Business

Advisor
(Fortnightly inputs for professionals and executives)
Volume XXVIII Part 2 July 25, 2019

Volume XXVIII Part 2 July 25, 2019 1 Business Advisor

 Contents
Articles

GST on spiritual products sold by trust? - Dr Sanjiv Agarwal

Recent developments in GST - Dr Sanjiv Agarwal

Press briefings, meetings

India International Leather Fair IILF 2018 press briefing

MSME DI Development Institute press briefing in PIB

KSRI talk by Dr C. L. Ramakrishnan on jurisprudence

Onida launch of 84 inverter air conditioner models

WVC World Veg Council lecture by Dr M. A. Hussain

Sankara Nethralaya awards for Deepak Parekh, Vani Jairam

Exhale Innovations Worldwide press briefing

SBI Life Insurance press briefing on Poorna Suraksha

RCME vocational excellence award to Priyadarsini Govind

90th anniversary celebrations of The Samskrta Academy

PFRDA conference on NPS National Pension System

ASA talk on India‟s evolving international outlook

(Cover page photos: At events.)

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Volume XXVIII Part 2 July 25, 2019 2 Business Advisor

 GST on spiritual products sold by trust?
Dr Sanjiv Agarwal

Charitable Trusts are formed for carrying out certain

objectives for which charitable trust is constituted as
per its trust deed. Though such trusts may enjoy
immunity from levy of GST on their activities, viz.,
supply of goods or services, all activities may not be
exempt. On whether sale of spiritual products by a
charitable trust would amount to „business‟ and
„supply‟ for the purpose of levy of GST, the Authority of
Advance Ruling (AAR), Maharashtra has pronounced
an advance ruling.

In Re: Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra (2018) 16

GSTL 332; (2018) 9 TMI 235; (2018) 97 taxmann.com 20 (AAR, Maharashtra),
the AAR ruled that it would be a taxable supply, as also affirmed by the
Appellate Authority for Advance Ruling (AAAR), Maharashtra (2019) 20 GSTL
779; (2019) 71 GST 541; (2019) 1 TMI 25; (2019) 101 taxmann.com 2 (AAAR-
Maharashtra).

Facts and Advance Ruling

The applicant, Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra,

was a public charitable and religious trust engaged in advancement of the
teachings of Paramkrupaludev Shrimad Rajchandra and spreading the
knowledge of Jain religion entrusted by Shri Mahavir Swami and other
Tirthankars.

The main object of the applicant trust was to spread the knowledge of the
Jain Dharam and advancement of teachings of Paramkrupaludev Shrimad
Rajchandra. The ancillary and incidental objects of the applicant trust were
to carry out activities for advancement of main object such as Satsang,
Shibirs, etc. To spread knowledge of the Jain Dharam through publications
of books, audio CDs, DVDs, etc. and other materials for students and public
in general and to set up organisations for helping people. The ancillary
object also includes, protecting birds and animals from being killed in
slaughterhouses and other activities.

The applicant was registered under VAT law and subsequently migrated to
GST. It is also registered u/s 12AA of Income Tax Act, 1961.

It sought advance ruling on the following issues:

Volume XXVIII Part 2 July 25, 2019 3 Business Advisor

(1) Whether the applicant which is a charitable trust with the main object
of advancement of religion, spirituality or yoga can be said to be in
business so as to attract the provisions of Central Goods and Services
Tax Act, 2017 and Maharashtra Goods and Services Tax Act, 2017?

(2) Whether the applicant which is a charitable trust with main object of
the advancement of religion, spirituality or yoga, is liable to registration
under the provisions of Central Goods and Services Tax Act, 2017 and
Maharashtra Goods and Services Tax Act, 2017?

(3) Whether sales of spiritual products which are incidental/ ancillary to

main charitable object of the applicant can be said to be business of the
applicant in terms of the definition in section 2(17) of the Central Goods
and Services Tax Act, 2017 and option provision of Maharashtra Goods
and Services Tax Act, 2017?

(4) Whether the sale of spiritual products can be said to be supply under
section 7 of the Central General Sales Tax Act, 2017 and equivalent
provision of the Maharashtra Goods and Services Tax Act, 2017 so as to
attract GST?

It was held that sales of spiritual products incidental and ancillary to its
main charitable object amounted to „business‟ and amounted to „supply‟
attracting Goods and Services Tax. There is no exemption granted to
charitable trusts in case of supply of goods which are taxable and are not
specifically exempt or nil rated. In case of service tax exemption, a

Volume XXVIII Part 2 July 25, 2019 4 Business Advisor

charitable trust is required to comply with the following criteria:

(i) The entity must be registered under section 12AA of the Income Tax Act;

(ii) The services provided by the entity must be a charitable activity.

Under the GST Act, not all services provided by a Trust registered under
section 12AA would be termed as a charitable activity. Only the following
activities are termed as charitable activity and are exempt from GST-
services relating to public health such as care or counseling of terminally ill
persons or persons with severe physical or mental disability; persons
afflicted with HIV or AIDS; persons addicted to a dependence-forming
substance such as narcotics drugs or alcohol; public awareness of
preventive health, family planning or prevention of HIV infection;
advancement of religion, spirituality or yoga; advancement of educational
programs or skill development relating to; abandoned, orphaned or
homeless children; physically or mentally abused and traumatised persons;
prisoners; or persons over the age of 65 years residing in a rural area;
preservation of environment including watershed, forests and wildlife.

It was thus ruled as follows:

Volume XXVIII Part 2 July 25, 2019 5 Business Advisor

(a) Applicant is in business and provisions of CGST Act, 2017/
Maharashtra GST Act, 2017 would be applicable;

(b) Applicant is liable to be registered under GST law provided the

aggregate turnover in a financial year exceeds the threshold limit
provided under section 22 of the CGST Act, 2017;

(c) Sale of spiritual products is business activity u/s 2(17) of CGST Act,
2017;

(d) Sale of spiritual products is a supply u/s 7 of CGST Act, 2017.

Appellate Ruling

Being aggrieved with the advance ruling, appellant filed appeal before
Appellate Authority for Advance Ruling (AAAR) on the following main
grounds:

(1) AAR did not consider the objects of Trust to consider whether it falls
under scope of „business‟ as defined in section 17 of CGST Act, 2017
and that they are not engaged in business.

(2) AAR had discussed the exemptions on issues not raised in application
no question was raised by the appellant on exemption of various
services provided by the Appellant. Thus, the findings on services
provided by the Appellant are ex-facie erroneous and not binding on the
Appellant.

(3) Judicial precedents have not been considered.

(4) The Appellant is a public charitable trust with the main object of
advancement of religious and spiritual teachings and not engaged in
any trade, commerce, manufacture, profession, vocation adventure,
wager or any other similar activity. Further, the Appellant does not get
any pecuniary benefit from various activities carried out by the
Appellant under the main object of spreading religious and spiritual
teachings.

(5) Appellant sold various spiritual products such as books, audio CDs,
DVDs, statues etc. which are for the advancement of the religious
teachings of the Paramkrupalu Shrimad Rajchandra. The said books
give in-depth study of the teachings of Gurudev and are only for
spreading the religious message. The DVDs and CDs are recorded
pravachan, satsang, spiritual songs and bhajans for those who cannot

Volume XXVIII Part 2 July 25, 2019 6 Business Advisor

 be personally present at the events. These were sold at cost or less then
cost price.

(6) Appellant cannot be considered as carrying on business even for the

ancillary and incidental activity of selling the spiritual products.

(7) Since the aggregate of taxable supplies of goods and services does not
exceed twenty lakh rupees, the Appellant was not liable for registration
under section 22 (1) of the CGST Act, 2017.

(8) Since the Appellant is not engaged in carrying out business as defined
under section 2(17) of the CGST Act, 2017, the other provisions and
rigors of the CGST Act shall not be applicable to the Appellant.

The AAR, agreed with AAR that the definition of „business‟ under the CGST
Act is wide enough to include trade, commerce, manufacture, profession,
vocation, adventure, wager or any other similar activities. The term „trade‟ is
a comprehensive term which covers the activity of buying, selling or
exchanging goods or services. The terms „trade and commerce‟ by
themselves mean the buying or selling goods or services between people.
The charitable trust may be formed with the fundamental objectives of
carrying out spiritual activity and salvation. But it also, at the same time,
sells goods and services under the auspices of the trust. The trust sells
various goods and services to the people desiring to buy them and such an
activity by itself forms a part of the objective of the trust. Under the heading
- „other objectives of the trust‟ and the heading „activity of spreading the
knowledge‟ the trust had printing and publishing as one of the objectives of
the trust. In the various objectives of the trust listed, it was observed that
the trust can dispose its property, buy and sell securities, sell the trust
property by public auction or let it out on lease etc. Thus, though it is
public charitable religious trust by name, activities of trade and commerce
also form a major part of the objectives of the trust.

The main activity or object of the trust includes trade and commerce and as
the definition of „business‟ under the CGST Act includes the words „trade
and commerce‟, it can be said that the appellant is engaged in supply of
goods and services and is, therefore, liable to get itself registered.

On charitable activities, certain activities are exempt from GST. Specific

exemption from GST is given to charitable institutions registered u/s.12AA
of the IT Act, 1961. Thus, it could be gathered that the intention of the
legislature is to tax all the activities of supply goods and services by
charitable trust except those specifically exempted. This is with the

Volume XXVIII Part 2 July 25, 2019 7 Business Advisor

background that charitable institutions qua their activities of charity do not
lend themselves to any specific concession or exemption from the definition
of „supply‟ or „business‟ or „taxable person‟. The very fact that certain
services have been carved out and given out a special treatment makes it
clear that all trade and commerce transaction of selling books, statutes,
CDs and DVDs etc. done commercially for consideration come within the
broad ambit of „business‟ under the CGST Act.

It further observed that in the present case, a reading of the GST Act/
rules/ notifications/ exemptions show that the intent was to consider
„charitable/ religious trusts‟ as taxable persons effecting taxable supply of
goods/ services and they have been given specific exemptions in some
areas. As said earlier, the GST law had no such exemption provisions.

It thus concluded that the intention of the legislature is to tax all the
activities of supply goods and services by charitable trust except those
specifically exempted. [In Re: Shrimad Rajchandra Adhyatmik Satsang
Sadhana Kendra (2019) 20 GSTL 779; (2019) 71 GST 541; (2019) 1 TMI 25;
(2019) 101 taxmann.com 2 ((AAAR- Maharashtra)].

(Dr Sanjiv Agarwal is Partner, Agarwal Sanjiv & Company, Jaipur.)

Volume XXVIII Part 2 July 25, 2019 8 Business Advisor

 Recent developments in GST
Dr Sanjiv Agarwal

The Finance Bill, 2019 stands passed by the

Parliament. Within a month of the last meeting, GST
Council meets again for 36th time on 25 July, 2019.

It is likely to consider the proposals of GST rate

reduction in case of electric vehicles, from 12% to 5%
besides taking up similar issue for solar systems,
windmills etc. The GST rate on chargers may also be
slashed. The issue on lotteries is also to be discussed
subject to clarity from Government.

CBIC has clarified that outsourcing services in relation to information

technology services (BPO in common parlance) would attract GST @ 18%
and such services would not qualify as exports. This is likely to adversely
impact BPO activities as cost would go up straight by 18% (Circular No. 107
dated 18.07.2019).

Clarification has also been issued in respect of goods taken or sent out of
India for exhibition or on consignment basis for export promoter. Such
activities shall not constitute supply as there is no consideration involved at
the point of sending/ taking out (Circular No. 108 dated 18.07.2019).

Recent developments at a glance

 Applicability of GST on goods sent out of India for exhibition or for

export promotion

 The activity of sending/ taking the goods out of India for exhibition or on
consignment basis for export promotion, except when such activity fall
under Schedule I to CGST Act, 2017, does not constitute supply, as there is
no consideration at that point in time.

 Since the activity is not a supply, the same cannot be treated as zero-
rated supply as per section 16 of the IGST Act, 2017.

 Such goods are required to be either sold or brought back within the
stipulated period of six months from the date of removal, if not, then supply
. shall be deemed to have taken place, on the expiry of six months.
.
.
Volume XXVIII Part 2 July 25, 2019 9 Business Advisor
 The sender shall issue a tax invoice in respect of such quantity of
specified goods which has been sold abroad or when goods are neither sold
nor brought back into India.

 Other compliances:

 Maintenance of records of such goods as per the format at Annexure to

the Circular by registered person.

 Goods shall be accompanied with a delivery challan issued (Rule 55 of the

CGST Rules, 2017).

 For export of these goods, execution of a bond or LUT is not required.

[Source: Circular 108/27/2019 Dated 18-07-2019]

 IT-enabled services: Clarification on intermediary or export of

services?

 The definition of intermediary inter alia provides specific exclusion of a

person, i.e., that of a person who supplies such goods or services or both or
securities on his own account.

 The supplier of services would not be treated as “intermediary” even

where the supplier of services qualifies to be “an agent/ broker or any other
person”, if he is involved in the supply of services on his own account.

 Therefore, in case of supplier located in India supplying services on behalf

of client located abroad -

o if supplier supplies IT enabled services on his own account, he will not be

categorised as intermediary, whereas

o if supplier arranges or facilitates the supply of goods or services or both

by the client located abroad to the customers of client, he will fall under the
ambit of intermediary as these services are merely for arranging or
facilitating the supply of goods or services or both between two or more
persons.

 But where the supplier provide both services i.e. on his own account and
support services, then the nature of service shall depend on the facts and
circumstances of the case.

Volume XXVIII Part 2 July 25, 2019 10 Business Advisor

 The supplier who is not an intermediary as per section 2(13) of the IGST
Act, 2017 can avail benefits of „export of services‟ if he satisfies the criteria
as per section 2(6) of the IGST Act, 2017.

 Exports to get tax benefit whereas intermediary to pay GST @ 18%.

[Source: Circular No 107/26/2019 dated 18-07-2019]

 Changes in the CGST Rules, 2017

 Electronic ticket in multiplex screens [Rule- 54(a)]

 An electronic ticket shall be required to be issued by a registered person

supplying services by way of admission to exhibition of cinematograph films
in multiplex screens.

 The said electronic ticket shall be deemed to be a tax invoice for all
purposes of the Act, even if such ticket does not contain the details of the
recipient of service but contains the other information as mentioned under
rule 46.

 The supplier of such service in a screen other than multiplex screens

may, at his option, follow the above procedure.

 Surrender of enrolment of goods and services tax practitioner [Rule- 83B]

 A goods and services tax practitioner seeking to surrender his enrolment

shall electronically submit an application in Form GST PCT-06, at the
common portal, either directly or through a facilitation centre notified by the
Commissioner.

 The Commissioner, or an officer authorised by him, may after causing

such enquiry as deemed fit and by order in Form GST PCT-07, cancel the
enrolment of such practitioner.

[Source: Notification No. 34/2019 – Central Tax dated 18-07-2019]

 Extension in due date of Form GST CMP-08

 The due date of Form GST CMP-08 for the quarter April, 2019 to June,
2019, or part thereof has been extended to 31st day of July, 2019.

[Source: Notification No. 34/2019 – Central Tax dated 18-07-2019]

(Dr Sanjiv Agarwal is Partner, Agarwal Sanjiv & Company, Jaipur.)

Volume XXVIII Part 2 July 25, 2019 11 Business Advisor
 Press briefings, meetings - Playlists

India International Leather Fair IILF 2018 press briefing

MSME DI Development Institute press briefing in PIB

Volume XXVIII Part 2 July 25, 2019 12 Business Advisor

 Press briefings, meetings - Playlists

KSRI talk by Dr C. L. Ramakrishnan on jurisprudence

Onida launch of 84 inverter air conditioner models

Volume XXVIII Part 2 July 25, 2019 13 Business Advisor

 Press briefings, meetings - Playlists

WVC World Veg Council lecture by Dr M. A. Hussain

Sankara Nethralaya awards for Deepak Parekh, Vani Jairam

Volume XXVIII Part 2 July 25, 2019 14 Business Advisor

 Press briefings, meetings - Playlists

Exhale Innovations Worldwide press briefing

SBI Life Insurance press briefing on Poorna Suraksha

Volume XXVIII Part 2 July 25, 2019 15 Business Advisor

 Press briefings, meetings - Playlists

RCME vocational excellence award to Priyadarsini Govind

90th anniversary celebrations of The Samskrta Academy

Volume XXVIII Part 2 July 25, 2019 16 Business Advisor

 Press briefings, meetings - Playlists

PFRDA conference on NPS National Pension System

ASA talk on India’s evolving international outlook

Volume XXVIII Part 2 July 25, 2019 17 Business Advisor

 Published by: Shrinikethan, Chennai (Map)
Edited by: D. Murali
July 25, 2019

Volume XXVIII Part 2 July 25, 2019 18 Business Advisor