NEW DELHI: The Tamil Nadu Authority for Advance Ruling (AAR) has held that licence fees collected by temple authorities for permitting contractors to collect human hair donated by devotees amounts to a taxable supply of service under the GST regime and would attract 18% tax.
The ruling came in the case of Arulmigu Mariamman Temple, where the temple administration grants licences through a tender process to successful bidders for collection of hair offerings made by devotees on the temple premises.
Rejecting the applicant’s contention that activities connected with worship at a temple should not be subjected to GST, the AAR drew a distinction between a temple as a place of worship and commercial activities undertaken by temple authorities.
The bench comprising Shri C Thiyagarajan (Member-Central Tax) and Shri B Suseel Kumar (Member-State Tax) observed that commercial activities undertaken by religious institutions are taxable and referred to the proviso under Sl No. 13 of Notification No. 12/2017-Central Tax (Rate), which carves out exceptions to GST exemption available for conduct of religious ceremonies.
The AAR noted that the temple authority, under the Hindu Religious and Charitable Endowments Department, invites tenders and collects licence fees from the highest bidder for the right to collect hair offerings. It said the arrangement bears all the characteristics of a commercial activity akin to renting of rooms or spaces for business purposes.
“This activity is similar to renting of rooms… Incidentally it happens that the licence is for collection of human hair from a place of worship. All the features of a commercial activity are appearing in the process of issuing of the licence for collection of human hair,” the ruling stated.
The authority further held that the temple administration was not itself supplying human hair, but was transferring the right to undertake a service for consideration. Accordingly, it classified the activity as supply of services under SAC 9997, covered under Entry No. 35 of Notification No. 11/2017-Central Tax (Rate), attracting GST at 18% — 9% CGST and 9% SGST.
However, the AAR clarified that exemption would continue to apply in cases where the transaction involved supply of human hair as goods. In the present case, the taxable element was the licence granted for collection of hair.
The authority also declined to answer whether the temple could be treated as business premises, saying the issue falls outside the scope of Section 97(2) of the CGST Act.
