The Kerala Authority for Advance Ruling has delivered a comprehensive 9-question ruling that will reverberate across every devaswom board, temple trust and religious institution in the country. In its Order No. KER/01/2026 dated 04.03.2026, the AAR held that the Travancore Devaswom Board — a statutory body constituted under the Travancore Cochin Hindu Religious Institutions Act, 1950 and administering over 1,250 temples — is engaged in "business" within the meaning of Section 2(17) of the CGST Act, and that its periodic auctions of commercial rights constitute taxable supplies of services.
The ruling systematically examines nine categories of the Board's activities. For five of them — auctioning rights to collect rice and coconut offerings, abandoned clothes, rights to perform rituals like Pulluvanpattu and Balithara, and rights to manage temple toilets and washrooms — the AAR held these are taxable supply of licensing services. The key analytical principle: in each case, the Board does not itself provide the underlying service (cleaning, ritual performance, sanitation). What it does is grant an exclusive commercial right to a third-party contractor through a competitive auction, for consideration. The contractor operates independently, bears commercial risk, and collects charges from devotees. The religious context does not alter the contractual character of the transaction.
The AAR rejected the Board's argument that supply of rice and coconuts through auction is an exempt sale of goods. The Authority held that at the time of entering into the contract, there is no transfer of identified or ascertained quantities of goods — what is conferred is a commercial privilege to collect and appropriate materials that may arise during the pilgrimage season. This is a "licence" under Schedule II, not a sale. Notably, the toilet exemption under Entry 76 was held inapplicable to the Board because the Board is not the person providing the public convenience — the contractor is. The Board merely grants a licence to operate the facilities for approximately ₹1 crore.
Three categories received favourable treatment: harvesting coconuts from temple lands (exempt as agricultural operations under Entry 54), renting precincts for pooja stalls (exempt under Entry 13(b) subject to the ₹10,000 monthly threshold), and honorarium to the Board President and Members (not "directors" for RCM purposes). Legal services from advocates attract RCM as the Board is a "business entity."
2026-juristway.com-1161-AAR(Kerala)-GST | AAR(Kerala) | KER/01/2026 | 04.03.2026