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TMI Blog2021 (1) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... viding knowledge, education, training and research facilities of high order in specific fields which would advance education. The relevant extract of Section 4 of the Nirma University Act has been reproduced herein below, for ready reference: (ii) to create centres of excellence for providing knowledge, education, training and research facilities of high order in specific fields of science, technical, dental, medial, paramedical, physiotherapy, pharmacy, commerce, management, education and humanities and other related professional education as per its current status and such other manner as develop in future, including continuing education and distance learning; 4. During the normal course of its operations, the applicant procures several inputs and input services. At times, it requires the assistance of an advocate and accordingly, procures legal services including but not limited to representational services from individual advocates, including senior advocates. These services form an important input service for the applicant. 5. The GST regime envisages two types of supplies which are covered under RCM. The first type depends upon the nature of supplies, which are covered u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s operations, the University procures several input services including legal services. 12. The applicant refers to Notification No.13/2017-Central Tax (Rate) dated 28th June, 2017,which requires GST to be discharged under reverse charge mechanism in case of specific services. The list of services inter-alia includes: * Services supplied by an individual advocate, including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to business entity. * Services supplied by an arbitral tribunal to a business entity. 13. Considering the wide definition of the term 'business", the applicant is of the view that they would be considered as a business entity from GST prospective. Accordingly, legal services received by them would be subject to tax under reverse charge mechanism. 14. However, it is important to note that Notification No.2/2018-Central Tax (Rate) dated 25.01.2018 amended the Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9) 2 P&H 486 (FB)] = 1979 (7) TMI 243 - PUNJAB AND HARYANA HIGH COURT held as follows: "After the words 'administration of justice' in Entry 3, there is a semicolon and this punctuation cannot be discarded as being inappropriate. The punctuation has been put up with a definite object of making this topic as distinct and not having relation only to the topic that follows thereafter." 19. To buttress above point, the applicant would like to further submit that the definition of the 'Governmental Authority' was similar in the erstwhile service tax legislation and during erstwhile regime. Hon'ble Patna High Court had on occasion to deal with the similar issue in the case of Shapoorji Paloonji & Company Ltd Vs CCE, Patna (2016-TIOL-556-HC-PATNA-ST] = 2016 (3) TMI 832 - PATNA HIGH COURT. In that decision, the Court held that the condition attached to the definition viz. participation of government by way of 90% or more of equity and control to carry out the functions of municipality under Article 243W of the Constitution, is relevant only for the board established by the Government. The Court further held that the authority set up by an Act of Parliament or State Legislature is not an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d if such service of providing higher education provided by them would qualify for exemption under Sr. No. 4 of the exemption notification. 25. From perusal of Article 243W, the applicant understands that one of the function entrusted to municipality is promotion of education aspects. Entire list of activities contained in Article 243W is provided in Annexure D. The relevant provision of Article is reproduced hereunder: "13. Promotion of cultural, educational and aesthetic aspects." 26. From review of above, the applicant submitted that the scope of function is very much wide and is not limited to one or two activities relating to education. In fact, the Constitution neither specifies nor restricts the scope of education covered by Article 243W. Accordingly, any function for promotion of education aspect should be covered within provisions of this Article. It should cover conferment of degree, diplomas or grant certificates, or other academic titles to students. Provision of higher education to students should also be covered in Article 243W. 27. It is imperative to note that there are several colleges and institutions established by the Municipalities that confer higher educa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic distinction or course of study on the sole ground of sex, race, creed, caste, class, place of birth, religious belief or political or other opinion. 30. Having said that, the Applicant would like to submit that incorporation of education institute and provision of various related services for offering training in higher education can be construed to be activities in relation with promotion of education. 31. Additionally, the Applicant would like to submit that the term 'in relation to' used in above exemption is very much wide enough to cover every kind of services provided in respect of functions as per Article 243W. 32. The Applicant wishes to rely on judgement of State Waqf Board Vs, Abdul Azeer sahibas reported in AIR 1968 Mad 79, wherein it was held that ""in relation to" are words of comprehensiveness which might both have a direct significant as well as an indirect significance, depending on the context. They are not words of restrictive content and ought not to be so construed." 33. Further, the Applicant wishes to draw attention to another judgement of Doypack System (P) Ltd. Vs. UOI as reported in 1988 (36) ELT 201 (S.C.) = 1988 (2) TMI 61 - SUPREME COURT wherein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference No. 76/50/2018GST dated 31st December, 2018 wherein the clarity is provided on similar aspect or legal interpretation. Accordingly, to Circular, it has been clarified that the long line written in clause (a) in Notification No.50/2018-Central Tax dated 13.09.2018 is applicable to both the items (i) and (ii) of clause (a) of the said Notification. 40. In other words, the provisions of Section 51 of the CGST Act, are applicable only to such authority or a board or any other body set up by an Act of parliament or a State legislature or established by any Government in which fifty-one per cent. or more participation by way of equity or control, is with the Government. 41. On conjoint reading of above, the Applicant wishes to know whether the University is liable to be registered as a Deductor under GST. 42. At the time of personal hearing held through Video Conferencing on 18.06.2020, the Authorised Representative of the applicant, Shri Hardik Shah reiterated the facts as stated in the Application. DISCUSSION & FINDINGS: 43 We have considered the submissions made by the applicant in their application for advance ruling as well as at the time of personal hearing. We also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices received by them would be subject to tax under reverse charge mechanism. 46.2 The applicant referred to Notification No.13/2017-Central Tax (Rate) dated 28th June, 2017,which requires GST to be discharged under reverse charge mechanism in case of specific services. The list of services inter-alia includes: * Services supplied by an individual advocate, including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to business entity. * Services supplied by an arbitral tribunal to a business entity. 46.3 The applicant further pointed out that Notification No.2/2018-Central Tax (Rate) dated 25.01.2018 amended the Notification No.12/2017-Central Tax (Rate) dated 26.06.2017 and, thereby, legal services provided to a Central Government, State Government, Union Territory, local authority, Governmental Authority or Government entity were exempted. 46.4 The applicant further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal to- (i)--------------; (ii)-------------; (iii) a Central Government, State Government, Union Territory, local authority, Governmental Authority or Government entity. (b) a Partnership Firm of Advocates or an individual as an advocate other than a Senior advocate, by way of legal services to- (i)-------------; (ii)-----------; (iii)---------; (iv) a Central Government, State Government, Union Territory, local authority, Governmental Authority or Government entity. a Senior advocate by way of legal services to- (i)--------------; (ii)-------------; (iii) a Central Government, State Government, Union Territory, local authority, Governmental Authority or Government entity. Nil Nil Further, the definition of "Legal service" has been provided under entry 2 (zm) of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, which is reproduced hereunder: "Legal service means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority". 48. We find that admittedly, the applicant is not Central Government, State G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 31st December, 2018, we can state that the applicant does not fall under the "governmental authority", as defined under Section2(16) of the IGST Act, 2017. We, therefore, conclude that the condition of 'with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under Article 243W of the Constitution' would apply to both authorities whether set up by an Act of Parliament or a State Legislature; or established by any Government. 50. In view of the above, we hold that the applicant would not be eligible for claiming benefit of the exemption as provided in Sr. No.45 of the Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017, as amended from time to time, in respect of procurement of legal services (as a recipient). 51. Now, we come to second issue that whether services of higher education provided by the applicant would qualify for exemption provided under S. No. 4 of the exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. 52. The applicant is providing the services of higher education in the fields of science and technology, dental, medial, paramedical, physiotherapy, pharmacy, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her secondary school or equivalent; (ii) Education as a part of a Curriculum for obtaining a qualification recognised by any law for the time being in force. (iii) Education as a part of an approved vocational education course; 55.2 Within the term "educational institution", sub clause (ii) covers institutions providing services by way of education as a part of a Curriculum for obtaining a qualification recognised by any law for the time being in force. This is an area where doubts have been persisted as to what would be meaning of "education as a part of a Curriculum for obtaining a qualification recognised by any law". In this regard, we refer to GST E flyer_40_Education Service wherein the Explanation given in the Education Guide of 2012 was referred to understand the meaning of the term which reads as under: "What is the meaning of "education as a part of a Curriculum for obtaining a qualification recognised by any law"? It means that only such educational services are in the negative list as are related to delivery of education as "a part of the law". It is important to understand that to be in the negative list, the service should be delivered as a part of curriculum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-Central Tax dated 13.09.2018, which provides that TDS provisions u/s 51 will be applicable w.e.f 01.10.2018 and provides other specified persons as below: (a) an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function; (b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860); (c) public sector undertakings (PSUs). 56.2 The issue before us to decide is whether the applicant falls under any of the categories of the persons mandated to undertake TDS deduction under Section 51 of the CGST Act, 2017 on consideration of aforesaid relevant amendments. 56.3 As mentioned in foregoing paras that the applicant entity was formed as a private university set up by the Nirma University Act passed by the Gujarat State Legislature, in which Government is having zero percent participation by way of equity or control. 56.4 Further, admittedly, the applicant does not fall under (i) a department or establishme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority or board or any other body whether set up by an Act of Parliament or a State Legislature or established by any Government in which fifty one percent or more participation by way of equity or control, is with the Government. It is fact on record that the Nirma University is set up by the Nirma University Act passed by the Gujarat State Legislature, in which Government is having zero percent participation by way of equity or control. Hence, the applicant does not fall under this category of specified person for the purpose of Section 51 of the CGST Act, 2017. 57.4 In view of the above, we hold that the applicant is not liable to register themselves as a Deductor under GST. 58. In light of the foregoing, we rule as under - R U L I N G Question-1: Whether Nirma would be eligible for claiming benefit of the exemption for legal services as provided in Sr. No.45 of the Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017, as amended from time to time in respect of procurement of legal services? Answer: Answered in negative. Question-2: Whether services provided by Nirma are exempted under S. No. 4 of Notification No.12/2017-Central Tax (Rate)? Answer: Answered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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