The Gujarat Authority for Advance Ruling (AAR) in the case of M/s. Vikas Centre For Development vide Advance Ruling No. GUJ/GAAR/R/2022/50 dated 30.12.2022, has held that the afforestation carried out by the charitable organisation is exempt from GST.

In this case, the applicant is a charitable trust registered under Section 12AA of the Income Tax Act of 1961 that carries out charitable activities. The objects of the trust are to undertake, promote, and support such activities leading to the promotion of human development and welfare among the general public and to render all types of services for the amelioration, relief, betterment, and advancement of the community and for carrying out any programme for the benefit of fellow beings and for any other object of public utility. The trust’s objects are covered by Section 2(15) of the Income Tax Act. 

The applicant sought an advance ruling on the issue of whether the activity of afforestation, which includes the plantation of mangroves, is exempt from GST. 

The applicant contended that since the applicant is not engaged in “business,” the transactions of the applicant are not “supply” transactions as defined under the GST Acts. Hence, the applicant does not have any “turnover,” and therefore, it is not required to take registration under the GST Acts. As per Clause (a) of Section 7(1), a supply will be liable for GST only when it is made for consideration in the course or furtherance of business. Since the appellant is not carrying on any business, there can be no supplies liable to GST at the hands of the applicant.

The AAR noted the benefits of plantation of Mangroves along coastal and looking to the impact of plantation of mangrove on environment, social and economic, and hold that the activities of plantation of mangrove carried out by the applicant are covered under point (iv) of Charitable Activity define under clause 2 (r ) of Notification No. 12/2017-CT (R ) dated 28-6-2017 as amended. Further, the applicant service of afforestation which include plantation of Mangroves along with the coastline to protect the environment and up liftmen of socially and economically marginalized people cannot be considered as a business activity. The said activity have not been done for the commercial benefit but it is being carried out for social and economic benefit of the marginalized people and to protect the environment.

The AAR observed that the applicant does not have any profit motive and has not earned any income due to such activities. All funds received in 2022-23 would be used solely for the project of plantation only. Therefore, the applicant’s activity is not covered under “supply” as defined under Section 7 of the CGST Act, 2017. 

The AAR rules that the activities of mangrove plantations are covered under charitable activity as defined under Clause (r) of the Notification No. 12/2017-CT(Rate) dated 28.06.2017. The applicant is registered under Section 12AA of the Income-tax Act, 1961, as a charitable trust, and thus the service of planting mangroves by the applicant is eligible for exemption from the payment of GST.