Category: GST

GST

The Institute of Chartered Accountants of India v. DGIT W.P.(C) No.3147/2012

The Institute of Chartered Accountants of India v. DGIT W.P.(C) No.3147/2012

Whether the Institute of Chartered Accountants of India (ICAI) is a charitable institution and is therefore exempt from income tax on its income?

A professional body can be a charitable institution if its primary object is to promote charitable purposes and its income is used solely for the advancement of its charitable objects.

The Institute of Chartered Accountants of India (ICAI) is a statutory body established under the Chartered Accountants Act, 1949.
It is responsible for regulating the profession of chartered accountancy in India.
The ICAI provides a number of services to its members and students, including education, training, and professional development.
The ICAI argued that it is a charitable institution because its primary object is to promote the education and training of chartered accountants.
The ICAI also argued that its income is used solely for the advancement of its charitable objects.
The Director General of Income Tax (DGIT) argued that the ICAI is not a charitable institution because it is a professional body that provides services to its members for a fee.
The DGIT also argued that the ICAI’s income is not used solely for the advancement of its charitable objects.

The Delhi High Court held in this case held that the Institute of Chartered Accountants of India (ICAI) is a charitable institution and is therefore exempt from income tax on its income.
The Court held that the ICAI satisfies both of the following criteria for being a charitable institution:
The ICAI’s primary object must be to promote charitable purposes.
The ICAI’s income must be used solely for the advancement of its charitable objects.
The Court found that the ICAI’s primary object is to promote the education and training of chartered accountants.
The Court also found that the ICAI’s income is used solely for the advancement of this charitable object.
The Court’s judgment is important because it clarifies that professional bodies can be charitable institutions if their primary object is to promote charitable purposes.
The judgment also clarifies that the fact that a professional body charges its members for its services does not necessarily mean that it is not a charitable institution.

GST

CST v. Sai Publication Fund 2002 (4) SCC 57

Whether the respondent is a dealer in accordance with Section 2(11) of The Bombay Sales Tax Act, 1959?
Whether the trust, by publishing and selling booklets and other literature bearing Saibaba’s words, can be said to be engaged in a “business” as contained under Section 2(5A) of the Act?

A trust or religious organization that sells books and other literature at a nominal price to cover costs are not engaged in a business and is therefore not liable to pay sales tax.

The respondent, Sai Publication Fund, was a trust created by four devotees of Saibaba of Shirdi with the object of spreading his message.
In furtherance of its object, the trust published books, pamphlets, and other literature containing the message of Saibaba under the aegis of “Sai Publications”.
The trust sold these publications to devotees at a nominal price to cover costs.
The sale proceeds of the publications went to the trust and form part of the trust property, which could be utilized only for the advancement of the objects of the trust.
There was a specific provision in the trust deed that in the event of the failure of the trust to carry on its aims and objects, the remaining fund in its hands would be handed over to Sansthanam of Shirdi.

The Hon’ble Supreme Court of India in this case held that the trust / organization was not a “dealer” within the meaning of Section 2(11) of the Bombay Sales Tax Act, 1959.
The Court held that the trust’s activities were not commercial in nature and that the sale of literature was incidental to its main purpose of spreading the message of Saibaba.
The Court also noted that the trust was not generating a profit from the sale of literature.
The Court further held that the trust’s activities were not covered by the definition of “business” under Section 2(5A) of the Act.
The Court held that the trust was not engaged in any trade, commerce, or manufacture, and that its activities were not in the nature of trade, commerce, or manufacture.
The Court’s judgment in this case has important implications for trusts and religious organizations that sell literature and other goods at a nominal price to cover costs.
The judgment clarifies that these organizations are generally not liable to pay sales tax.

GST

Skill Lotto Solution Pvt. Ltd. v. Union of India, 3 December, 2020

Whether the Writ Petition is maintainable under Article 32 or not
Whether the inclusion of lottery as actionable goods in the ambit of goods as per the Goods and Services Tax Act is constitutional or not?
Whether it should be taxed for the same reason or not?

The levy of GST on lottery, betting, and gambling is constitutional. It has been held that these activities are “res extra commercium”, which means that they are outside the sphere of commerce. This means that the government is free to regulate and tax them in any way it sees fit.

Skill Lotto Solution Pvt. Ltd. is an authorized agent of the State of Punjab for the sale of lottery tickets.
The company challenged the levy of GST on lottery, betting, and gambling under the GST Act, 2017.
The company argued that the levy of GST on these activities was unconstitutional and discriminatory.
The case went to the Supreme Court, which had to decide whether the levy of GST on lottery, betting, and gambling was constitutional and discriminatory.

The Supreme Court of India held that levy of GST on lottery, betting, and gambling is constitutional.
Lottery, betting, and gambling are “res extra commercium”, which means that they are outside the sphere of commerce which means that the government is free to regulate and tax them in any way it sees fit.
The Hon’ble Court held that levy of GST on lottery, betting, and gambling is not discriminatory.
These activities are already subject to other forms of taxation, such as income tax and entertainment tax.
The GST law also provides for a number of exemptions and concessions, which benefit certain categories of people and businesses which means that the government is free to tax lottery, betting, and gambling in any way it sees fit.