No GST Payable On Afforestation Carried Out By Charitable Organisation: Gujarat AAR

The Gujarat Authority for Advance Ruling (AAR) has held that the afforestation carried out by the charitable organisation is exempt from GST.

The two-member bench of Amit Kumar Mishra and Milind Kavatkar observed that the activities of mangrove plantations are covered under charitable activity. The applicant is registered under Section 12AA of the Income-tax Act, 1961, as a charitable trust, and thus the service of planting mangroves by the applicant is eligible for exemption from the payment of GST.

The applicant is a charitable trust registered under Section 12AA of the Income Tax Act of 1961 that carries out charitable activities. The objects of the trust are to undertake, promote, and support such activities leading to the promotion of human development and welfare among the general public and to render all types of services for the amelioration, relief, betterment, and advancement of the community and for carrying out any programme for the benefit of fellow beings and for any other object of public utility. The trust's objects are covered by Section 2(15) of the Income Tax Act.

The applicant sought an advance ruling on the issue of whether the activity of afforestation, which includes the plantation of mangroves, is exempt from GST.

The applicant contended that since the applicant is not engaged in "business," the transactions of the applicant are not "supply" transactions as defined under the GST Acts. Hence, the applicant does not have any "turnover," and therefore, it is not required to take registration under the GST Acts. As per Clause (a) of Section 7(1), a supply will be liable for GST only when it is made for consideration in the course or furtherance of business. Since the appellant is not carrying on any business, there can be no supplies liable to GST at the hands of the applicant.

The AAR ruled that the applicant does not have any profit motive and has not earned any income due to such activities. All funds received in 2022-23 will be used solely for the plantation project. Therefore, the applicant's activity is not covered under "supply" as defined under Section 7 of the CGST Act 2017.

Applicant’s Name: M/s. Vikas Centre For Development

Date: 30.12.2022

Click Here To Read The Ruling