GST not applicable on Adoption Fees received from Adoptive Parents by Trust under Adoption Law: AAR Maharashtra [Read Order]

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The Authority of Advance Ruling in Maharashtra has ruled that, Goods and Services Tax ( GST ) is exempted on Adoption Fees received from Adoptive parents by Trust under Adoption Law.

The AAR was hearing a question, Whether the activities conducted by The Children of the World (India) Trust are the “Charitable Activities” exempted under the Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended and consequently, the receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax?

The Applicant seeking a ruling on whether their activities are exempted under the Entry No.1 of the Notification 12/2017 CT dated. 28.07.2017 and in the second part of the question the applicant queried, whether the receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the applicant Trust is exempted from the levy of Goods and Services Tax.

The applicant has submitted that ‘Children’ are neither “goods” nor is there any “service” provided by them to the adoptive parents and therefore the essential element of supply namely “in the course or furtherance of business” is missing from the chain of activities, because their activities neither answer the definition of ‘business’ under section 2(17) of the CGST Act nor do the fees received from the adoptive parents to be a ‘consideration’ under the Section 2(31) of the CGST Act.

The applicant is a Specialized Adoption Agency as defined under the relevant laws and they have established a shelter, namely, “Vishwa Balak Kendra”, in their own building and provide shelter, food, clothing, healthcare, foster care and basic education to abandoned, orphaned or homeless children below 6 years of age till the time of adoption. We further find that their activities which are in the nature of “Charitable Activities”, also consists of the advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children. Such activities are clearly covered under Sr. No. 1 of Notification No.12/2017- C.T. (Rate) dated 28.06.2017 as amended from time to time and the applicant is an entity registered under Section 12AA of the Income Tax Act, such activities carried out by the applicant is exempted by the said notification.

The AAR bench of B.Timothy and A.A Chahure observed that, “The activities conducted by the applicant are “Charitable Activities” which are exempted under Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended. The receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax exempted under Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended”.

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