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2020 (10) TMI 852 - AAR - GSTSupply or not - supply of educational aids to students such as school bags, footwear, geometry box, wooden colour pencils, crayons, woollen sweater to government and government aided schools - supply of Rain Coats, Ankle Boots and Socks to students without consideration to Government/Government Aided schools located in Hilly areas - eligibility to avail input tax credit - exemption from payment of GST in respect of services received from printers engaged by them for printing of text books - levy of GST on Penalty and Liquidated damages levied by them on suppliers due to violation of the contract terms for supply - rate of GST. Whether the supply of educational aids to students such as school bags, footwear, geometry box, wooden colour pencils, crayons, woollen sweater to government and government aided schools based on the State Government educational policy for which the consideration is paid to Tami Nadu Text Book and Educational Services Corporation by the State Government by means of a budgetary allocation constitutes a supply? - HELD THAT - In the instant case, the applicant is a society registered under Societies Registration Act, 1860 and hence is a 'person' as per Section 2(84) of CGST/TNGST Act - In the instant case, the applicant was formed as a society by the State government for procuring and supplying textbooks and other items. The applicant is supplying the kits for a consideration which includes cost of the goods plus various administrative charges which is claimed by the applicant. Therefore, the supply of educational aids such as school bags, footwear, geometry box, wooden colour pencils, crayons, woollen sweater by the applicant to the State government for a consideration is a 'supply of goods' in the course of its business as per Section 7 of the Act - the supply of educational kit as above is a 'Supply' and the same is squarely covered as supply of goods specified under Sl.No. 150 of Notification no. 2/2017-C.T. (Rate) dated 28.06.2017 as amended by Notification No.35/2017-C.T. (Rate) dated 13th October 2017 and hence is an exempted supply. As such a supply is exempt. Whether Tamil Nadu Text Book and Educational Services Corporation is entitled to avail of corresponding input tax Credit on the procurement made? - HELD THAT - As it is seen that the supply of 'Educational Kit' is fully exempted, the applicant is not eligible to the Credit of Input Tax paid on the procurement of such goods. Whether the supply of Rain Coats, Ankle Boots and Socks to students without consideration to Government/Government Aided schools located in Hilly areas is a supply - If the answer to the above is in the affirmative then is Tamil Nadu Text Book and Educational Services Corporation is entitled to discharge its tax liability on such outward supplies at Cost 10% and avail of corresponding Input Tat Credit on the procurement made - HELD THAT - As per Order No. 204 dated 15.11.2016, it is ordered that based on the announcement of the Chief Minister during the allocation of grants for the year 2016-2017, decision to supply raincoat, boots and socks with expected expenses of ₹ 8 Crores stands announced, accordingly, sanction has been accorded to meet the expenses from the funds already available with the applicant and no separate sanction is accorded. It is evident that separate grant is not allocated but the funds of the applicant have been ordered to be used for the supply. It is seen from the balance sheet of the applicant that all their income comes from the reimbursement from the State Government with any balances let over after expenses of procurement of the various goods as directed by the government. As seen from the Order No. 204 dated 15.11.2016 for supply of these goods, the Government has directed to use the funds already granted and lying unspent with the applicant. Thus, it is to be construed that the grant for the procurement was already given and part of the previous grants left unspent with the applicant. The entry at Sl.No. 150 of the Notification no. 2/2017 -C.T.(Rate) dated 28.06.2017 as amended exempts supply of goods to Government by a Government entity, the consideration of which is in the form of grants. From the Order of the Chief Secretary furnished by the applicant G.O. No. 204 dated 15.11.2016 , it is evident that these supplies have been considered and sanction for these expenses accorded to be used from the funds of the applicant. Therefore, these supplies also are exempt vide the said entry - In as much as the supply of these goods to the Government are held to be exempted, the valuation to be adopted for taxation purposes do not arise and therefore not dealt with. Also, the applicant will not be eligible to avail any input tax paid on these procurements as credit, since the procurement is exclusively towards the exempt supply. Whether Tamil Nadu Text Book and Educational Services Corporation is eligible for exemption from payment of GST in respect of services it receive from printers engaged by them for printing of text books? - HELD THAT - The ruling can be sought in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant - this question relates to receipt of service and not supply of service by the applicant, therefore the said question is not taken up for consideration for the reason that it is not covered under the purview of this Authority. Whether the Tamil Nadu Text Book and Educational Services Corporation is required to pay GST on Penalty and Liquidated damages levied by them on suppliers due to violation of the contract terms for supply and if so the rate at which such GST is payable? - HELD THAT - In this case, the applicant has sought a ruling on a supply to be received by the applicant. However, as per Section 95 (a) of CGST/TNGST Act, the ruling can be sought in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant and not received by the applicant. Therefore, the said question is not taken up for consideration for the reason that it is not covered under the purview of this Authority.
Issues Involved:
1. Supply of educational aids to students and corresponding input tax credit. 2. Supply of raincoats, ankle boots, and socks without consideration. 3. Exemption from GST for services received from printers. 4. GST applicability on penalties and liquidated damages levied on suppliers. Issue-wise Detailed Analysis: 1. Supply of Educational Aids to Students and Corresponding Input Tax Credit: The applicant, a society registered under the Societies Registration Act, 1860, sought clarification on whether the supply of educational aids (school bags, footwear, geometry boxes, wooden color pencils, crayons, woolen sweaters) to government and government-aided schools, for which consideration is paid by the State Government through budgetary allocation, constitutes a supply. The authority confirmed that such supply is indeed a supply of goods under Section 7 of the CGST Act, 2017, since it is made for a consideration in the course of business. However, this supply is exempt from GST under Sl.No. 150 of Notification No. 2/2017-C.T.(Rate) dated 28th June 2017, as amended by Notification No.35/2017-C.T.(Rate) dated 13th October 2017, which exempts supplies made by a Government entity to the State Government against consideration received in the form of grants. Consequently, the applicant is not entitled to claim input tax credit on the related purchases. 2. Supply of Raincoats, Ankle Boots, and Socks Without Consideration: The applicant also sought clarification on whether the supply of raincoats, ankle boots, and socks to students in government and government-aided schools located in hilly areas without consideration constitutes a supply. The authority ruled that such supplies are also considered a supply of goods under Section 7 of the CGST Act, 2017. However, these supplies are exempt from GST under the same notification (Sl.No. 150 of Notification No. 2/2017-C.T.(Rate) dated 28th June 2017, as amended) since the funds for these supplies were part of the previous grants left unspent with the applicant. Therefore, the applicant is not entitled to claim input tax credit on these procurements as well. 3. Exemption from GST for Services Received from Printers: The applicant inquired about eligibility for exemption from GST for services received from printers engaged in printing textbooks. However, the authority did not address this question, stating that the ruling can only be sought in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant, not for services received. 4. GST Applicability on Penalties and Liquidated Damages Levied on Suppliers: The applicant sought clarification on whether GST is applicable on penalties and liquidated damages levied on suppliers for violation of contract terms. The authority did not address this question either, stating that the ruling can only be sought in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant, not for penalties and liquidated damages received. Ruling: 1. The supply of educational aids to government and government-aided schools constitutes a supply but is exempt from GST under the specified notification. Consequently, the applicant cannot claim input tax credit on related purchases. 2. The supply of raincoats, ankle boots, and socks to students without consideration constitutes a supply but is exempt from GST under the specified notification. Consequently, the applicant cannot claim input tax credit on related purchases. 3. The question regarding exemption from GST for services received from printers was not addressed. 4. The question regarding GST on penalties and liquidated damages was not addressed.
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