Nagri Eye Research Foundation vs. Union Of INDIA

Held

The Court held that the activities of the medical store run by the petitioner charitable trust constitute 'business' within the meaning of Section 2(17) of the CGST Act. The definition of 'business' includes any trade or commerce, whether or not for pecuniary benefit. The Court found that selling medicines to patients for consideration, even at a lower rate, falls under trade or commerce. Consequently, the petitioner is liable for GST registration under Section 22(1) if their aggregate turnover exceeds the prescribed limit. The Court also held that such sale of medicines amounts to a 'supply of goods' under Section 7(1) of the CGST Act. The Court found no illegality or infirmity in the orders passed by the GAAR and GAAAR. No issues were expressly left undecided.

Facts

The petitioners, Nagri Eye Research Foundation and its Secretary, challenged an order dated January 28, 2021, passed by the Gujarat Appellate Authority for Advance Ruling (GAAAR). The GAAAR had confirmed an earlier Advance Ruling dated May 19, 2020, given by the Gujarat Authority for Advance Ruling (GAAR). The petitioner is a charitable trust running a medical store that sells medicines to indoor and outdoor patients at lower rates. Any surplus income is used for unforeseen eventualities or administrative expenses. The GAAR had ruled that the trust required GST registration for its medical store and that selling medicines at a lower rate constituted a supply of goods.

Key Issues

1. Whether the medical store run by the petitioner charitable trust is required to obtain GST registration, turning on Section 22(1) of the CGST Act. The petitioner argued that the activities of the medical store do not constitute 'business' as defined under Section 2(17) of the CGST Act, as they are neither trade nor commerce nor for pecuniary benefit. They contended that the trust's objectives and the provision of benefits under government schemes negate the 'business' character. The revenue did not record specific arguments but implicitly supported the GAAR and GAAAR findings. 2. Whether the medical store providing medicines at a lower rate amounts to a 'supply of goods', turning on Section 7(1) of the CGST Act. The petitioner argued that the activity is not 'business'. The revenue, by upholding the GAAR and GAAAR decisions, implied that it is a supply of goods.