Conducting Marathon by Trust not a Charitable Activity: GST AAR [Read Order]

The Authority for Advance Ruling (AAR), Tamil Nadu has held that conducting marathon by a Charitable Trust would be subject to GST as the same do not constitute a ‘charitable activity’.

The applicant, M/s. Dream Runners Foundation, stated to have engaged in conducting public charitable activities such as Health care, Rural development, Women empowerment, Education facility etc, either directly or through various public charitable institutions for the common good of the general public of and in India, irrespective of caste, religion, creed, gender and without any motive for profit.

They sought for an Advance ruling on whether the conduct of marathon events by the Trust through which donations are raised for charity is an exempted service under GST?

The applicant further claimed that when the Trust is approved under Sec 12AA of the Income Tax Act 1961 means that the service of the Trust is charitable in nature, it automatically become a charitable activity that is exempted under GST.

The authority noted that the Applicant is an entity registered under Section 12AA of Income Tax Act.

It was noted that only those activities of such an entity are exempt from GST which qualify under the definition of “charitable activities” given in the notification.

“This activity of conduct of Marathon event by the Applicant does not fall under the definition for Charitable activities mentioned under clause 2 of Notification. Therefore, though the Applicant is an entity registered under Section 12 AA of the Income Tax Act and conducts the Marathon events for raising funds for charitable activities, the exemption under Sl.No. 1 of these notification does not apply to the activity of organizing the marathon by the Applicant,” the authority said.

Regarding the registration with GST, the authority observed that “As per Section 22 of CGST/TNGST Act, every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, 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. In the instant case, the Applicant’s annual turnover is more than Rs 20 lakhs and they are providing the taxable supply of organizing marathon events. Hence, they are liable to register under CGST /TNGST Act.”