University not liable for GST under Reverse Charge Mechanism until registration as regular taxpayer

The applicant, a university, sought clarification on the applicability of GST on security services. The court ruled that until 24-6-2019, when the university was registered only as a Tax Deductor, it was not liable for GST under Reverse Charge Mechanism (RCM). However, from 25-6-2019, when the university also registered as a regular taxpayer, it became liable for GST under RCM for receiving security services. The court held that the service provider must pay GST under forward charge until the university's status changed to a regular taxpayer.

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Issues Involved:
1. Applicability of GST on security services provided to a university.
2. Interpretation of Notification No. 29/2018-Central Tax (Rate), dated 31-12-2018.
3. Status of the applicant as a Tax Deductor and regular taxpayer.
4. Liability under Reverse Charge Mechanism (RCM).

Issue-wise Detailed Analysis:

1. Applicability of GST on Security Services Provided to a University:
The applicant, Hemchand Yadav Vishwavidyalaya, invited a tender for security services. Eight firms submitted bids, with seven including 18% GST. One firm, M/s. Ex-Man Security Service, did not include GST, arguing that the university would pay the GST due to a government memo and educational institutions being exempt from GST. The applicant sought an advance ruling on whether GST should be applied under Notification No. 29/2018-Central Tax (Rate), dated 31-12-2018.

2. Interpretation of Notification No. 29/2018-Central Tax (Rate), dated 31-12-2018:
The applicant argued that the notification exempts services provided to government departments, local authorities, and government agencies registered under Section 51 for tax deduction purposes from GST. The applicant contended that security services provided to the university are not exempt and should include GST in their bills.

3. Status of the Applicant as a Tax Deductor and Regular Taxpayer:
The applicant is a state university registered under GST as a Tax Deductor (GSTIN-22AAAJH0647Q1DD) from 4-12-2018. Later, the applicant also registered as a regular dealer (GSTIN-22AAAJH0647Q1Z4) from 25-6-2019 for various services like consultancy, renting part of the university building, etc. Until 24-6-2019, the applicant was only a Tax Deductor, and from 25-6-2019, it became a regular taxpayer.

4. Liability under Reverse Charge Mechanism (RCM):
Reverse Charge Mechanism (RCM) under Section 2(98) of the CGGST Act, 2017, implies that the recipient of goods or services pays the tax instead of the supplier. Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017, exempts certain services provided to educational institutions up to higher secondary. However, security services provided to higher education institutions are taxable. Notification No. 29/2018-Central Tax (Rate), dated 31-12-2018, amends Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017, specifying that security services provided to a registered person are under RCM, except for certain government departments and agencies registered only for tax deduction purposes.

Conclusion:
- Until 24-6-2019, the applicant, registered only as a Tax Deductor, is not liable for GST under RCM. The service provider must pay GST under forward charge.
- From 25-6-2019, the applicant, also registered as a regular taxpayer, is liable for GST under RCM as the recipient of security services.

Order:
- The applicant, registered only as a Tax Deductor until 24-6-2019, is not liable for GST under RCM. The liability lies with the service provider.
- From 25-6-2019, the applicant, as a regular taxpayer, is liable for GST under RCM.

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