2023 (5) TMI 286 - AAR - GST

Trust providing pilgrim accommodation at temple must register for GST and pay 12% tax on services

In Re: M/s. Nandini Ashram Trust

The AAR Gujarat ruled that a registered trust providing accommodation to pilgrims at Ambaji Temple must register for GST and pay 12% tax. The trust could ... Requirement of GST registration - liability to pay tax under GST registration - applicant provides accommodation to pilgrims who visit the Ambaji Temple - registered trust under the Bombay Charitable Trust Act - HELD THAT:- In terms of Sr. No. I of the notification No. 12/2017-CT( Rate), services by an entity registered under section 12AA of the Income Tax Act, 1961, by way of charitable activities is exempted. The applicant claims that he falls within the ambit of a similar serial number 1 and 14 of notification No. 9/2017-IT (Rate) which as is mentioned is pari materia to the serial number mentioned above. However, the notification defines 'charitable activities' to include (i) public health, (ii) advancement of religion spirituality, yoga (iii) advancement of educational programmes or skill development and (iv) preservation of environment including watershed, forests and wildlife. The applicant, is a registered trust under the Bombay Charitable Trust Act. They hold 12AA certificate issued by the Income Tax Authorities and in terms of the trust deed, as per applicant, they provide accommodation to the pilgrims who visit the Ambaji Temple for which they charge room rent @ Rs. 1000/- per day. However, there is nothing on record to substantiate the claim that all the accommodation granted are to the pilgrims visiting the Ambaji Temple. Applicability of serial number 13(b) of N/N. 9/2017-IT (Rate) - HELD THAT:- The exemption is for the activity of renting of precincts of a religious place meant for general public, which is,- (a) owned or managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Act. 1961 or (b) a trust or an institution registered under sub-clause (v) of clause (23C) of section It) of the Income-tax Act or (c) a body or an authority covered under clause (23BBA) of section 10 of the said Income-tax Act - Further, as per the proviso, the exemption is not applicable in respect of three situations, wherein one of the situations is renting of rooms where charges are one thousand rupees or more per day. The authorized representative of the applicant during the course of personal hearing held on 23.3.2023, was specifically asked as to whether the Nandini Ashram, was owned by the trust managing the Ambaji Temple, to which he answered in negative. On being further asked whether the rooms of Nandini Ashram which they were renting to pilgrims is located in the precincts of the Ambaji Temple, he informed that it was not within the boundary of the temple. Going by the definition of precinct as mentioned above, it is emphatically clear that the applicant is not eligible for the benefit of Sr. No. 13 of the notification. Whether they are liable to pay tax? - HELD THAT:- In terms of Sr. No. 14 of the notification No. 12/2017-CT (Rate), services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff below one thousand rupees per day or equivalent was exempted. However, in terms of notification No. 4/2022-CT (Rate) effective from 18.7.2022, serial number 14 and the entries relating thereto were omitted - the applicant is leviable to GST at the rate of 12%. Whether the applicant is liable for GST registration? - HELD THAT:- In terms of section 22 of the CGST Act, 2017, every supplier shall be liable to be registered from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees. Issues Involved:1. Liability for GST registration.2. Liability to pay tax under GST registration.Summary:Issue 1: Liability for GST RegistrationThe applicant, a registered trust under the Bombay Charitable Trust Act and holding a 12AA certificate, provides accommodation to pilgrims visiting the Ambaji Temple, charging Rs. 1000/- per day. The applicant sought an advance ruling on whether they are liable for GST registration. The Authority for Advance Ruling (AAR) referred to section 22 of the CGST Act, 2017, which mandates registration for any supplier whose aggregate turnover exceeds twenty lakh rupees in a financial year. The AAR concluded that the applicant is liable for GST registration, subject to the threshold limit of their aggregate turnover exceeding twenty lakh rupees.Issue 2: Liability to Pay Tax Under GST RegistrationThe applicant argued that they are exempt from GST based on Notification No. 9/2017-Integrated Tax (Rate) and a tweet stating that Sarais run by religious or charitable trusts are exempt from GST irrespective of rent. However, the AAR found that the applicant's accommodation services do not fall within the definition of 'charitable activities' as per Notification No. 12/2017-Central Tax (Rate), which exempts services by entities registered under section 12AA of the Income Tax Act, 1961, by way of charitable activities. The AAR noted that the applicant's accommodation services are not located within the precincts of the Ambaji Temple, and thus, do not qualify for exemption under serial number 13(b) of the notification.Furthermore, the AAR referred to Notification No. 20/2019-Central Tax (Rate) dated 30.9.2019, which fixed the CGST rate for hotel accommodation with a declared tariff above one thousand rupees per day. The AAR concluded that the applicant is liable to pay GST at the rate of 12% (CGST @ 6% and SGST @ 6%).RULINGThe applicant is liable for GST registration in terms of section 22 of the CGST Act, 2017, subject to the threshold limit of their aggregate turnover exceeding twenty lakh rupees. The applicant is also liable to pay GST at the rate of 12% as per Notification No. 20/2019-Central Tax (Rate) dated 30.9.2019, as amended by Notification No. 3/2022-CT (Rate) dated 13.7.2022, effective from 18.7.2022.