No GST on Afforestation of Mangrove Species by Charitable Institutions

According to the Gujarat Authority for Advance Ruling (AAR), the nonprofit organization’s afforestation activities are GST-exempt.

The two-person bench of Amit Kumar Mishra and Milind Kavatkar noted that mangrove plantation efforts fall within the category of charity activity. Since the applicant is a charitable trust registered under Section 12AA of the Income-tax Act of 1961, the service of planting mangroves by the applicant qualifies for a GST exemption.

The applicant is a charity trust that conducts philanthropic operations and has been registered under Section 12AA of the Income Tax Act of 1961. The trust’s goals are to carry out, support, and encourage initiatives that advance human development and welfare among the general public as well as to provide all kinds of services for the community’s improvement, relief, advancement, and carrying out any program for the advantage of others as well as for any other public good. The trust’s objects are covered by Section 2(15) of the Income Tax Act.

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The applicant asks for an advance ruling on the problem of whether the afforestation activity comprised of the plantation of mangroves, does not levy GST.

The applicant argued that because they are not conducting a “business,” their transactions do not qualify as “supply” transactions under the GST Acts. As a result, the applicant has no “turnover” and is exempt from the GST Acts’ registration requirements. A supply is only subject to GST if it is made for consideration in the conduct or advancement of business, according to Clause (a) of Section 7(1). There cannot be any supplies made by the applicant that are subject to GST as the appellant is not engaged in any commercial activity.

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The AAR ruled that the petitioner has no economic motivation and has not reaped any financial benefit from these actions. For the plantation project, all the funds obtained in the year 2022-23 would be utilized. As a result, the applicant’s activity does not fall under the definition of “supply” under Section 7 of the CGST Act 2017.