In the case of Nagri Eye research Foundation v. Union of India cited in [2021] 128 taxmann.com 310 (Gujarat), the petitioner is a registered charitable Trust set up with various objectives basically and essentially of undertaking eye and research activities to be carried out by C.H. Nagri Municipal Hospital as well as procurement and management of funds for the purpose of education and charitable activities in eye research and prevention of blindness.
The petitioner trust is also running a medical store where the medicines to the indoor and outdoor patients of the petitioner Hospital are sold at a lower rate.
The petitioner Trust had filed an application before the GAAR under section 97 the CGST Act seeking advance ruling on questions in respect of requirement of GST registration for medical store run by Charitable Trust and Medical store providing medicines at a lower rate is it amounts to supply of goods?
The AAR vide the Advance ruling dated 19-5-2020 came to the conclusion that the petitioner Trust was required to obtain GST Registration for the medical store run by the Trust and that the medical store providing medicines at a lower rate amounted to supply of goods. The petitioners had filed an Appeal before the GAAAR. The GAAAR vide the impugned order dated 28-1-2021 dismissed the said Appeal. The petitioners have filed the present petition to Hon’ble High Court of Gujarat.
The learned Advocate appearing for the petitioners has submitted that the activities carried on by the petitioner Trust by running a medical store could not be said to be a “business” within the meaning of Section 2(17) of the CGST Act, inasmuch such activities can neither be said to be a trade or commerce nor for any pecuniary benefit. The learned Advocate submitted that since the activities of the petitioner Trust could not fall in the first part of the definition, i.e. trade or commerce, the application of the second part of the definition would not arise.
The Hon’ble High has stated that it is not disputed that the petitioners are selling the medicines, may be at a cheaper rate but for consideration in the course of their business. The submission that such a sale could not said to be a “business” in view of the definition contained in Section 2(17) of the said Act cannot be accepted. From the bare reading of the definition of ‘business’, it clearly emerges that any trade or commerce whether or not for a pecuniary benefit, would be included in the term ‘business' as defined under section 2(17) of the said Act. For the purpose of “business” under section 2(17) of the Act, it is immaterial whether such a trade or commerce or such activity is for pecuniary benefit or not.
The Hon’ble High Court of Gujarat has held that where Charitable Trust was running a medical store, even though Charitable Trust was giving medicines to customers at a lower rate with no profit, sale of medicine by Trust would be a taxable supply of goods; and if aggregate turnover exceeding threshold limit, Trust would have to obtain registration.
