National Institute of Design (NID) Status under GST Act

The ruling determined that the National Institute of Design (NID) would qualify as a 'Governmental Authority' under the Integrated Goods and Services Tax Act if it meets the condition of 90% or more participation by way of equity or control by the Government. Regarding the liability to pay GST on procurement of services, no decision was made due to the lack of submission of necessary agreements or contracts. Additionally, NID must register as a tax deductor under GST if it meets the condition of 51% or more participation by way of equity or control by the Government.

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Issues Involved:
1. Qualification of NID as a 'Governmental Authority' under the Integrated Goods and Services Tax Act, 2017.
2. Liability of NID to pay GST on procurement of security services and access to e-books/e-database under reverse charge mechanism.
3. Requirement for NID to be registered as a tax deductor under GST as per Section 24 of the CGST Act.

Issue-wise Detailed Analysis:

1. Qualification of NID as a 'Governmental Authority':
The applicant, National Institute of Design (NID), sought to determine if it qualifies as a 'Governmental Authority' under the IGST Act, 2017. The definition of 'Governmental Authority' under Section 2(16) of the IGST Act requires:
- The entity to be set up by an Act of Parliament or State Legislature, or established by any Government with 90% or more participation by way of equity or control.
- The entity must carry out functions entrusted to a municipality under Article 243W or a Panchayat under Article 243G of the Constitution.

The applicant argued that NID was set up by an Act of Parliament and is controlled by the Central Government, thus meeting the first condition. However, the applicant did not provide proof of the Government having 90% or more participation by way of equity or control. The ruling concluded that NID would qualify as a 'Governmental Authority' if it fulfills the condition of 90% or more participation by way of equity or control by the Government.

2. Liability to Pay GST on Procurement of Services:
The applicant sought clarification on whether they are liable to pay GST on the procurement of security services and access to e-books/e-database under reverse charge mechanism, given the exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) and Notification No. 09/2017-IGST (Rate). The conditions for exemption include:
- The service must be a pure service (excluding works contract service or other composite supplies involving supply of any goods).
- The service must be provided to the Central Government, State Government, Union territory, local authority, Governmental Authority, or Government Entity.
- The service must relate to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution.

The applicant did not submit copies of agreements or contracts with service providers, making it impossible for the authority to determine whether the services received are 'pure services'. Consequently, the ruling could not provide a decision on the matter.

3. Requirement to Register as a Tax Deductor:
The applicant questioned whether NID is required to register as a tax deductor under GST as per Section 24 of the CGST Act. Section 24 mandates registration for persons required to deduct tax under Section 51, which includes:
- An authority or board set up by an Act of Parliament or State Legislature, or established by any Government with 51% or more participation by way of equity or control.

The ruling noted that NID was formed by an Act of Parliament, but the applicant did not provide proof of 51% or more participation by way of equity or control by the Government. Therefore, NID must register as a tax deductor if it meets the condition of 51% or more participation by way of equity or control.

RULING:
1. Qualification as 'Governmental Authority': NID qualifies if it meets the condition of 90% or more participation by way of equity or control by the Government.
2. Liability to Pay GST on Procurement of Services: No decision due to non-submission of necessary agreements or contracts.
3. Requirement to Register as a Tax Deductor: NID must register if it meets the condition of 51% or more participation by way of equity or control by the Government.

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