2018 (4) TMI 809 - AAR - GST

Levy of GST - requirement of registration - charitable institutions - non-profit organisation set up by the Central Government under Clause 17 of the Iron & Steel (Control) Order vide SO 1567 dated 07/04/1971 - main source of income is interest - Applicant declares that it has not been registered under any of the repealed Acts and wants a ruling on whether it is required to be registered under the CGST / WBGST Act, 2017 - Held that - Exemption under serial no. 1 of the Exemption Notifications for Services is available for charitable activities within the meaning of definition clause (r) of the above notifications - Activities of applicant not eligible for those exemption. Section 24 of the GST Act requires a person to be registered under certain circumstances even if his aggregate turnover does not exceed the threshold specified under Section 22(1) of the GST Act. It will be apparent from a plain reading of Section 24 that the question is relevant in the context of the Applicant only with respect to Section 24(iii) of the GST Act when the person is required to pay tax under the Reverse Charge. The Applicant is engaged exclusively in supplying goods and services that are wholly exempt from tax, and, therefore, not liable to be registered in accordance with the provisions under section 23(1) of the GST Act, subject to the condition that the Applicant is not otherwise liable to pay tax under the Reverse Charge mechanism under Section 9(3) of the GST Act or 5(3) of the IGST Act. As the applicant is unregistered and not liable to be registered, the provisions of Reverse Charge under section 9(4) of the GST Act or 5(4) of the IGST Act will not apply. Ruling - The Applicant is not required to be registered under the GST Act if he is not otherwise liable to pay tax under reverse charge under section 9(3) of the GST Act.

Summary

Issues:
1. Whether the Applicant, a non-profit organization, is required to be registered under the CGST/WBGST Act, 2017.
2. Whether the Applicant's income sources make it liable for registration under the GST Act.
3. Whether the Applicant's supplies of services are taxable.
4. Whether the Applicant is liable for registration under Section 24 of the GST Act even if it is not making any taxable supply.
5. Whether the Applicant is required to pay tax under the Reverse Charge mechanism.

Analysis:
1. The Applicant, a non-profit organization under the Ministry of Steel, sought an advance ruling on its registration requirement under the GST Act. The Applicant's functions involve managing the Steel Development Fund and maintaining market data in the Iron & Steel sector. The composition and functions of the Applicant have been modified over time by the Government of India.

2. The Applicant's income primarily comes from interest on deposits and loans, sale of journals, and renting accommodations. The aggregate turnover from these sources exceeds the threshold for registration under the GST Act unless exclusively dealing with non-taxable goods or services. The Applicant's supplies of journals are wholly exempt under specific notifications.

3. The Applicant argues that its services are exempt under the Income Tax Act and should be treated similarly under the GST Act. However, the services provided by the Applicant do not fall under the categories eligible for exemption under the GST Act. The Applicant's income from services like extending deposits or loans is also wholly exempt under specific notifications.

4. Section 24 of the GST Act mandates registration under certain circumstances, including when liable to pay tax under Reverse Charge. The Applicant, engaged in exclusively exempt supplies, is not liable for registration unless required to pay tax under the Reverse Charge mechanism.

5. The Reverse Charge mechanism obliges the recipient to pay tax instead of the supplier under certain conditions. The Applicant, being unregistered and not liable for registration, is not subject to Reverse Charge provisions unless required to pay tax under specific sections of the GST Act or IGST Act.

In conclusion, the ruling states that the Applicant is not required to be registered under the GST Act unless liable to pay tax under the Reverse Charge mechanism. This ruling is valid unless declared void under the provisions of the GST Act.