2021 (7) TMI 822 - HC - GST

Medical Store Operated by Charitable Trust Requires GST Registration for Supply of Medicines

The Court upheld the orders of the Gujarat Appellate Authority for Advance Ruling and Gujarat Authority for Advance Ruling, requiring GST registration for ... Requirement of GST registration - medical store run by Charitable Trust - Medical store providing medicines at a lower rate - amounts to supply of goods or otherwise? - scope of 'supply' and 'supplier' - activity of selling medicines to the patients for consideration, amounts to trade or commerce or not - HELD THAT:- There remains no doubt that every supplier who falls within ambit of Section 22(1) of the Act has to get himself registered under the Act. As per Section 7(1) of the Act, the expression ‘supply’ includes all forms of supply of goods and services or both such as sale, transfer, barter etc. made or agreed to be made for consideration by a person in the course or furtherance of business. It is not disputed that the petitioners are selling the medicines, may be at a cheaper rate but for consideration in the course of their business. As per the definition of ‘Business’ means any trade or commerce any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit. From the bare reading of the said definition, it clearly emerges that any trade or commerce whether or not for a pecuniary benefit, would be included in the term ‘business’ as defined under Section 2(17) of the said Act - Mr. Joshi has failed to substantiate or justify his submission as to how such activity of selling medicines to the patients for consideration could not be said to a trade or commerce. Both the authorities have in detail considered the submissions and the issues raised by the petitioner Trust and held that the Medical Store run by the Charitable Trust would require GST Registration, and that the Medical Store providing medicines even if supplied at lower rate would amount to supply of goods - the Court does not find any illegality or infirmity in the said orders passed by the authorities. Issues:Challenge to order of Gujarat Appellate Authority for Advance Ruling and Gujarat Authority for Advance Ruling regarding GST registration for a medical store run by a charitable trust and whether providing medicines at a lower rate amounts to supply of goods.Analysis:The petitioner, a charitable trust, challenged the order of the Gujarat Appellate Authority for Advance Ruling (GAAAR) confirming the Advance Ruling of Gujarat Authority for Advance Ruling (GAAR) regarding GST registration for its medical store and whether providing medicines at a lower rate constitutes supply of goods. The petitioner contended that its activities did not qualify as 'business' under the CGST Act and were not for pecuniary benefit. The petitioner Trust argued that it operated the medical store to fund charitable activities and mitigate unforeseen expenses, not for profit. However, the authorities upheld the requirement for GST registration and deemed the sale of medicines as supply of goods, dismissing the petitioner's appeal.The petitioner relied on Section 2(17) of the CGST Act to argue that its activities did not fall under the definition of 'business' as they were not for trade or commerce or pecuniary benefit. The petitioner emphasized that it provided benefits to patients under government schemes, indicating a non-commercial motive. The Court examined Section 7(1) of the Act, defining 'supply,' and Section 22(1), mandating registration for suppliers exceeding specified turnover. The Court noted that the petitioner's sale of medicines, even at reduced rates, constituted a supply for consideration in the course of business, necessitating GST registration. The Court rejected the petitioner's argument that the sale of medicines did not qualify as trade or commerce under the Act, emphasizing that the definition of 'business' encompassed all activities, regardless of pecuniary benefit.Ultimately, the Court found no legal flaw in the decisions of the authorities, which upheld the requirement for GST registration for the medical store run by the charitable trust and deemed the sale of medicines, even at reduced rates, as supply of goods. Consequently, the petition challenging the orders was dismissed summarily for lacking merit.