2021 (8) TMI 142 - AAR - GST

Deduction of TDS - Government Entity or not - Indian Institute of Management Tiruchirapalli Tiruchirappalli (IIM) - discharge of liability on reverse charge basis on supply of services or not - Section 9 (3) and 9 (4) of the CGST Act 2017 - Applicability of Serial No.3 of N/N. 12/2017 - Composite supply of works contract provided to the applicant - covered by Serial No.3 (vi) of N/N. 11/2017 dated 28th June 2017. Admissibility of the application before this authority under Section 95/97(2) of the GST Act - HELD THAT - As per S. 9 (3) the provisions of the Act is applicable to recipient as if he is the person liable for paying the tax in relation to supply of such goods or services or both and the provisions of Advance Ruling is applicable to an applicant only with regard to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Thus advance ruling cannot be sought by a person who is a recipient of the supply of goods or services when the ruling sought relates to the classification/taxability of such supply received by them - the expression unless the context otherwise requires read with S. 9 (3) provides for admission of application from service recipients in cases where the question relates to determination of the liability to pay tax on any goods or services. Whether the entry provided under Sl.No.3/3A of the N/N.12/2017-Central Tax (Rate) dt. 28.06.2017 is available? - HELD THAT - Ruling can be sought by recipient of a supply who are made liable to pay tax under Section 9(3) only with regard to determination of their liability to pay or not and such recipients cannot seek ruling on the applicability of an exemption notification/preferential rates on such supplies received by them - the question is not admissible and not admitted. Whether IIMT is a Government entity under the GST law? - HELD THAT - The applicant institute was originally established in the year 2011 as a society registered with the Registrar of Societies Tamilnadu under the auspices of the Ministry of Human Resources Development with the Chairman to be appointed by the Central Government two representatives including a financial advisor nominated by the Department of Higher Education Ministry of HRD Four representatives from Industry commerce labour and thrust areas nominated by the Central Government Two representatives nominated by the State Government from departments concerned including Chief Secretary of Tamilnadu etc. - Further the institute was initially and also after the enactment of the IIM Act has been receiving funds from the central Government by way of fund which substantiates the requirement of more than 90% financial participation from the central or state Government. Thus the IIMT satisfies the conditions prescribed to be held as Government entity under the CGST Act 2017. Whether the applicant is liable to deduct Tax? - section 51 of the CGST Act 2017 - HELD THAT - The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act 2017 read with Notification No. 50/2018-C.T dt. 13.09.2018. Whether the applicant is liable to discharge tax on reverse charge basis on supply of services as per Section 9 (3) of the CGST Act 2017? - HELD THAT - The security services provided by any person other than a body corporate received by a registered person is taxable by RCM. In this case the applicant is registered under GST. In respect of security services they have submitted copies of Tax invoices no.BNTNTR10000262/20 DT. 01.08.2020 and No. BNTNTR10000426/20 DT.05.10.2020 raised by M/s. Security Intelligence Services India Ltd bearing GSTIN No.33AAECS3538A1ZU. From the invoices submitted by them it is seen that the service provider is a registered Private Limited company and so the tax liability will vest on the service provider only in such cases. Further the applicant has not submitted the list of all the service providers along with their constitution as called for during the hearing and thereafter. Thus the applicant has not furnished any other documentary evidence to the effect that security services are provided to them by any other person other than a body corporate - in respect of security services being received from a body corporate the applicant is found not to be liable under RCM to pay tax as per the documentary evidences submitted by them. Any business entity is liable to pay tax under RCM on the legal fees paid to any individual advocate or a firm of advocates - the applicant is found to be liable to pay tax under RCM on the legal fees paid by them. Online education journals and periodicals provided to the applicant by the person located in non-taxable area - HELD THAT - The applicant is found liable to pay tax under Section 9(3) of the Act in respect of legal services availed by them based on the documentary evidences submitted by them.

Summary

Issues Involved:
1. Whether Indian Institute of Management, Tiruchirappalli (IIM) is a Government Entity under GST Law.
2. If the answer to the first question is affirmative:
2.1. Whether the applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017.
2.2. Whether the applicant is required to discharge liability on reverse charge basis on supply of services as per Section 9(3) and 9(4) of the CGST Act, 2017.
2.3. Whether the entry provided under Serial No.3/3A of Notification 12/2017 is available to IIMT and whether the composite supply of works contract provided to the applicant is covered by Serial No.3(vi) of Notification 11/2017 dated 28th June 2017.

Detailed Analysis:

1. Whether Indian Institute of Management, Tiruchirappalli (IIM) is a Government Entity under GST Law:
The applicant, IIMT, was originally established as a society in 2011 and later became a body corporate under the Indian Institute of Management Act, 2017. The institute is under the direct supervision and control of the Ministry of Human Resources Development of India, with its initial corpus fund provided by the Government of India. The term "Government Entity" as defined in Notification No. 32/2017 - Central Tax (Rate) dated 13.10.2017 includes bodies set up by an Act of Parliament or State Legislature with 90% or more participation by way of equity or control. Given that IIMT was set up by an Act of Parliament and receives more than 90% of its funding from the central government, it qualifies as a Government Entity under the GST law.

2.1. Whether the applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017:
Section 51 of the CGST Act mandates certain entities, including those set up by an Act of Parliament with more than 51% participation by way of equity or control, to deduct tax at the rate of 1% on account of CGST and 1% on account of SGST from the payment made to suppliers where the total value of the supply under a contract exceeds Rs. 2,50,000. Since IIMT is a body set up by an Act of Parliament with more than 51% participation by way of funding, it is liable to deduct TDS from its suppliers under Section 51 of the CGST Act, 2017, read with Notification No. 50/2018 dated 13.09.2018.

2.2. Whether the applicant is required to discharge liability on reverse charge basis on supply of services as per Section 9(3) and 9(4) of the CGST Act, 2017:
Section 9(3) of the CGST Act allows the government to specify categories of supply of goods or services on which tax shall be paid on a reverse charge basis by the recipient. The applicant receives security and legal services. As per Notification No. 13/2017 dated 28.06.2017, security services provided by any person other than a body corporate to a registered person are taxable on a reverse charge basis. However, the applicant submitted invoices showing that the security services were provided by a registered private limited company, thus not liable under RCM. In contrast, legal services provided by an individual advocate or a firm of advocates are taxable on a reverse charge basis. The applicant submitted invoices for legal services received from an individual advocate, making them liable to pay tax under RCM for these services.

2.3. Whether the entry provided under Serial No.3/3A of Notification 12/2017 is available to IIMT and whether the composite supply of works contract provided to the applicant is covered by Serial No.3(vi) of Notification 11/2017 dated 28th June 2017:
The applicant contended that they are entitled to exemption under Serial No. 3 & 3A of Notification 12/2017 as they provide educational services covered under the Twelfth Schedule under Article 243W and the Eleventh Schedule under Article 243G of the Constitution of India. They also sought eligibility for preferential rates under Serial No. 3(vi) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 for works contract services provided by CPWD. However, as per the ruling, advance ruling cannot be sought by recipients of a supply regarding the classification or taxability of such supply received by them. Therefore, the question regarding the applicability of Serial No. 3/3A of Notification 12/2017 and Serial No. 3(vi) of Notification 11/2017 was not admitted for consideration.

RULING:
1. The Indian Institute of Management, Tiruchirappalli (IIM) is a Government Entity under GST Law.
2.1. The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017, read with Notification No. 50/2018-C.T dated 13.09.2018.
2.2. The applicant is required to discharge liability on reverse charge basis on supply of services as per Section 9(3) of the CGST Act, 2017, in respect of legal services received by them for which documentary evidence was submitted.
2.3. The question regarding the applicability of Serial No. 3/3A of Notification 12/2017 and Serial No. 3(vi) of Notification 11/2017 was not admissible and therefore not admitted.