Aroh Foundation v. Additional Commissioner, Adjudication, DGGSTI & Ors., High Court of Delhi, W.P.(C) 10621/2024 – Order dated 19.11.2024 (Issue: Taxability of Charitable Activities under CGST Act; Category: Levy & Scope of Supply)
Facts (with para references)
(Paras 1–2, 4 of order)
The petitioner, Aroh Foundation, a registered charitable organisation holding registration under Section 12AA of the Income Tax Act, 1961, was subjected to adjudication proceedings by the DGGSTI culminating in an Order-in-Original dated 30.04.2024, wherein the adjudicating authority treated the petitioner’s activities as taxable supplies under the CGST Act, 2017.
The Foundation challenged the order before the Delhi High Court contending that its activities are charitable in nature, not undertaken in the course or furtherance of business, and therefore fail the statutory test of “supply” under Section 7. The respondents, while opposing the petition, did not dispute the charitable character of the petitioner.
Questions / Issues (derived from judicial discussion)
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Whether activities of a registered charitable organisation, engaged solely in philanthropic functions, constitute “supply” under Section 7(1)(a) of the CGST Act?
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Whether the impugned Order-in-Original imposing GST on such activities could be sustained when the foundational condition—activity undertaken in the course or furtherance of business—appears absent?
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Whether the Court should grant interim protection pending final adjudication of the writ?
Court’s Observations (with para references)
1. Essential requirement of “business nexus” under Section 7(1)(a) – Prima facie absent
(Paras 2–4)
The Court noted that Section 7 defines “supply” through the lens of activities performed “for a consideration in the course or furtherance of business.” Since the respondents themselves did not dispute the petitioner’s charitable character, the Bench held that prima facie, such activities do not satisfy the statutory condition of business nexus, thereby failing the definition of supply.
2. Levy under Section 9 is contingent upon a valid “supply”
(Paras 3–4)
The Court emphasised that Section 9 enables levy only upon taxable supplies. If the petitioner’s activities do not qualify as supply, the consequential GST demand cannot be sustained.
3. Interpretation aligned with legislative intent
(Para 4)
The Court recognised that charitable institutions are typically not engaged in trade or commerce, thereby falling outside the commercial contours expected under GST. The order stressed that activities undertaken solely for charity cannot, prima facie, be subjected to GST, unless the statutory conditions are unequivocally met.
Judgment / Verdict (with para references)
(Paras 2, 5–6)
The High Court held that the Order-in-Original dated 30.04.2024 cannot be sustained prima facie, since charitable activities do not fall within the ambit of business under Section 7, and therefore cannot be taxed under Section 9.
Accordingly, the Court:
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Kept the impugned order in abeyance,
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Directed filing of counter-affidavits and rejoinder within the timelines fixed, and
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Listed the matter for 08.01.2025.
Thus, the GST demand was effectively stayed.
Summary of Cases Referred (Tabular Form)
(No external precedents were cited or relied upon in the order. The Court relied solely on the statutory text of Sections 7 and 9 of the CGST Act.)
| Case Name | Citation | Issue | Verdict |
|---|---|---|---|
| No case law cited in this order | — | — | The judgment is based exclusively on interpretation of Sections 7 & 9 of CGST Act. |
Between the Fine Lines – Practical Trade Takeaways
The ruling reiterates that charitable organisations are not automatically taxable under GST. A levy can arise only when activities satisfy the statutory test of being conducted for consideration and in the course or furtherance of business. Merely receiving grants, donations, CSR funds, or carrying out community-centric outreach does not transform a charity into a taxable commercial entity. Authorities must demonstrate a clear commercial character before imposing GST.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”