No GST on Charitable Institution Planting & Maintaining Trees for Contractual Payment of ₹113 Crore: AAR [Read Order]

The Gujarat Authority for Advance Ruling (AAR) recently clarified that a charitable institution engaged in the activity of planting and maintaining trees continues to be exempt from paying Goods and Services Tax (GST) even when the work is performed by virtue of government contracts, here valued at almost ₹113 crore, payable over the course of three years.

The ruling was rendered by the Authority against an application filed by Sadbhavna Seva Foundation, Sadbhavna Seva Trust (Sadhbhavna) based in Gujarat.

Sadhbhavna is a company incorporated under Section 8 of the Companies Act, 2013, and has also duly been recognised by way of registration under Section 12AB of the Income Tax Act, 1961 for salient activities including yoga, medical relief, preservation of environment (including watersheds, forests and wildlife), and for the advancement of any other object of general public utility wherein the provisions of sections 11 and 12 shall apply in the case from the Assessment Year 2020-21.

Sadbhavna approached the Authority seeking clarity on whether its activity of plantation and maintenance of trees, carried out for specific consideration under various government tenders, attracted GST liability; and whether they are eligible to avail the exemption under entry no. 1 of Notification No. 12/2017.

Sadbhavna, represented by CA Sumit Shingala submitted before the authority that it had undertaken extensive tree plantation and post-plantation maintenance work for Municipal Corporations and Highway Authorities across Gujarat.

The Foundation submitted that these activities fell squarely within the definition of “charitable activities” under Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017, which exempts services provided by charitable entities engaged in the preservation of the environment.

The authority, at the outset noted that Sadbhavna was party to the ‘Harit Van Path Yojna floated by the Government of Gujarat for which the charitable institution would be paid an cumulative amount of ₹113.65 crores for planting 7,62,712 trees and maintaining them from 2025 to 2028.

The Bench of Sushma Vora - SGST Member and Vishal Malani - CGST Member observed that the applicant’s primary object was environmental preservation, and the activities undertaken by them including plantation and maintenance of trees was directly linked to their charitable purposes.

The Authority further noted that receiving consideration from government authorities for executing such projects did not alter the charitable character of the service.

Accordingly, the Authority ruled that the services provided by the applicant were exempt from GST under Entry No. 1 of Notification No. 12/2017-CGST (Rate).

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