2018 (9) TMI 698 - AAR - GST

Charitable Trust's GST Advance Ruling Denied: Recipient Status Limits Jurisdictional Scope of Section 95(a)

In Re: Dr. Dathu Rao Memorial Charitable Trust

A charitable trust providing education to mentally retarded children sought an advance ruling on GST liability for construction materials and services. ... Admissibility of Advance Ruling application - Jurisdiction - activities related to providing of education to Mentally Retarded Children - whether the Trust is liable to pay GST on receipt of Goods/Services, when the Charitable Trust is exempted under the GST Act 2017? Held that:- An applicant can seek an Advance Ruling Authority in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant - In the case at hand, the applicant is the proposed recipient of the proposed works contract and accordingly, does not fall within the definition of advance ruling. Hence, the Application is not liable for admission and therefore rejected without going into the merits Of the case, on the issue of lack of jurisdiction. Thus, The Application for Advance Ruling dated 18.06.2018 of Dr. Dathu Rao Memorial Charitable Trust, Chennai is not admitted, under sub-section (2) of section 98 of the CGST Act, 2017 and the TNGST Act, 2017. Issues:1. Whether a charitable trust providing education to mentally retarded children is liable to pay GST for materials bought and construction services availed, even though they are under an exempted category.Analysis:The case involved a charitable trust engaged in providing education to mentally retarded children seeking an advance ruling on their liability to pay GST for materials and construction services. The trust planned to undertake construction activities, including building a boundary wall, painting the existing building, and renovating school toilets. They intended to award works contracts to GST registered vendors for these projects. The trust contended that as they are exempt from GST, they should not be liable to pay tax on goods or services purchased. The authorized representative of the trust clarified that they are recipients of the supplies, not suppliers. The central issue was whether the trust is required to pay GST on the receipt of goods/services, considering their exempt status under the GST Act.The advance ruling authority noted that the applicant, as the recipient of the works contract, did not fall within the definition of advance ruling as per Section 95(a) of the CGST and TNGST Act. The definition specifies that an advance ruling pertains to matters related to the supply of goods or services undertaken or proposed by the applicant. Since the trust was not the supplier but the recipient, the application was rejected on the grounds of lack of jurisdiction. Consequently, the application for advance ruling by the charitable trust was not admitted under the provisions of Section 98 of the CGST Act, 2017, and the TNGST Act, 2017.In conclusion, the judgment clarified that the charitable trust providing education to mentally retarded children, being exempt from GST, was not required to pay tax on goods or services purchased for their construction projects. The ruling emphasized the distinction between suppliers and recipients in the context of advance rulings, leading to the rejection of the application based on jurisdictional grounds. The trust's exemption status shielded them from GST liability on materials and services procured for their charitable activities, ensuring compliance with the relevant tax laws.