2026-VIL-106-AAR
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SGST Advance Ruling Authority

GST – Kerala AAR - Grant of Rights through Auction - Taxability of consideration received by a statutory religious board for auctioning the right to collect remnant rice offerings at a temple – HELD - The transaction does not involve the supply of pre-ascertained or identified quantities of rice as goods at the time of contract, but rather the conferment of an exclusive commercial licence or right upon the successful bidder to collect and appropriate offering remnants arising during temple operations for a specified period, the quantity and nature of which are uncertain at the time of contracting. The use of a competitive auction mechanism evidences that the activity is undertaken in the course or furtherance of business with the objective of maximising consideration. The religious origin of the offerings does not alter the essential legal character of the contractual arrangement, which is the grant of a right for consideration. Once an article is offered by a devotee, it ceases to retain the character of agricultural produce and becomes an asset of the temple - Although the Applicant is a statutory religious board, it is a body corporate engaged in “business” within the meaning of Section 2(17) of the CGST Act, 2017. Accordingly, the assignment of rights and licences for consideration constitutes “supply” under Section 7(1) of the CGST Act, 2017. The transaction therefore falls squarely within the ambit of a licence or grant of rights constituting a supply of services, and is accordingly taxable under the relevant provision of the Act – Ordered accordingly - Taxability of consideration received by a statutory religious board for auctioning the right to collect coconuts and broken coconuts offered by devotees at temples under its administration - Whether the assignment of collection rights for coconuts constitutes a sale of nil-rated goods or a taxable supply of services – HELD - The subject matter of the auction is not the coconuts as goods but the exclusive commercial right or licence granted to the successful bidder to collect and appropriate such offerings during a specified period. The adoption of a competitive tendering mechanism indicates that the activity is undertaken in the course or furtherance of business. The exemption or nil-rating applicable to coconuts as goods is not attracted since the applicant does not supply the coconuts as commodities but confers a right to collect them. The consideration flows from the contractor to the applicant in exchange for the conferment of this exclusive right, and the underlying nature of the transaction is therefore a supply of services and not a sale of goods - Taxability of consideration received for auctioning the right to collect clothing abandoned by pilgrims in a river - Whether such transaction constitutes a supply of goods or a taxable supply of services – HELD - There is no transfer of identified or ascertained goods at the time of the contract, and the quantity and nature of the clothing to be collected remains uncertain and dependent on future events, with the successful bidder bearing the associated commercial risk. The grant of an exclusive commercial privilege to collect and deal with such materials for a lump-sum auction amount constitutes the conferment of a right or licence, which is a supply of services. The hygienic and religious objective underlying the arrangement does not alter the contractual and commercial character of the transaction. The exemption applicable to sanitation services supplied to Governmental authorities is not attracted since the supply made by the applicant is not the sanitation activity itself but the grant of a right to the contractor to carry out such activity. The activity falls within the scope of business and constitutes a taxable supply of services - Taxability of consideration received for auctioning the right to harvest coconuts from coconut palms situated on temple lands - Whether the assignment of such agricultural rights constitutes a taxable supply or is exempt under the relevant notification – HELD – Coconuts on the tree constitute agricultural produce in their primary form. The assignment of the right to collect and manage such standing crops through auction is intrinsically linked to the activity of harvesting and cannot be viewed in isolation from agricultural operations. The relevant exemption notification exempts services relating to agricultural operations directly related to production of agricultural produce, including harvesting. The grant of the right to collect and manage such produce falls squarely within the scope of this exemption as it is directly related to harvesting operations. The applicant does not derive revenue from a commercial licence unconnected to agricultural activity but assigns the right to carry out harvesting of crops attached to temple lands, which is a service directly related to agricultural operations - Taxability of honorarium and sitting fees paid by a statutory religious board to its president and members - Whether such payments attract reverse charge liability as services supplied by a director to a body corporate – HELD - The Notification No. 13/2017-Central Tax (Rate) prescribing reverse charge liability is restricted to services supplied by a director of a company or a body corporate, and does not extend to services rendered by members of a statutory board or governing body, unless such persons hold the legal status of directors in law. The president and members of the board are statutory functionaries appointed under the governing legislation and do not constitute a board of directors, nor are they appointed as directors under any corporate law. Merely being members of the board of a body corporate does not render them directors for the purposes of the said notification. The services rendered by such persons therefore do not fall within the prescribed category, and the reverse charge provisions are accordingly not attracted - Tax is not payable under reverse charge - Taxability of advocate fees and legal expenses paid by a statutory religious board to unregistered advocates - Whether reverse charge is attracted on legal services received by the applicant – HELD - The Notification No. 13/2017-Central Tax (Rate) mandates reverse charge on legal services provided by an individual advocate or firm of advocates to a business entity located in the taxable territory. The definition of business under the relevant provision is wide and inclusive, covering all activities undertaken for consideration, including activities incidental or ancillary thereto, irrespective of profit motive. The applicant, being engaged in revenue-generating activities such as auctioning of rights and generating consideration from temple assets, qualifies as a business entity. Legal services provided by advocates to the applicant therefore attract reverse charge, and the applicant, as recipient of such services, is liable to discharge the tax - Tax is payable under reverse charge - Taxability of consideration received for auctioning the right to perform religious rituals such as specific ceremonies within temple premises - Whether such transaction is exempt as the conduct of a religious ceremony or constitutes a taxable supply of services – HELD - The exemption for conduct of religious ceremonies is applicable to the person who actually performs the ceremony and not to a transaction by which the right to perform such ceremonies is granted to a third party for consideration. The applicant does not itself conduct the religious ceremony but grants an exclusive licence or right to a qualified priest or acharyan through a competitive auction process. Such a transaction is a commercial supply undertaken in the course or furtherance of business and is distinct from the actual conduct of a religious ceremony. The religious nature of the underlying ritual does not alter the contractual character of the arrangement between the applicant and the suc
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