2018 (4) TMI 809 - AAR - GST

Non-Profit Under Ministry of Steel Exempted from Mandatory GST Registration Based on Service Characteristics

The SC ruled that a non-profit organization under the Ministry of Steel is not mandatorily required to register under the GST Act. Despite having an ... Exempt supply - registration under the GST Act - liability to register despite exempt supplies where subject to reverse charge - reverse charge mechanism - Exemption Notifications for ServicesExempt supply - registration under the GST Act - Exemption Notifications for Services - The Applicant's supplies are wholly exempt and, therefore, it is not required to be registered under the GST Act under the threshold-based provision applicable to persons making only exempt supplies. - HELD THAT: - The Applicant's supplies of journals and periodicals fall under the exempt tariff entry and its services (including interest on deposits/loans and low priced guest house accommodation) are exempt under the notified entries in the Exemption Notifications for Services. On the material before the Authority, the Applicant is engaged exclusively in supplies which are wholly exempt from tax. Consequently, the Applicant is not liable to be registered under the GST Act under the provision that exempts persons making only exempt supplies from mandatory registration, subject to the qualification regarding reverse charge liability. [Paras 12]Applicant engaged exclusively in wholly exempt supplies and therefore not required to be registered under the GST Act under the exemption for persons making only exempt supplies, subject to reverse charge qualification.Liability to register despite exempt supplies where subject to reverse charge - reverse charge mechanism - registration under the GST Act - Even if a person makes only exempt supplies, registration is required if the person is liable to pay tax under the reverse charge mechanism. - HELD THAT: - Section 24 (obligation to register in specified cases) operates notwithstanding the exemption for persons making only exempt supplies; where a person is required to pay tax under the reverse charge (as defined), that obligation triggers the requirement to obtain registration irrespective of the aggregate turnover threshold or the exempt nature of the person's supplies. Thus the Applicant's exemption from registration applies only so long as it is not otherwise liable to pay tax under the reverse charge provisions of the GST Act or the corresponding provisions of the IGST Act. [Paras 11, 13]If the Applicant is liable to pay tax under reverse charge, it must obtain registration notwithstanding that it makes only exempt supplies; if not so liable, it need not register.Final Conclusion: The Authority ruled that the Joint Plant Committee is not required to be registered under the GST Act so long as it is exclusively engaged in wholly exempt supplies; however, this non registration does not apply if the Committee is otherwise liable to pay tax under the reverse charge mechanism. 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.