Sale of Spiritual Products by Charitable Trusts attract GST: AAAR [Read Order]

The Appellate Authority for Advance Ruling (AAAR), Maharashtra has upheld an order of the Advance Ruling Authority that the activity of imparting yoga is not exempted under the Goods and Services Tax ( GST ) regime as the same constitute “business”. The Authority also confirmed that GST is payable on the supply of spiritual products by the Trust as the services provided by the Charitable and religious trusts are not specifically exempted under the new tax regime.

The applicant, a Charitable Trust engaged in the field of spreading the knowledge of Jain Dharam and advancement of teachings of Param krupaludev Shrimad Rajchandra. It generates income from the sale of goods, provides for accommodation and foods in various Shibir/Satsang on payment/chargeable basis. It organizes Shibir/Satsang for the participant and they are not free for the participants, as the trust charge some amount from the participants in the name of accommodation or participation. Satsang is the only activity provided by the applicant free of cost to the participant.

The applicant approached the Advance Ruling Authority for a clarification on the taxability of its activities.

The Advance Ruling authority held that the activities carried on by the applicant is in the nature of business as defined under section 2(17) of the GST Act and further considering the GST Regulations that all services provided by the religious trusts and charitable institutions are not exempt from tax. “There is no exemption granted to charitable trusts in case of supply of goods which are taxable and are not specifically exempt or nil rated,” it said.

While upholding the AAR order, the appellate authority held that “What can be seen from the above notifications is that specific exemption from GST is given to charitable institutions registered u/s.12AA of the IT Act, 1961. It can be gathered from the above that the intention of the legislature is to tax all the activities of supply goods and services by charitable trust except those specifically exempted. This is with the background that charitable institutions qua their activities of charity do not lend themselves to any specific concession or exemption from the definition of ‘supply’ or ‘business’ or ‘taxable person’. The very fact that certain services have been carved out and given out a special treatment makes it clear that all trade and commerce transaction of selling books, statutes, CDs and DVDs etc. done commercially for consideration come within the broad ambit of ‘business’ under the CGST Act.”