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2021 (8) TMI 187 - AAR - GSTDeduction of tax (GST) at source (TDS) - Government Entity or not - National Institute of Technology, Tiruchirappalli (NITT) - reverse charge mechanism - supply of services - Sl.No. 3, 3A of N/N. 12/2017 - Composite supply of works contract provided to the applicant - Sl.No.3 (vi) of N/N. 11/2017 dated 28.06.2017. HELD THAT - The applicant, National Institute of Technology, Tiruchirappalli( NITT) was started as a joint co-operative venture of the Government of India Government of Tamil Nadu in 1964 with a view to catering to the needs of man-power in technology for the country. NITT is covered under the National Institute of Technology Act, 2007. In the course of discharging the functions as per the NIT, 2007, the applicant engages suppliers to provide certain services like pure labour services and supply of composite services. It is apparent from the above that as per Section 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 - 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. However, the expression, 'unless the context otherwise requires' read with Section 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. The applicant institute was originally established in the year 1964 as a society registered with the Registrar of Societies, Tamilnadu under the auspices of the Ministry of Human Resources Development with the Minister of HRD being the Chairman, Board members will be Education Secretary of Ministry of HRD, Principal Advisor, Planning commission, Secretary, Chairman, UGC, Department of Science Technology. Director General of CSIR will be the educational advisor and financial advisor will be from Ministry of HRD, two representatives from Industry will be nominated by the Central Government. The NIT Act, 2007 enacted wherefrom the applicant becomes an entity set up by an Act of Parliament in as much as the said Act in S.3 (c) defines 'corresponding institute' as that specified in Column 3 of the schedule i.e., National Institute of Technology, Tiruchirapalli, a society registered under the Tamilnadu Societies Registration Act, 1975 and 'Institute' under the Act specified in Column 3 of the Schedule i.e, National Institute of Technology, Tiruchirapalli - the institute initially and also after the enactment of the NIT 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 NITT satisfies the conditions prescribed to be held as 'Government entity' under the CGST Act, 2017. Whether the applicant is liable to deduct Tax, as per 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 N/N. 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 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 the list of providers of security services other than the one mentioned above. Hence 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. Application not admitted.
Issues Involved:
1. Whether National Institute of Technology, Tiruchirappalli (NITT) is a Government Entity under GST Law. 2. Whether the applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017. 3. 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. 4. Whether the entry provided under Sl.No. 3, 3A of Notification 12/2017 is applicable to them. 5. Whether Composite supply of works contract provided to the applicant is covered by Sl.No.3 (vi) of Notification 11/2017 dated 28.06.2017. Detailed Analysis: 1. Government Entity Status: The applicant, National Institute of Technology, Tiruchirappalli (NITT), was established as a joint venture by the Government of India and the Government of Tamil Nadu in 1964. It is covered under the National Institute of Technology Act, 2007, and is declared as an Institution of National Importance. NITT is under the direct supervision and control of the Ministry of Human Resource Development of India. The corpus fund of the institute is provided by the Government of India. The term "Government Entity" is defined under Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017. Based on the submissions, the authority concluded that NITT satisfies the conditions prescribed to be held as a "Government entity" under the CGST Act, 2017. 2. Liability to Deduct Tax at Source (TDS): As per Section 51 of the CGST Act, 2017, and Notification No. 50/2018 dated 13.09.2018, a Government entity is liable to deduct TDS. Since NITT is a Government entity set up by an Act of Parliament with more than 51% participation by way of funding, it is liable to deduct TDS from their suppliers. 3. Liability on Reverse Charge Basis: Under Section 9(3) of the CGST Act, 2017, the Government may specify categories of supply of goods or services on which tax shall be paid on a reverse charge basis by the recipient. The Notification No. 13/2017 dated 28.06.2017 specifies such services. - Security Services: The applicant submitted invoices from a registered Private Limited company for security services. Since the service provider is a body corporate, the tax liability will vest on the service provider, not the applicant. - Legal Services: The applicant submitted bills for legal services received from individual advocates. As per Notification No. 13/2017, the applicant is liable to pay tax under RCM on the legal fees paid. - Online Educational Journals: The applicant claimed exemption from IGST for online educational journals. However, they did not submit whether the journal is educational or non-educational. If the subscription is for non-educational journals, NITT is liable to pay tax under RCM. 4. Applicability of Sl.No. 3, 3A of Notification 12/2017: The applicant sought clarification on the applicability of Sl.No. 3, 3A of Notification 12/2017. However, as per Section 95(a) of the Act, advance ruling can be sought only in respect of services undertaken or proposed to be undertaken. Since the applicant is a recipient of the supply of services, the question is not admissible. 5. Applicability of Sl.No.3 (vi) of Notification 11/2017: The applicant sought clarification on the applicability of Sl.No.3 (vi) of Notification 11/2017 for composite supply of works contract. Similar to the previous issue, since the applicant is a recipient of the supply of services, the question is not admissible. Ruling: 1. NITT is a Government Entity under GST Law. 2. NITT 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. 3. NITT is required to discharge liability on reverse charge basis on legal services received. For security services, RCM will not apply as the services have been provided by a body corporate. 4. The questions regarding the applicability of Sl.No. 3, 3A of Notification 12/2017 and Sl.No.3 (vi) of Notification 11/2017 are not admissible.
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