Cooperative Society Exempt from GST TDS

The cooperative society registered under the Tamil Nadu Cooperative Societies Act, 1983, was found not to be subject to TDS provisions under the GST Act. The society's structure and government equity did not meet the criteria outlined in the relevant notifications, leading to a ruling that the notifications were not applicable to the society.

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Issues Involved:
1. Applicability of TDS provisions under GST Act to a Co-operative Society registered under the Tamil Nadu Cooperative Societies Act, 1983.
2. Interpretation of Notification No. 33/2017 (C.T) dated 15/09/2017 as amended by Notification No. 50/2018 dated 13.09.2018.

Detailed Analysis:

Issue 1: Applicability of TDS provisions under GST Act to a Co-operative Society registered under the Tamil Nadu Cooperative Societies Act, 1983

The applicant, a Co-operative Society registered under the Tamil Nadu Cooperative Societies Act, 1983, sought clarification on whether the TDS provisions under the GST Act are applicable to them. They argued that since they are not registered under the Societies Registration Act, 1860, and are not a statutory corporation or a state government undertaking, they should be exempt from TDS provisions.

The applicant detailed their operations, which include supporting sericulture activities by supplying silk to various cooperative societies and other entities. They highlighted that their transactions attract 5% GST and that they are exempt under Section 80P of the Income Tax Act.

Upon examination, it was found that the applicant is an Apex society registered under the Tamil Nadu Cooperative Societies Act, 1983, with the Director of Sericulture as the Functional Registrar. The society's capital structure includes contributions from members, government share, and loans from the National Corporation of Development of Co-operatives. The government’s share has never exceeded 51%, and currently stands at 30%.

Issue 2: Interpretation of Notification No. 33/2017 (C.T) dated 15/09/2017 as amended by Notification No. 50/2018 dated 13.09.2018

The applicant sought to understand the applicability of Notification No. 33/2017 (C.T) dated 15/09/2017, which was amended by Notification No. 50/2018 dated 13.09.2018. This notification specifies the persons required to deduct TDS under the GST Act, including:

1. Authorities or bodies set up by an Act of Parliament or State Legislature with 51% or more participation by way of equity or control.
2. Societies established by the Central or State Government under the Societies Registration Act, 1860.
3. Public sector undertakings.

The applicant argued that they do not fall under these categories as they are not established under the Societies Registration Act, 1860, and the government’s equity participation is below 51%. Furthermore, the control of the society rests with the elected members of the cooperative societies, not the government.

Upon review, it was concluded that the applicant, being a cooperative society under the Tamil Nadu Cooperative Societies Act, 1983, with less than 51% government equity and management control vested in elected members, does not meet the criteria specified in the notifications for TDS applicability.

Ruling:

Central Tax Notification No. 33/2017-C.T. dated 15.09.2017 as amended and State Tax Notification No. II(2)/CTR/783(C-3)/2017 vide G.O. (Ms) No. 107 dated 15.09.2017 as amended are not applicable to the applicant.

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