2018 (6) TMI 1126 - AAR - GST

Government Entities Clarify GST Exemption Scope for Services and Goods Procurement Under Section 97 Advance Ruling

ITDA sought advance ruling on GST exemption for services/materials from government authorities. SC determined services from IIT Bombay were GST-exempt ... Exemption of services between governmental authorities - GST leviability on supplies between governments - local authority - definition of Government under Central GST - advance ruling admissibilityAdvance ruling admissibility - Whether the application for advance ruling filed by ITDA is maintainable under the advance-ruling provisions. - HELD THAT: - The Authority examined whether the applicant falls within the statutory definition of 'applicant' entitled to seek an advance ruling. The record shows M/s. ITDA is registered under GST and therefore meets the requirement in Section 95(c) (definition of applicant). The question raised relates to determination of liability to pay tax on services or goods, which falls within the scope of matters enumerated in Section 97(2)(e). On that basis the Authority held the petition raises a question on leviability of GST and admitted the application for advance ruling and proceeded to hear the matter. [Paras 3]Application admitted for advance ruling under the advance-ruling provisions.Local authority - definition of Government under Central GST - Status of ITDA and IIT Bombay for the purpose of GST (whether ITDA is a local authority and IIT Bombay is a Government authority). - HELD THAT: - The Authority considered the constitutional and statutory character of the parties. ITDA is registered under the Societies Registration Act, operates under administrative control of the State Information Technology Department, was nominated as the State Nodal Organization and its executive committee includes government officers; accordingly it falls within the concept of a local authority under the State GST Act. IIT Bombay, being an Institute constituted under the Institutes of Technology Act, 1961 with governance and amendments by Parliament and with the Minister/Visitor roles, was held to fall within the definition of 'Government' under the Central GST Act. The Authority therefore treated ITDA as a State/local authority and IIT Bombay as covered by the Central Government definition for GST purposes. [Paras 6]ITDA is a local authority under State control; IIT Bombay is covered by the definition of Government under Central GST.Exemption of services between governmental authorities - GST leviability on supplies between governments - Leviability of GST on services and on supply of goods procured by ITDA from IIT Bombay (i.e., from one Government/authority to another). - HELD THAT: - The Authority examined the GST tariff classification and the nil-rated/fully exempted entries. It noted that Part 3 of GST Tariff-Services (Chapter 99), serial entry B, exempts services provided by one Government/authority to another Government/authority. Applying that tariff entry to the facts - services rendered by IIT Bombay to ITDA - the Authority concluded such services are exempt from GST. The Authority further noted that the exemption in that entry applies to services and that there is no corresponding exemption for supply of goods by one Government/authority to another; accordingly supplies of goods between Government/authorities attract GST unless covered by some other exemption not claimed here. [Paras 6]Services supplied by IIT Bombay to ITDA are exempt from GST; supply of goods by one Government/authority to another is not exempt under the cited tariff entry.Final Conclusion: The Authority admitted the advance-ruling application, held that ITDA is a local authority and IIT Bombay falls within the definition of Government for GST purposes, ruled that services supplied by IIT Bombay to ITDA are exempt under the nil-rated/fully exempted services entry in the GST tariff, and observed that no exemption exists under that entry for supply of goods between Government/authorities. Issues:1. Whether services or material procured by ITDA from Govt./Govt. Authority are exempt from GST.Analysis:The application sought an advance ruling on the leviability of GST on services or material procured by ITDA from the Government or Government Authority. The Joint Commissioner initially raised concerns about the question falling under Section 97(2) of the UKGST Act, but it was clarified that as per Section 97(1) of the CGST/SGST Act, an applicant can seek an advance ruling on the mentioned question. The applicant, being registered under GST, falls under the definition of an 'applicant' and is eligible to seek an advance ruling as per the relevant sections of the Act. The application was admitted based on Section 97(2)(e) of the CGST/SGST Act, which allows rulings on the determination of tax liability on goods or services procured. Therefore, the application was deemed admissible.The applicant was granted a personal hearing to present their case, where they reiterated their submission from the application. The ruling focused on the leviability of GST on the procurement of services or material from the Government or Government Authority. The ITDA, being under the administrative control of the Information Technology Department of the Uttarakhand Government, was considered a local authority as per the definitions provided in the Uttarakhand Goods and Services Tax Act. Additionally, an MOU with IIT Bombay was discussed, establishing IIT Bombay as falling under the definition of the Government as per the Central Goods and Services Tax Act.The ruling determined that services received by the applicant from IIT Bombay were exempt from GST based on the GST Tariff-Services, which lists nil rated/fully exempted services. However, there was no exemption from GST for the supply of goods by one Government/Authority to another. Therefore, services received by the applicant from IIT Bombay were deemed exempt from GST, while the supply of goods between Government/Authorities was not exempt.This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the specific rulings made by the Authority for Advance Rulings, Uttarakhand.