursery-1st Year 1 Pilot Plot 1 - 50Ha. 2500 Plants 4.80 2500 50 6,00,000 6,00,000 2 Pilot Plot 2 - 50Ha. 5000 Plants 4.80 5000 50 12,00,000 12,00,000 3 Pilot Plot 3 - 50Ha. 7500 Plants 4.80 7500 50 18,00,000 18,00,000 4 Pilot Plot 4 - 50Ha. 10000 Plants 4.80 10000 50 24,00,000 24,00,000 A 60,00,000 60,00,000 Payment to be done to Labourers against the activities towards formation of Nursery of total 12.50 lakh seedlings. The activities include Collection of A Seeds, transporting seed to location, punching of bags, filling of bags, laying of bags inside the nursery beds etc. The labourers need to be transported from villages t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then putting the Plants in the holes. Payment transfer to the Labourers on weekly basis based on the Payment Sheet received from the Field. The Payment is done through NEFT directly into the Beneficiary Account. B Mangroves Plantation- Gap Filling 1 Pilot Plot 1 - 50Ha. 2500 Plants 6.30 750 50 - 2,36,250 2 Pilot Plot 2 - 50Ha. 5000 Plants 6.30 1500 50 - 4,72,500 3 Pilot Plot 3 - 50Ha. 7500 Plants 6.30 2250 50 - 7,08,750 4 Pilot Plot 4 - 50Ha. 10000 Plants 6.30 3000 50 - 9,45,000 B 23,62,500 Gapfilling of 3.75 lakh plants in 2nd Year Payment transfer to the Labourers on weekly basis based on the Payment Sheet received from the Field. The Payment is done through NEFT directly into the Beneficiary Account. C Mangroves Plantation- Gap Filling 1 Pilot Plot 1 - 50Ha. 2500 Plants 6.62 250 50 - 82,750 2 Pilot Plot 2 - 50Ha. 5000 Plants 6.62 500 50 - 1,65,500 3 Pilot Plot 3 - 50Ha. 7500 Plants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the Office. On monthly basis, debited from Project account and Credited into VIKAS CFD Account. TOTAL BUDGET 169,09,600 267,10,475 TOTAL PROJECT COST 1ST YEAR 16.5 We have observed that the applicant has submitted that total fund of Rs. Rs. 169,09,815 would be received and utilized for the carrying out the work of plantation of Mangroves and no amount would be utilized for the other than the said project work. The applicant has given heads under which the fund would be utilized and same is reproduced as above. We find that the applicant does not have any profit motive and not earned any Income due to such activities. All the fund received in the year 2022-23 would be utilized for the project of plantation only. Therefore, the applicant activity do not covered under the Supply as defined under Section 7 of CGST Act 2017. 17. We have already hold that the applicant activity of plantation of Mangrove are covered under Charitable Activity as defined under Clause 2( r) of the Notification No. 12/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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