In a recent AAAR of Karnataka in case of a religious Trust i.e. M/s Acharya Shree Mahashraman Chaturmas Pravas Vyavastha Samiti Trust it was held that GST would be charged on the renting services provided by the religious trust to the pilgrimages.
Facts of the case:
Appellant is a religious trust registered under section 12AA of the Income Tax act and was formed for carrying out religious and charitable activities. The trust is principally engaged in the field of spreading knowledge and advancement of Jain dharma.
The appellant conducted religious function from July 2019 to November 2019 near Bengaluru. The main activities were pravanchan, meditation, dhyan etc. The appellant provided boarding and lodging activities to devotees for which appellant erected temporary residential rooms and facilities.
There were 5 category of rooms:
Category 1: 2 BHK.
Category 2: 1 BHK.
Category 3: Single room.
Category 4: Single room.
Category 5: Dormitory consisting 12 beds.
All the above places were equipped with water facility, AC restroom and 2 BHK and 1 BHK accommodation even had cooking facility. The trust was even providing food at concessional rate to the devotees. the range of above accommodation would range between Rs. 250 to Rs. 1000 per day.
There were two concern:
1. Renting of dormitory consisting of 12 beds where the rate per bed per day was Rs. 250.
2. Renting of 2 BHK where rent per day was less than Rs. 1000 per day.
According to the appellant as he was a religious trust and was not doing the service for business same should not be covered under GST and should be covered under heading 9963 i.e. conduct of religious service or renting of precincts of religious places meant for general public owned and managed by entity registered as a charitable or religious trust u/s 12AA of the Income tax act.
Provided that nothing contained in above heading would apply where rent of room per day was more than Rs. 1000 per day or rent for a community hall etc was more than Rs. 10000 per day and rent for space of shops was more than 10000 per day.
Hence the appellant argued that since his rent was less than 1000 per day no GST should be charged on same and as far as dormitory is concerned same was rented out on per bed basis and hence cost of same was 250 per bed per day.
However The appellate authority of advance ruling was of the view that the 2 BHK provided by the appellant was not a room but a unit of accommodation consisting of 2 bed rooms, hall, kitchen, restroom etc and hence the above exemption was not available to the appellant. Similarly the dormitory cannot be considered as a room and same would also not qualify for such exemption.
Therefore it was held that GST needs to be levied on rent of both the 2 BHK and dormitory as a single unit.
To read full judgement CLICK HERE.
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