9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (6) TMI 385 - AAR - GSTLevy of GST on Grants - Government entity or not - supply of service by a Government controlled Association to State Government, Local Authority or any person specified by State Government, Local Authority against consideration received from State Government, Local Authority - entry no. 9C of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification No.32/2017 - Central Tax (Rate) dated 13.10.2017 - HELD THAT - The applicant is a society registered under the Societies Registration Act, 1860 and hence is a society - The applicant has not established whether the applicant society has been set up by an Act of State Legislature or established by the Government. He has only stated that the Nirmiti Kendra is promoted, monitored, overseen and guided by Karnataka Rajya Nirmana Kendra (KARNIK) which itself was registered on 11.06.1991 under the Societies Act and the applicant is registered under the Karnataka Societies Registration Act, 1960 (Karnataka Act 17 of 1960) from 02.04.2008. Nowhere he has established that it was established by the Government - the applicant cannot be covered under the definition of Government Entity and hence the entry no. 9C of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification No.32/2017 - Central Tax (Rate) dated 13.10.2017 is not applicable to the applicant. The supply of service by a Government controlled Association to State Government, Local Authority or any person specified by State Government, Local Authority against consideration received from State Government, Local Authority, in the form of grants is not liable to GST only if the Government controlled Association is covered under the definition of Government Entity and if not, then the same is liable to tax.
Issues Involved:
1. Whether the supply of service by a Government-controlled Association to the State Government, Local Authority, or any person specified by the State Government, Local Authority against consideration received in the form of grants is liable to GST. 2. Determination of whether the applicant qualifies as a "Government Entity" under the relevant GST notification. Detailed Analysis: 1. Admissibility of the Application: The application was admitted as it related to the application of an exemption notification, which falls under Section 97(2)(a) of the CGST Act, 2017. 2. Applicant’s Interpretation of Law: The applicant, a society involved in executing civil works contracts, argued that their services to the State Government, Local Authority, or specified persons against consideration in the form of grants are not liable for GST based on Notification No. 32/2017-CGST (Rate) dated 13.10.2017. They provided a detailed background of their establishment and operations, emphasizing their government-controlled status and the nature of their services, which include housing for economically weaker sections, educational buildings, hospitals, and other public service projects. 3. Analysis of Notification No. 32/2017-CGST (Rate): The relevant entry in the notification exempts the supply of services by a Government Entity to the Central Government, State Government, Union territory, or local authority against consideration received in the form of grants. The conditions to be satisfied include: - The supplier must be a Government Entity. - The supply must be a service. - The recipient must be the Central Government, State Government, Union territory, or local authority. - The consideration must be in the form of grants. 4. Determination of "Government Entity": The term "Government Entity" is defined under Notification No. 12/2017-Central Tax (Rate) as an authority, board, or body, including a society, trust, or corporation, set up by an Act of Parliament or State Legislature or established by any Government, with 90% or more participation by way of equity or control, to carry out a function entrusted by the Government or local authority. The applicant, being a society registered under the Karnataka Societies Registration Act, 1960, did not establish that it was set up by an Act of State Legislature or established by the Government, nor did it demonstrate 90% or more government participation by way of equity or control. 5. Findings: The applicant does not qualify as a "Government Entity" as per the definition provided in the GST notification. Consequently, the exemption under entry no. 9C of Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 32/2017-Central Tax (Rate) is not applicable to the applicant. 6. Ruling: The supply of service by a Government-controlled Association to the State Government, Local Authority, or any person specified by the State Government, Local Authority against consideration received in the form of grants is not liable to GST only if the Government-controlled Association qualifies as a "Government Entity." Since the applicant does not meet this criterion, their services are liable to GST. Conclusion: The ruling clarifies that the applicant's services are not exempt from GST as they do not qualify as a "Government Entity" under the specified notification. Therefore, their supply of services to the State Government, Local Authority, or specified persons against consideration in the form of grants is subject to GST.
|
