TaxTMI 
TaxTMI 
TaxTMI 
The AAR Ruling in the above case Ref IN RE: M/S. DREAM RUNNERS FOUNDATION LIMITED [2019 (3) TMI 927 - AUTHORITY FOR ADVANCE RULING, TAMILNADU]is in my opinion is not well founded on law and on facts. The Hon'ble Authority has held that the entire amount of donations collected from the participants in the Marathon organised by the Foundation is liable to tax under GST . This decision has ostensibly been arrived on the analysis of the expenditure incurred by the Charitable Institution holding that the bulk of the expenses have been spent on holding the marathon like event management expenses, prize money expenses etc and only small percentage of donations is available for the charitable activities.
The Hon'bel Authority has not disputed the fact that the Foundation comes under the category of Charitable Institution registered under section 12AA of the IT Act. The question before the Tribunal was not relating any service rendered by the Foundation as a charitable activity which may be eligible for exemption under Notification 12 of 2017 but with the collection of donation from the participants in the marathon.
The question therefore before the authority was whether the donations received was a quid pro quo for any service rendered by them to the participants. whether allowing a person who has donated money for a cause in running in a race can be considered a service. Do the participants derive any benefit by particiapting in such event. Health benefit aside such participation is symbolic gesture by the donors for a charitable cause. There is neither a service promised nor received. It may so happen that many of the partiicpants do not take part in the marathon at all. The donation is not intended in order to get any service from the organisers . Hence bracketing the activity of conducting marathon for the donors would not come under the category of services at all.
Moreoevr interestingly the Hon'ble Authority has gone into the details of expenses side of the collections made and came to the conclusion that since the majority of the expenses are relating to conducting of the marathon event and since such activities are not coming under the 'charitable activities' as defined in Notification 12 of 2017 the amounts collected as donation from the particiapnts in the marathon event is liable to GST.
To determine the nature of an activity whether such activity comes under supply of goods or services what is to be loooked is the receipt side of the provider of supplies and not the expenses side. For example if some one supplies goods to others what is necessary to look into is whether such supplies have taken place and whether there is a consideration and not the application by the service provider of such funds for running his business to determine his tax liability.
It is not out of place even to submit that the GST would have been paid by the Foundation for the payment towards evnet management services, purchase of materials for facilitating the event etc for which due credits would have been available to the foundation.This factor has not been considered by the Hon'ble Authority..
This decision requires reconsideration in appeal.
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J.KUMAR
Advocate, Hyderabad