Charitable activity exemption under GST is limited to defined environmental services, not consideration-based facilitation and supply arrangements.

Exemption under Notification No. 12/2017-Central Tax (Rate) is available to an entity registered under section 12AA of the Income-tax Act, 1961 only where the supply is itself by way of a defined charitable activity. The notification treats charitable activities narrowly, including preservation of the environment, but services linked to implementation of renewable energy schemes, empanelment of vendors and contractors, and collection of fees and charges for allied facilities and supplies were treated as facilitative and consideration-based. Activities such as registration fees, supervision charges, processing fees, connection charges, entry fees, penalty charges, issuance charges, scrap battery sale and tender form sales were therefore outside the charitable exemption.

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Issues: Whether services rendered by an entity registered under section 12AA of the Income-tax Act, 1961, together with receipts such as registration fees, supervision charges, processing fees, connection charges, entry fees, penalty charges, issuance charges, scrap battery sale and sale of tender forms, were exempt as services by way of charitable activities under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The exemption under Serial No. 1 of Notification No. 12/2017-Central Tax (Rate) applies only to services by an entity registered under section 12AA of the Income-tax Act, 1961 when the services are by way of charitable activities. The notification defines charitable activities narrowly, including preservation of environment. CREDA's functions involved implementation of renewable energy schemes, empanelment of vendors and contractors, and collection of fees and charges for allied services and supplies. The receipt of consideration for these activities showed that the impugned supplies were not undertaken merely or primarily for preservation of environment, but were connected with tender work, supply arrangements and allied facilitation services rendered for consideration.

Conclusion: The impugned activities did not qualify as charitable activities under the notification, and the exemption was not available.

Ratio Decidendi: Exemption under Notification No. 12/2017-Central Tax (Rate) is available only where the supply by a section 12AA entity is itself by way of a defined charitable activity, and activities undertaken for consideration that are primarily facilitative or commercial in nature do not fall within that exemption merely because they are associated with environmentally beneficial projects.

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