University ineligible for GST exemption under Notification No. 12/2017-Central Tax (Rate)

The university, not meeting the criteria of a "governmental authority," was deemed ineligible for claiming exemption on legal services under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate). Additionally, the services provided by the university did not qualify for exemption under Sr. No. 4 of the same notification. However, the university was not mandated to register as a Deductor under GST as it lacked the requisite government participation percentage.

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Issues Involved:
1. Eligibility for claiming exemption for legal services under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017.
2. Exemption of services provided by the university under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate).
3. Requirement for the university to be registered as a Deductor under GST as per Section 24 of the CGST Act.

Issue-wise Detailed Analysis:

Issue 1: Eligibility for Exemption for Legal Services
The applicant, a university established by a special Act of the Gujarat State Legislative Assembly, sought clarity on whether it could claim an exemption for legal services under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017. The applicant argued that it should be considered a "governmental authority" as it was set up by a State Legislature Act. However, the authority concluded that the applicant does not qualify as a "governmental authority" under Section 2(16) of the IGST Act, 2017, as it does not have 90% or more participation by way of equity or control by the government. Consequently, the applicant is not eligible for the exemption and must discharge tax liability on legal services under the reverse charge mechanism.

Issue 2: Exemption of Services Provided by the University
The applicant sought an exemption for its higher education services under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate). The authority noted that this exemption applies to services by Central Government, State Government, Union Territory, local authority, or governmental authority by way of any activity related to functions entrusted to a municipality under Article 243W of the Constitution. Since the applicant is not classified as any of these entities and higher education is not a function under Article 243W, the services provided by the university do not qualify for this exemption. However, the authority clarified that services provided by the university as part of a curriculum for obtaining a qualification recognized by law are exempt under Sr. No. 66 of the same notification.

Issue 3: Requirement to be Registered as a Deductor under GST
The applicant sought clarity on whether it needed to register as a Deductor under GST. According to Section 51 of the CGST Act and Notification No. 50/2018-Central Tax, certain entities are required to deduct TDS under GST. The authority clarified that only entities with 51% or more participation by way of equity or control by the government are required to register as Deductors. Since the applicant university has zero percent government participation, it does not fall under this category and is not required to register as a Deductor under GST.

Ruling:
1. The university is not eligible for claiming the benefit of the exemption for legal services under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate).
2. The services provided by the university are not exempt under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate).
3. The university is not required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act.

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