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TMI Blog2018 (11) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be other such State Federal Societies and State Apex Training Institutes which have been notified for providing such education/coaching/ training. Applicant are neither providing any services to the Central Government, State Government, Union territory administration under any training programme nor is the expenditure borne by the Central Government, State Government, Union territory administration. In their case they are funded by the fees received from the societies for the training of their members - they cannot be considered as an educational institution providing services to its students, faculty and staff and therefore the supply of services by them to the members of the cooperative societies do not get exemption given under Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-11 (Rate) both dated 28-6-2017. There appears to be no funding by the Government whether direct or indirect. The Societies Act referred above, vide Section 24A has laid down that every society shall organise co-operative education and training, for its members, officers and employees from the applicant or other notified institutes and every society shall contribute annually toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ody and doing this activity as statutory requirement of Maharashtra Co-operative Societies Act, 1960. Therefore, it is requested to exempt GST to Maharashtra Rajya Sahakari Sangh Ltd. At the outset, we would like to make it clear that the provisions of both the CGST Act and the GST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submission (Brief facts of the case), as reproduced verbatim, could be seen thus - FACTS OF THE CASE The Maharashtra Rajya Sahakari Sangh Ltd is state level apex training institute registered under Maharasthra Co-operative Societies Act, 1960 on 13th of July 1918. The Maharashtra Rajya Sahakari Sangh Ltd. gives education to members of co-operative societies in the state (Total number is as on 31.3.2017) and training ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amchand Gandhi, father of our nation. d. Incorporation of the assessee has everything to do with the then ongoing cooperative movement during the period of the father of the nation and therefore, the main object of the assessee is to educate the people of India on the cooperative movement. Regarding finances to the trust, the assessee has by virtue of section 68 of the Maharashtra Co-op. Societies Act, every other member-society should mandatorily contribute annually towards the education fund of assessee as per the sums prescribed in the notification issued by the State Government. Such contributions to the education fund of the assessee are the sources of finance for the assessee-Sangh. Admittedly, the Sangh does not receive any funds or grants from the Government directly. As per the assessee, in brief, such supply of finance indirectly by way of mandatory contributions by the member co-operative societies by virtue of legislation i.e. Section 68 of the Maharashtra Co-op. Societies Act, meets the requirement of the said expression financed by the Government. e. The assessee main object is to work for the furtherance of co-operative movement in India and supply of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Government. It does mean that one has to see the financing in each year. Financed here means that the institute was set-up with the finances made available by the Government Such requirement was met in instant case. After setting-up infrastructure, the institute started imparting education and charged fees as prescribed by the Government. l. The finances received by the assessee in the form of training receipts from the member cooperative societies by way of compulsory subscriptions in accordance with a State legislation tantamount to financed by the Government . m. The instant assessee earlier has also got the requisite finance out of the exclusive Education Fund of the State Federal Society created by way of law in the name of Maharashtra Co-operative Societies; 1960, which is a legislative enactment of the State Government of Maharashtra. Thus, there exists legislative nod this legislative participation constitutes an essential ingredient of any financing by the Government. n. It is also relevant to mention that there is need for understanding the ingredients of the cooperative movement and the need for autonomy both in matters of finance as well as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution out of the Governmental funds or may be by way of indirectly providing the alternative methods of financing the institution by virtue of state or central legislations as in the case of the assessee. Therefore, in the circumstances, where the Government created a special enactment i.e. Maharashtra Co-operative Societies, 1960 in general and section 68 of the said Act in particular, where by an education fund is created in this regard to constitute a fund set apart to be the source of finance to the institution. Further, we are also Of the opinion, the assessee being the case of the society engaged in the running the educational institution for promoting the cooperative movement in India, liberal interpretation of the statute is the need of the time. The cases of this kind, where the Government legislates law to provide for compulsory contributions by the member societies to an Education fund which is set apart to be the source of finance for an educational institution Of this kind engaged in the cooperative movement in India, which constitutes indirect financing by the Government. Statement containing the applicant's interpretation of law and/or facts, as the case may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cooperative movement in India, constitutes indirect financing by the Government and are thus entitled for the exemption . Further, vide Order dated 31.07.2007, the Commissioner of Income Tax, Pune, did not consider the activity carried out by the taxpayer to be of charitable nature and accordingly denied the taxpayer the exemption under section 12AA (l)(ii) Of the Income Tax Act, 1961 which is accorded to a charitable trust. 5. Thus in view of the above it is seen that the service provided by the taxpayer is not free but carried out against a consideration received from the members of the cooperative society and accordingly fall under the purview of GST as detailed below: 5.1 Under CGST Act, 2017, Section 2 (84), the definition of Person includes - (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company is defined in clause (45) of section 2 of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such Club; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; 5.4 Under CGST Act, 2017, Section 2 (31), consideration in relation to supply of goods or services or both includes - (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 1960, they are giving education/ training, though their 13 training centres, to the members of co-operative societies in the state of Maharashtra and the same is not a commercial activity. They have submitted that they do not receive any funds or grants from the Government directly and their funding is indirectly by way of mandatory contributions by the member co-operative societies under the provisions of Section 68 of the Maharashtra Co-op. Societies Act and they are not a profit making organization but only an educational institution and therefore on the similar lines of exemption granted to educational institutions registered under Trust Act', they should be treated as educational institute and CST should not be levied. The department has observed on perusal of the order dated 30.04.2010 by the Income Tax Appellate Tribunal, Pune Bench, submitted by the applicant in their favour, that they were not granted exemption and were denied registration under section 12AA of the Income Tax Act, 1961 as a charitable trust. For reasons mentioned in their reply, the department has concluded that the training provided by the applicant is against consideration, i.e., fees collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and training fund of such State federal societies State Apex Training Institutes, notified under subsection (1), at such rates as may be prescribed, and different rates may be prescribed for different societies or classes of societies. Hence it is clearly seen that there is no funding from the Government directly or indirectly to the applicant as claimed by them in their submission and also that there may be other such State Federal Societies and State Apex Training Institutes which have been notified for providing such education/coaching/ training. We find from the submissions made by the applicant that they are neither providing any services to the Central Government, State Government, Union territory administration under any training programme nor is the expenditure borne by the Central Government, State Government, Union territory administration. In their case they are funded by the fees received from the societies for the training of their members. It is also seen from their submissions that they cannot be considered as an educational institution providing services to its students, faculty and staff and therefore the supply of services by them to the members of the coo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1860 can be termed as a society and supply service in the form of commercial training and coaching to the members of the cooperative societies, for a subscription/ fees (in this case Annual Membership Fees). Such provision of facilities or benefits to its Member Cooperatives , by the applicant is squarely covered under Section 2 (17) (e) of the GST Act. It is clearly seen from their submissions that it is optional for the cooperative societies to obtain training for their members from the applicant or other similar institutes. It seems that it would be optional for societies to avail of such services either from the applicant of some other such institute. Thus the member societies are not under any legal compulsion to become members and get training from the applicant only. The obtaining of such membership by way of payment of annual fees implies that the applicant would supply such educational and training services only to societies who pay annual fees and not to those societies who do not pay the applicant such fees. The applicant has submitted that The Maharashtra Societies Act, vide Section 24 provides for guidelines, which are mandatory for each and every Co-Operative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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