Certain Exemption to entities registered u/s 12AA from service tax

Certain Exemption to entities registered u/s 12AA

 

(Notification No. 25/2012- ST dated 20.6.2012)

Serial No. 13(c) of Notification No. 25/2012-ST provides exemption to :

“Services provided by way of construction, erection, commissioning, installation, completion, fitting

out, repair, maintenance, renovation or alteration of –

(a)………….

(b)………....

(c) a building owned by an entity registered u/s 12AA of the Income Tax Act, 1961 (43 of 1961)and meant predominantly for religious use by general public

(d) ………….

Analysis of the above exemption

The exemption is available to specified services only, namely-

Construction
Erection
Commissioning
Installation
Completion
Fitting out
Repair
Maintenance
Renovation
alteration
In relation to

a building ;
owned by an entity registered under section 12AA of the Income Tax Act, 1961 (43 of 1961) and ;
meant predominantly for religious use
by general public.
Entity registered u/s 12AA: Application for registration is required to made u/s 12A of the Income Tax Act and registration is granted u/s 12AA of the income Tax Act 1961. The Commissioner of Income Tax shall call for documents and make enquiry to test genuineness of the activities of the trust. Order shall be passed within 6 months from application accepting or rejecting the application. The registration is available only for the entities which are engaged in carrying out the charitable object under section 2(15) of the Income Tax Act.

Exemption shall be available only after registration. Hence, services provided before availing registration remain taxable.

Religion: Religion is an unending discovery into unknown world. It is a social institution and society accepts religion in a form which it can be practiced. The Hon’ble Supreme Court in the case of Ratilal Panchand Gandhi v. The State of Bombay 1954 (SC)-GJX-SC has held that what constitutes religion has to be demonstrated with its doctrine, practice, tenets, historical background of given religion. The practices followed in different religions vary. For eg in Hindu religion, the naming ceremony of newly born child is held to fix the name of new born child and that is considered as religious activity.

Predominantly for religious use: The practices, tenets, historical backgrounds of different religions are different. Therefore, functions performed by different religions differ. As long as the building is used for performing practice followed in particular religion, it will be considered as used for the purpose of religion. Such building may also have place of worship where different activities like celebration of marriage, holding of shok-sabha, preaching of mass in any program, holding of prayers during festival can be carried out. Such use will be considered as for the religious purpose.

Use by general public: It is quite common that in large residential complexes, temples are constructed and are meant for use only for the persons staying in such complex. Outsiders are not permitted. If use of such temple is restricted to members of the society/complex, the exemption may not be available. However, if the use is for general public the exemption will be available.