Services offered for facilitating puja or abhishek by a priest will attract the Goods & Services Tax (GST), according to Maharashtra’s Authority for Advance Ruling (AAR-MAHA). It also made it clear that if the facilitation is done through a website, the person providing the services will have to register the site as an e-commerce operator.

In the instance case, Sadashiv A Shete is engaged in the business of arranging/booking pandits online for conducting religious ceremonies such as pujas and abhisheks. He does not charge for his service which he provides through his own website. He hires various pandits to perform religious duties. He approached the AAR seeking clarity on whether he will be required to register under the GST Act and whether the services offered by him are exempted. He also wanted determination of the time and value of goods or services or both and determination of liability to pay tax on any goods or services or both.

The need for advance ruling arose as Serial Number 13 of Notification Number 12/2017, Central Tax (Rate) dated June 28, 2017, exempted conduct of any religious ceremony and renting of precincts of a religious place meant for general public, owned or managed by charitable or religious trust, from the GST. Here, the Authority said the applicant is actually not performing any puja or abhishek. It means he is acting as an agent to co-ordinate between the person who wants the services and the pandits who are actually performing the religious ceremonies. Also, pandits are not employees of the applicant. Accordingly, the authority has ruled that the applicant will not get exemption.

Since the applicant is providing his services through his own website and business compliance is also made through the electronic network media, he is required to be registered as an e-commerce operator without fulfilling the threshold limit (₹20 lakh). Also, the Authority made it clear that the applicant is liable to pay the GST on the value of commission received from the website users/pandits.

‘Facilitation of services’

According to Harpreet Singh, Partner in KPMG, the Order has rightly held that ‘facilitation of services’ is a ‘service’ in itself and is different from the inherent services being facilitated.

Accordingly, exemption on services being facilitated (puja services in this case) does not necessarily mean that its facilitation would also be exempt.

“Another key observation in the Order is that collection of total amount from customers by an e-commerce operator would not necessarily make the entire amount liable to be taxed in the hands of the e-commerce operator. The GST is applicable only on the commission received from the website users and not on the total amount received through the website,” Singh clarified.

The AAR helps the taxpayer by giving an advance decision in relation to the supply of goods and/or services proposed to be undertaken or being undertaken by the assessee. The decision is binding on the applicant and the jurisdictional tax authority. Though such a decision does not have precedent value like that of a High Court or Supreme Court judgment, it can be used as a persuasive tool in future cases.

Also, businesses would like to use such ruling in their tax planning and business strategy.