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of <h1>Trust's marathon event organization subject to GST despite charitable purpose under Section 12AA registration</h1> <h3>In Re: M/s. Dream Runners Foundation Limited</h3> In Re: M/s. Dream Runners Foundation Limited - [2019] 63 G S.T.R. 409 (AAR), 2019 (23) G.S.T.L. 133 (A. A. R. - GST) Issues Involved:1. Whether the conduct of marathon events by the Trust through which donations are raised for charity is an exempted service under GST.2. Whether the Trust, approved under Section 12AA of the Income Tax Act 1961, automatically qualifies as a charitable activity exempted under GST.3. Whether the Trust, performing charitable activities as per Clause 2(r) of Notification No. 12/2017 -Central Tax (Rate), requires registration under GST.4. Whether donations received from participants of the marathon event are exempted from GST.Issue-wise Detailed Analysis:1. Exemption of Marathon Events under GST:The Applicant, a Trust registered under Section 12AA of the Income Tax Act, organizes marathon events to raise funds for charitable causes. The collected amounts are used to cover event expenses, with the remaining funds donated to charitable activities. However, the conduct of marathon events is considered a separate supply of service. According to Section 2(31) of the CGST Act, the money collected from participants is deemed as consideration for organizing the marathon, making it liable for GST. Thus, the conduct of marathon events by the Trust is not exempt from GST.2. Automatic Charitable Activity Exemption under GST:While the Trust is approved under Section 12AA of the Income Tax Act, this does not automatically exempt its activities from GST. The exemption under Sl.No. 1 of Notification No. 12/2017-C.T. (Rate) applies only to specific 'charitable activities' as defined in Clause 2(r) of the notification. The Trust’s activity of organizing marathon events does not fall under this definition. Therefore, despite the Trust’s charitable status under the Income Tax Act, its marathon events are not exempt from GST.3. GST Registration Requirement:As per Section 22 of the CGST/TNGST Act, any supplier making taxable supplies with an aggregate turnover exceeding twenty lakh rupees in a financial year must register under GST. The Trust’s annual turnover from organizing marathon events exceeds this threshold, making it liable for GST registration. Consequently, the Trust must register under the CGST/TNGST Act due to its taxable supply of services.4. GST Exemption on Donations from Marathon Participants:The money collected from marathon participants is used to cover event expenses and is considered a supply of service. Therefore, it is not exempt from GST. The Trust’s claim that these amounts are donations does not change their liability under GST, as the funds are used for organizing the marathon, which is a taxable service.Ruling:1. The conduct of marathon events by the Applicant is not an exempt supply under CGST/TNGST Act.2. Only those activities of the Applicant that fall under the definition of 'charitable activities' as per Clause 2(r) of Notification 12/2017-Central Tax (Rate) are exempt.3. The Applicant is required to register under CGST/TNGST Act due to its taxable supply of services and annual turnover exceeding twenty lakh rupees.4. The money collected from marathon participants is not exempt from CGST/SGST.
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