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Karnataka AAR ruling: While head tonsuring attracts GST, temple prasadam out of its ambit

Shishir Sinha New Delhi | Updated on May 09, 2020 Published on May 09, 2020

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Authority for Advance Rulings (AAR) of Karnataka in its recent ruling mentioned that services for fees collection for tonsuring the heads of devotees, vahana pooja or even for entry of vehicle will attract Goods & Services Tax (GST),

An important part of ruling says that Prasadam, sold by temple administration, will not attract GST. However, other articles such as cloth bags by the administration will attract GST. Any ruling by AAR is binding in applicant and jurisdictional tax authority. Appeal can be made in Appellate Authorities for Advance Ruling (AAAR) and after that in the High Court. Ruling by AAR has persuasive value in similar matter and many a time such ruling compels the Tax Administration to amend law or rules.

In this particular matter, brought before AAR-Karnataka, the applicant Sri Malai Mahadeshwara Swamy Kshethra Development Authority, posed a dozen questions for ruling on taxability. These questions, on the nature of activity done by the applicant into various categories such as seva services which are in the form of worship and darshan of the diety for which charges are collected from the devotees,sale of prasadam, rental services of commercial premises, leasing of the right to deliver services for consideration, rental services of accommodation, leasing services of commercial premises and services for providing access to the premises for vehicles

Earlier, various activities used to be managed by the temple staff themselves. Since the applicant want to transfer rights to collect fees for various activities, issue of taxability and if yes then at what rates need to be answered.

After hearing, AAR ruled that the auctioning for collection of vehicle entry fees, auctioning of service of tonsuring the heads of devotees, auctioning of right to collect service charges and auctioning of the right to collect charges for vahana pooja are supply of services and hence are liable to GST at the rate of 18 per cent. The sales of prasadam by the applicant, is exempt from tax but if goods other than prasadam are sold, they would be liable to tax at appropriate rates applicable to those goods

Renting of commercial shops’ services are exempt if the rental value is less than ₹10,000.00 per month per shop and if the rent per shop is more than ₹10,000₹per month, the same would be liable to tax at 18 per cent under GST. Providing services of accommodation to pilgrims where the charges are less than ₹1000 per day per room will not attract GST. Collection of seva charges and collection of special darshan charges are exempt from GST as they are not covered under supply

Renting out Kalyanamandapams is exempt from GST if the rental is less than ₹10,000 per day. As, collection of entry fees providing access to the temple is liable to tax at 18 per cent, hence future tendering of the right to collect charges and provide services is liable to tax at 18 per cent under GST

Harpreet Singh, Partner with KPMG termed this ruling as omnibus case law which provides threadbare comments upon taxability and exemption of various services supplied at temples. “Such case laws remind us to not throw caution to the wind by presuming all supplies at religious places, educational institutions, NGOs and alike to be exempt under GST,” he said.

Published on May 09, 2020

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