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TMI Blog2022 (10) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaken by the Appellant can be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017 or not? - HELD THAT:- The term consideration shall not include any subsidy given by the Central Government or State Government. Now, we would like to dissect as to whether the reimbursement amount received by the Appellant from the Women and Child Development Department of the Government of Maharashtra can be construed as subsidy or otherwise - Here, it is seen that the term subsidy has not been defined under the CGST Act, 2017 - The term subsidy , it is apparent that any money/amount granted by a government to any private person or company for undertaking any charitable activities, which are beneficial to the public, will be construed as subsidy. In the present case, the Appellant are being granted a fixed amount of money from the Government of Maharashtra under the One stop crises Centre Scheme for taking overall care of the destitute women who are litigating divorce, or homeless, or the victims of domestic violence. The said activities undertaken by the Appellant are clearly for the welfare of these destitute women, and thereby, serving the mankind in general. Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ist floor, Madhav Parvati Complex, Veer Savarkar Marg, Sangamner. The destitute for children is located at Akole bypass road, Sangamner. The trust undertakes services to orphans and homeless children by way of providing shelter, education, guidance, clothing, food and health, on behalf of the Women Child Development Ministry of Government of Maharashtra. 3.3 The trust also renders services under One stop crises centre scheme (Subject matter in Advance Ruling) introduced by Ministry of Women and Child Development to destitute women who are litigating divorce, or homeless, or the victims of domestic violence. Central Government also gives grants through Women Child Development Ministry for awarding shelter, food, medical facilities, clothing, etc. to these destitute women who are the victims of domestic violence, or are divorcee, or are homeless, or are the rape victims. The trust represents them before legal forums, including lodging FIR at police stations against the culprits. The trust also arranges for counselling them through expert counsellors to bring them out of the trauma and help them to lead normal life. These victim women are sent by police stations, or anybody ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted. 3.6 Since the Appellant was not sure of the GST applicability of the One Stop Crises Centre , an application was made with the Authority of Advance Ruling for the GST, Maharashtra (MAAR) for the purpose to ensure if the aforementioned transactions are liable to GST or not. 3.7 The MAAR passed an order bearing No.GST-ARA-97/2019-20/B-91 dated 10.11.2021 confirming the GST applicability on the impugned transactions. GROUNDS OF APPEAL 4 Aggrieved by the aforesaid Advance Ruling passed by the MAAR, the Appellant has preferred the present appeal before the Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax (hereinafter referred to as the MAAAR ) on the following grounds: 4.1 That MAAR, in their observations and findings in point numbers from 5.5 to 5.13 in the impugned Advance ruling order, has made a reference to the exemption Notification No. 12/2017 dated 28.06.2017 with regard to the charitable activities; that the MAAR has righteously noted that the main thrust is to identify as to whether the impugned activities are covered under the definition of charitable activities, or not. However, the MAAR has missed on the interpretat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harity commission of England Wales - To be a charitable institute, the fundamental states that the cause of religion must be advanced. In general, to 'advance' a religion means to promote or maintain or practice it, and increase belief in the supreme being or entity; that is the object or focus of the religions. Promoting particular tenets of religion: some charities whose aims include advancing religion might choose to concentrate on promoting particular tenets of the religion in order to further what they believe to be an inherently important aspect of that religion. 4.5 Further, to be recognized as charitable, all organizations advancing religion must be able to show that there is a moral or ethical framework which is promoted by the religion. This moral or ethical framework is considered by many to offer benefits to wider society, as well as individual comfort, solace and a sense of purpose. 4.6 As per the Government of Canada - To advance religion in the charitable sense means to preach and advance the teachings of a religious faith, and to maintain the doctrines and spiritual observances on which those teachings are based, such as:- establishing and mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, the trust reported net deficit of Rs 12,77.832/-. Therefore, grants received by the trust only cover the expenses incurred in specified manner and services provided by the trust to the government (as an implementing agency) are virtually free of cost and lacks essence of consideration. Further, in the case of APITCO Vs. Commissioner of Service Tax, Hyderabad (2010 (7) TMI 176 - CESTAT, BANGALORE), in which the Hon'ble Supreme Court upheld the decision of Tribunal that the assessee company had implemented welfare schemes consisting of training, technology facilitation, etc. for the Government for the benefit of the vulnerable / weaker sections of the society and grant in aid received from the Government was utilized for this purpose alone. Tribunal had held that in implementation of the Governmental schemes, the assessee as an implementing agency did not render any taxable service to the government. 4.13 The Judgment further stated that the department seems to be considering the Governments to be clients of APITCO. The question now is whether there was service provider-client relationship between the assessee and the governments. Here, again, the nature of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st. The Authorities must have actually appreciated the fact that the activities are not in the course and furtherance of business. 4.18 REIMBURSEMENT of ACTUAL EXPENSES Under the one stop crisis Centre Scheme; the Appellant was selected as an implementation agency vide Aadesh bearing number 686/19-20 dated 28.05.2019 (also refer agreement dated 31.03.2019); further a grant of amount up to Rs. 2,00.000/- per month was approved under the said scheme; wherein the trust will only act as an implementing agency and will use grant amount in specified manner. 4.19 Grant amount of Rs. 2.00.000/- is factually to be used as under: SI. No. Designation Required No. of People Honorarium (per month per person) Total Honorarium 1 Centre Administrator 01 25,000 25,000 2 Case Worker 02 15,000 30.000 3 Police Facilitation Officer (PFO) 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -a-vis Government: 5.1 Since the amount charged by the Appellant is equal to the amount paid by them as required by the order, levy of GST shall be an additional burden on the Appellant trust. As per the GST laws the Tax is to be calculated on Supply value. For Example, in present case the Appellant present proof of payment of Rs 2,00,000/- to designated persons.; further it approaches the Government agency for reimbursement thereon; No. NET TAX TOTAL Remarks 1 2,00,000/- 36,000/- 2,36,000/- Refer 15.2 2 1,69,491/- 30.509/- 2,00,000/- Refer 15.3 3 2,00,000/- 0 2.00.000/- Refer 15.4 5.2 As per the advance ruling order received if the transaction is liable to GST then as per sr. no. 1 above the implementing agency shall expend Rs 2,00,000/- and will bill Rs 2,36,000/- to the Government agency. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Government of Maharashtra) there needs to be clarity on the taxability of transaction but there needs to be extra clarity on the payer/reimburser of tax in this scenario as discussed above. 6.2 To summarize, the Appellant is relying on the aforementioned 3 grounds and need clarity on the 4th issue ,- i. The activities done by the Trust are in the charitable nature such as they promote the advancement of religion. As per the provisions as envisaged in notification no. 12 of 28.06.2017 the grant received by the trust is not liable to GST. ii. The definition of supply includes consideration furtherance of business - In the present case there exists no consideration also there exists no course or furtherance of business, thereby, the transaction cannot be treated as supply. Since there exists no Supply, therefore, GST is not chargeable. iii. The grants are given to an NGO under an agreement with detailed budget, which outlines how funds are to be utilized; The grant (which is subject matter of Advance ruling) is granted only after presentation of list of expenses incurred, therefore, grant amount is in nature of reimbursement of expenses incurred on behalf of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s Additional Submissions dated 27.06.2022 8. The Appellant, vide their letter dated 27.06.2022, have made additional submissions, extracts of which are enumerated hereunder: 8.1 As the Appellant have been selected as an implementation agency of the Government's One Stop Crises Centre Scheme, wherein the Appellant are being reimbursed by the Ministry of, for the expenses incurred towards the supply of goods and services to the destitute women, the Appellant can be construed as acting as a Pure Agent of the Women and Child Development, Government of India, and thereby, the impugned amount reimbursed by the Government will not be subject to the levy of GST in terms of the Rule 33 of the CGST Rules, 2017. 8.2 That the amount sanctioned by the Government to the Appellant in respect of the One Stop Crises Centre Scheme can be construed as 'subsidy' as per the general parlance meaning of the term 'subsidy'. As per 'Words and Phrases, Permanent Edition, Vol. 40', the term 'subsidy' is described as follows: A subsidy is a grant of funds or property from a government as of the state or municipal corporation to a private person or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide the schemes are mentioned in which wherever there is a construction activity involved, the Central Government has clearly worked out the GST portion to be paid, which is not the case with the subject scheme of One Stop Crisis Management Centre , i.e., no GST liability is demarcated. He further contended that the subject scheme guideline has explicit provisions for TDS whereas there is no provision for any GST on the impugned amount reimbursed to the Appellant, and thereby, contended the subject amount received by them was not liable to GST. 11. He further contended that the Appellant were implementing the objectives of the One Stop Crises Centre Scheme floated by the Ministry of Women and Child Development, Government of India, wherein they provided the food, cloths, shelter, medical care, legal assistance, etc., to the destitute women who are either litigating divorce, or are the victims of the rape or domestic violence. He further contended that since the Appellant were being reimbursed only to the extent of expenditure incurred by them towards undertaking various activities as envisaged under the subject scheme, they should be deemed as pure agent of the Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oated by the Women and Child Development Ministry of the Government of India, can be construed as services or not 15. To examine this issue, we would first like to refer to the definition of service provided under Section 2(102) of the CGST Act. 2017, which reads as under:- Section 2(102) services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; 16. Thus, the GST Law has given a very wide connotation to the term services , which cover any activities other than those which involve goods, money and securities. As the activities undertaken by the Appellant do not entail supply of any goods, money, or securities to their recipient, which in the present case is the Government of Maharashtra, who is compensating for the subject activities undertaken by the Appellant under the said scheme of One stop Crises Centre ', the activities of the Appellant would aptly be construed as services. 17. Now, we proceed to examine the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy . Meaning of Subsidy as per the Merriam-Webster Dictionary:- a grant or gift of money: such as a: a sum of money formerly granted by the British Parliament to the crown and raised by special taxation b: money granted by one state to another c: a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public Meaning of Subsidy as per dictionary.com :- a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like: a sum paid, often in accordance with a treaty, by one government to another to secure some service in return; a grant or contribution of money; money formerly granted by the English Parliament to the crown for special needs; 21. On perusal of the aforesaid dictionary meanings of the term subsidy , it is apparent that any money/amount granted by a government to any private person or company for undertaking any charitable activities, which are beneficial to the public, will be construed as subsidy. In the present case, the Appellant are being granted a fixed amount of money from the Government of Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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