2019 (7) TMI 817 - AAR - GST

Liability of TDS - Whether the applicant being a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965, now consolidated to Rajasthan State Co-operative Society Act, 2001 is liable to deduct tax at source (TDS) under GST from payment made to it by vendors for providing/ procuring taxable goods and services for making its supplies? HELD THAT - While going through the Section 51 of GST Act, 2017 read with Notification No. 50/2018 (Central Tax) dated 13.09.2018, we find that the applicant is neither established under Societies Registration Act, 1860 (21 of 1860) nor it is established/constituted by any government (viz. Central Government/ State Government/ Local Authority). The applicant thus does not fall under any category of Section 51 of the GST Act, 2017. Therefore provisions of TDS are not applicable in accordance with Section 51 of the GST Act, 2017. The applicant is not covered under the provisions of Section 51 of GST Act, 2017 therefore not liable to deduct tax at source.

Summary

Issues:
1. Applicability of TDS under GST for a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965.

Analysis:
The Advance Ruling Authority considered the application of M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. which deals in manufacturing milk products. The applicant sought a ruling on whether they, as a cooperative society, are required to deduct tax at source (TDS) under GST from payments made to vendors for taxable goods and services. The jurisdictional officer opined that the applicant, registered under the Rajasthan Co-operative Societies Act, 1965, did not fall under the categories specified for TDS deduction under Section 51 of the CGST Act, 2017.

Observations:
The Authority noted that the applicant is a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965, now governed by the Rajasthan State Co-operative Society Act, 2001. The applicant primarily deals in manufacturing milk products and procures raw milk from rural areas through dairy co-operative societies. While most of their sales are exempted under GST, they also engage in taxable sales.

Legal Provisions:
To determine the liability of the applicant for TDS under GST, the Authority examined Section 51 of the GST Act, 2017, which mandates certain entities to deduct tax at a specified rate from payments made to suppliers of taxable goods or services. The relevant provision specifies categories of persons subject to TDS, including government departments, local authorities, and specific entities notified by the government.

Decision:
After thorough analysis, the Authority concluded that the applicant, being a cooperative society not falling under the categories specified in Section 51 of the GST Act, 2017, is not liable to deduct tax at source. Therefore, the ruling stated that the applicant is not covered under the provisions of Section 51 of the GST Act, 2017, and hence, is not required to deduct TDS under GST regulations.

Conclusion:
The ruling provided clarity on the applicability of TDS under GST for cooperative societies registered under specific acts, emphasizing the importance of aligning with the provisions outlined in the GST Act to determine tax obligations accurately. The decision highlighted the specific criteria under which TDS deduction is mandated, ensuring compliance with relevant tax regulations.