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2019 (10) TMI 569 - AAR - GSTLiability for deduction of GST TDS - payments made to suppliers - whether the applicant falls under any of the categories of the persons mandated to undertake TDS deduction, under Section 51(1) of the CGST Act 2017? HELD THAT - The applicant entity was formed and registered under Co-operative Society Act 1959, where the District Co-operative Milk Unions are shareholders of the applicant organisation. Further applicant is a taxable person under the GST Acts and the entire shareholding is with the district milk unions and not with the State Government of any State or the Central Government or any local authority. Hence it is not a department or an establishment of Central Government/State Government/local authority. Therefore applicant is not covered under clause (a) (b) of Section 51(1) of the CGST Act, 2017. The applicant is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 and the applicant states that they are not registered under Societies Act, 1860. Hence the applicant is not a notified person under clause (d) of section 51(1). Clause (c) of the Section 51(1) of the CGST Act 2017 - whether the applicant is covered under Governmental Agency or not? - HELD THAT - Governmental agency has not been defined under the CGST Act 2017 or any other notifications. Governmental Agencies are usually administrative units of government that are tasked with specific responsibilities - In the instant case the applicant has not been established by national, regional or local governments but is registered under Co-operative Society Act 1959, which mandates certain supervisory / participation from the relevant Department of Karnataka State Government. The applicant has not been tasked with any responsibilities by the Government of Karnataka. The Directors have been nominated only to safeguard the funds of the said society. Therefore the applicant is not covered under clause (c) of Section 51(1) of the CGST Act 2017. Thus, the applicant is not liable to deduct tax at source as per provisions of section 51 of CGST ACT towards payments made to suppliers of taxable goods or services or both, as they are not covered under any of the clauses of Section 51(1) of the CGST/ KGST Act 2017.
Issues: Whether the applicant, a cooperative society engaged in processing milk products, is liable to deduct GST TDS under section 51 of CGST Act on payments to suppliers.
Analysis: 1. Background: The applicant, a cooperative society registered under the Co-operative Societies Act, sought an advance ruling on its liability to deduct GST TDS under section 51 of the CGST Act. 2. Legal Provisions: Section 51 of the CGST Act mandates certain persons to deduct TDS on payments exceeding a specified threshold. The applicant's eligibility for TDS deduction is evaluated based on the provisions of this section. 3. Notification No. 33/2017: Initially, this notification specified persons authorized to deduct TDS, including societies established under the Societies Registration Act, 1860. However, subsequent notifications did not alter this provision. 4. Amendments to Notifications: Various amendments were made to the notifications specifying TDS deduction criteria, including exemptions for specific entities like public sector undertakings. 5. Applicant's Eligibility: The applicant was formed under the Co-operative Society Act, with no government shareholding. It was not established by the central or state government, a local authority, or as a public sector undertaking. 6. Governmental Agency Status: The term "Governmental Agency" was not defined under the CGST Act. The applicant, though supervised by the relevant state department, was not tasked with government responsibilities. 7. Ruling: The Authority concluded that the applicant did not fall under any category mandated for TDS deduction under section 51(1) of the CGST Act. Therefore, the applicant was not liable to deduct tax at source on payments to suppliers of taxable goods or services. This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the reasoning behind the ruling delivered by the Authority for Advance Ruling, Karnataka.
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