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Omnibus case laws throw caution for presuming taxability exempted under GST

  • Jun 9, 2020 | Avalara

Omnibus case laws throw caution for presuming taxability exempted under GST

As a rule of thumb, most of the activities of a non-profit entity are generally exempted under GST in India. However, there may be some activities that can attract GST lens. Making a blanket presumption that such entities are completely exempted from GST should be avoided and extra care should be taken while involving in any revenue-generating transactions since similar transactions are undertaken by profit-making entities nowadays as well.

There are two such recent AAR rulings which brought our attention to the taxability of revenue-generating transactions carried out by non-profit entities and thus, makes the determination of taxability on goods and services under GST and calculation of GST much more complex.

Temple Service Case - Karnataka AAR Ruling

In this first case, the Karnataka Authority of Advance Ruling (AAR) clarified to the applicant, M/s Shri Malai Mahadeshwara Swamy Kshetra Development Authority, registered as a religious and charitable institution, that although the sale of prasadam by temples might be exempted under GST, goods other than prasadam and services including seva services, renting out accommodations or other commercial places would be liable to tax if they meet specific conditions and would attract the appropriate rate of taxes.  Such goods and services could be sold either by the institution itself or by selling off the rights to provide such goods and services and in lieu of such rights collect the money. Here's an overview of the applicability, but not limited to:

GST Applicable GST Exempted  
  • Service of tonsuring the heads of devotees
  • Charges for vahana pooja
  • Collection of vehicle entry fees
  • Cloth bags sold by the temple administration
  • Renting of commercial shops’ services if the rental value is more than ₹10,000 per month per shop
  • Providing services of accommodation to pilgrims where the charges are more than ₹1000 per day per room
  • Renting out Kalyanamandapams if the rental is more than ₹10,000 per day
  • Collection of entry fees providing access to the temple
  • Sale of prasadam
  • Renting of commercial shops’ services if the rental value is less than ₹10,000.00 per month per shop
  • Providing services of accommodation to pilgrims where the charges are less than ₹1000 per day per room
  • Collection of seva charges and collection of special darshan charges
  • Renting out Kalyanamandapams if the rental is less than ₹10,000 per day
 

Guru Nanak Dev University Case in Amritsar

In the Guru Nanak Dev University case, the institution was partially implying GST on specific services, but they will now be implementing GST on educational services additional to the recognised academic education by the UGC or the ministry concerned. The additional services include gymnasium facility, the arrangement of workshops and seminars, getting transcripts, migration certificates from the varsity and so on. GST on services like hostel and mess catering facilities for students will be exempted.

GST Applicable GST Exempted
  • Gymnasium facility
  • Arrangement of workshops and seminars
  • Getting transcripts from the varsity
  • Getting migration certificates from the varsity
  • Degree education on all courses offered by the GNDU
  • Hostel facility
  • Mess catering facility

The above two cases are examples of omnibus case laws which remind us to carefully presume taxability of all supplies exempt under GST like religious places, educational institutions, NGOs and so on. The cases provide threadbare comments upon taxability and exemption of various services supplied at temples, religious places, educational institutions, NGOs and alike and remind us not to go for blanket presumptions, rather look into the basic of GST rules about the places and nature of supply of goods and services.


Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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Avalara
Posted By Avalara
Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the U.S. and around the world in Canada, the U.K., Belgium, Brazil, and India.