Charitable Trust would be required to obtain registration even if it is supplying medicines to patients with no profit.

Case Details:

Issue- In the above case, the petitioner has filed a writ petition under Article 226 of the Constitution of India where in Rulings passed by Authority of Advance Rulings and Affirmation of the said rulings by Appellate Authority of Advance Rulings was under challenge. 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 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. It is also running a medical store where the medicines to the indoor and outdoor patients of the hospital are sold at a lower rate. Whatever marginal/little difference in terms of excess of income over expenditure is earned, the same is used only for the purpose of mitigating any unforeseen eventualities and/or administrative expenses. The petitioner Trust had filed an application before AAR seeking advance ruling on whether GST Registration is required for medical store run by Charitable Trust and whether activity of medical store providing medicines at a lower rate amounts to supply of goods. AAR ruled that petitioner was required to obtain GST registration which was also affirmed by the Appellate Authority of Advance Ruling.

Held- It was held that Section 22(1) of the CGST Act mandates that every supplier is liable to be registered under the Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees, provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees. Therefore, there remains no doubt that every supplier who falls within ambit of section 22(1) of the Act has to get himself registered under the Act. As per Section 7(1) of the Act, the expression ‘supply’ includes all forms of supply of goods and services or both such as sale, transfer, barter etc. made or agreed to be made for consideration by a person in the course or furtherance of business. 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 of petitioner 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. As per the said definition, the ‘Business’ means any trade or commerce any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit. From the bare reading of the said definition, 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. Petitioner has failed to substantiate or justify his submission as to how such activity of selling medicines to the patients for consideration could not be said to a trade or commerce. 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. Both the authorities have in detail considered the submissions and the issues raised by the petitioner Trust and held that the Medical Store run by the Charitable Trust would require GST Registration, and that the Medical Store providing medicines even if supplied at lower rate would amount to supply of goods. The Court does not find any illegality or infirmity in the said orders passed by the authorities.