GST on Auction Payments for Collecting Human Hair at Temples
Payments made to temples for the right to collect human hair are taxable services under the Goods and Services Tax (GST) law.
- Ruling
- Advance Ruling No. 45/ARA/2026, dated 05.05.2026
- Dated
- 05 May 2026
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked if auction payments to a temple are taxable.
- The Authority ruled these payments are a taxable supply of service.
- Exemptions for human hair do not apply to the temple's licensing service.
In short
The company asked the Authority for Advance Ruling (AAR) in Tamil Nadu if paying a temple for the right to collect human hair is subject to GST. They argued that because human hair itself is exempt from tax, the fee paid to the temple should also be exempt. The Authority decided that the temple is providing a taxable service by granting this license, regardless of the tax status of the hair.
What has changed
How it worked before
Many businesses assumed that if the underlying product (human hair) is exempt from GST, the fees paid to acquire it from religious institutions would also be exempt.
What has changed
The Authority clarified that the temple is providing a 'supply of service' under Section 7 of the Central Goods and Services Tax (CGST) Act. This means the auction amount is a taxable service fee, not a tax-free transaction. In practice, businesses must now account for GST on these payments.
Who this affects
Businesses and contractors who participate in auctions to collect offerings like human hair from temples or religious institutions.
An example
A business owner wins an auction to collect flowers or coconuts from a local temple. They might wonder if this payment is exempt because the items are religious offerings. Based on this ruling, the tax authority would likely view this as a taxable service fee for the right to collect, rather than an exempt sale of goods.
What you should do
If you pay for similar licenses, you should consult your tax advisor to determine if your specific payment is taxable. Remember that an Advance Ruling only binds the business that asked and its own tax office; it is not a law that automatically applies to your business.
If you do nothing
If you assume this ruling does not apply to you and fail to pay GST on these fees, you risk a tax demand from your local officer. You may be required to pay the unpaid tax along with interest and penalties. Relying on a misunderstanding of the law does not protect you from these costs.
The terms explained
- Supply of service
- Any activity that involves providing something for a fee, which is then subject to GST under the law.
- Advance Ruling
- A formal decision from tax authorities on how GST law applies to a specific business situation.
- Licensing service
- The act of granting someone the legal right to perform an activity, such as collecting items, in exchange for payment.
The ruling in detail
Authority for Advance Ruling
M/s. Rangaraj
Advance Ruling No. 45/ARA/2026, dated 05.05.2026 · Tamil Nadu
Questions before the authority
- Whether, the Auction amount that is collected by the Temple Authorities, which is controlled by the HR & CE Department for collection of human hair falls within the ambit of section 7 of CGST Act
- Whether the Temple is business premises
- Sale of Human hair is exempted from GST Tax liabilities, and whether as a consequence the Auction amount paid to the Temple for conducting the activity of collection of hair is also exempted.
Facts
The applicant participates in an auction conducted by the Arulmigu Mariamman Temple to obtain a license for collecting human hair offered by devotees. The applicant pays an auction amount to the temple authorities for this right. The applicant sought a ruling on whether this payment is subject to GST, arguing that the temple is not engaged in business and that the underlying sale of human hair is exempt.
Ruling
| Question | What the authority ruled |
|---|---|
| Taxability of auction amount | Yes, it is a supply of service falling within the ambit of Section 7 of the CGST Act, 2017. Taxable at 18% (CGST 9% + SGST 9%) under Entry No. 35 of Notification No. 11/2017-Central Tax (Rate). |
| Whether the Temple is business premises | The query is not covered under any of the sub-clauses (a) to (g) of Section 97(2) of the CGST Act, 2017. Beyond the jurisdiction of the Authority. |
| Exemption of auction amount | No, the exemption on the sale of human hair does not apply to the license fee. The licensing activity is not covered under the exemption notification and is liable to be taxed. |
The Authority ruled that the amount collected by the temple for the license to collect human hair constitutes a supply of service under Section 7 of the CGST Act and is taxable. It declined to answer the question regarding whether the temple is business premises, stating it falls outside its jurisdiction. Furthermore, it clarified that the exemption for the sale of human hair does not extend to the licensing activity performed by the temple.
Reasoning
The Authority determined that the temple is issuing a license for a consideration, which qualifies as a **supply of service** under Section 7 of the CGST Act. It rejected the applicant's contention that the activity is exempt, noting that the exemption for human hair applies to the goods themselves, not the **licensing service** provided by the temple. The Authority relied on the definition of supply and the scope of taxable services under the CGST Act and relevant notifications. It also noted that commercial activities undertaken by religious institutions are not automatically exempt.
Provisions relied on
- Section 7 of the CGST Act, 2017
- Section 97(2) of the CGST Act, 2017
- Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
For the practitioner
This ruling clarifies that payments made to religious institutions for the right to collect offerings like human hair are treated as **taxable supplies of service** rather than exempt transactions. Practitioners should note that the Authority will not entertain questions regarding the status of premises if they do not fall strictly within the scope of Section 97(2). It serves as a warning that the tax-exempt status of a product does not necessarily shield the associated **licensing or service fees** from GST.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/3-rangaraj_aar_order-1.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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