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Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST Update on Taxability of the Legal, Medical, and financial support by Charitable Trust 82/2020-21

GST Update on Taxability of the Legal, Medical, and financial support by Charitable Trust 82/2020-21
GST Update on Taxability of the Legal, Medical, and financial support by Charitable Trust
In this update, we will discuss recent West Bengal Advance Ruling(03/WBAAR/2020-21 dated 29.06.2020) given in case of a NGO Swayam which is unregistered and facilitates access of the women survivors to legal aids. And it does not charge anything from the survivors for the services it extends.
The NGO facilitates the survivor to the police and the courts and liaise with the lawyers when required. Depending upon the financial circumstances of the survivor, it often provides support in the form of reimbursement of the court fee, lawyers’ fee or medical expenses, including hospitalization or psychiatric counselling. Such financial support is also extended for paying the remuneration of the trainers and charges of the facilitators for trainings and workshops.
The applicant approached the Authority of Advance Ruling to ask whether they are liable to pay tax on the legal, medical, psychological and financial support including training programs and workshops provided to the women and their children survivors.
The AAR observed that applicant merely assist the women and children survivors to support in various ways to get back on their feet. The charitable trust does avail the services but the women or children are the actual recipient of the services. The applicant makes payments not to the supplier of the services, but as financial support in the form of reimbursement to the recipient survivor. Therefore, the applicant is not liable to pay GST on advocate and other services which attract reverse charge mechanism.Further the applicant does not charge any consideration for facilitating the legal aid and other assistance. Such activities of the applicant, therefore, does not result in ‘supply’ of service as defined under section 7 (1) of the GST Act. The applicant is not, therefore, liable to pay tax thereon.
However, Tamil Nadu AAR has ruled that conducting the Marathon event by a charitable organization called ‘Dream Runner Foundation’ is not an “exempt supply”.
Dream Runners Foundation is a registered charitable trust with charitable objects and carries out various charitable programs and activities. It is also registered u/s 12AA of income tax and therefore tax exempt and has certificate u/s 80G which entitles donors to tax deduction.
The principal objects of the Trust as per the Trust Deed is to organize events like Marathon, Blood Donation Camp, Organ Donation Camp, Eye Donation Camp, Health Awareness Camp etc., and utilize the funds raised from such events for charitable cause like funding to NGOs, Hospitals, Trusts and other Charitable Organizations.
Every year since 2012, the trust organizes and conducts a marathon event named ‘Dream Runners Half Marathon’. The event involves collecting donations from the participating runners and also money pooled in through corporate donations for the event. The amount so received is utilized for the conduct of the event that includes permit and approval fees, fees paid to the government authorities, expenses for the conduct of the event that includes prize money for the winners and the balance left is paid as donations to the NGOs supporting the cause or directly to the beneficiaries.
AAR has taken the view that as per Section 2(31) of CGST Act, “consideration” in relation to the supply of goods or services or both includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government.
The money collected by the charitable trust from the participants in the Marathon was used for the expenses of organizing the marathon in terms of paying the registration partner, event management charges, prize money, publicity, other organizing expenses such as T-shirts, banners and other related materials etc., as seen in their balance sheets. Thus, AAR has concluded that the money collected from the participants “is a consideration towards the supply of service of organizing and conducting the marathon for the participants and the same is liable to GST”.
Further, although the trust is registered u/s 12AA of Income Tax “only those activities of such an entity are exempt from GST which qualify under the definition of “charitable activities” given in the CGST and SGST Notifications of June 2017.
Thus, according to AAR, the conduct of Marathon event by the trust for participants is a not an exempt supplyunder CGST/TNGST Act and since the trust is providing “taxable supply of services” and has aggregate turnover in a financial year exceeding twenty lakh rupees, the trust is required to be registered under CGST/TNGST Act.
Thus, it can be concluded from the above two rulings that consideration plays an important role in determining the taxability of a transaction or an event. In the West Bengal AAR, the NGO was not receiving any kind of consideration from women and children in respect of whom the charitable activities are being carried on. They are receiving donations from other persons and undertaking charitable activities.  On the contrary, Dream Runners Foundation was receiving consideration from various participants for participating in Marathon. Hence, it is held that these are chargeable to tax. Hence, it can be concluded that if trust is receiving donation from other person who are not beneficiaries of the trust then it is not taxable. But if you are receiving donations from beneficiaries of the trust then it is taxable.
This is solely for educational purpose. 
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