NITT Governed by GST Law: TDS Obligations & Reverse Charge Mechanism Explained

The ruling in this case determined that the National Institute of Technology, Tiruchirappalli (NITT) is considered a Government Entity under GST Law. As a Government entity, NITT is obligated to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017. Additionally, NITT is required to discharge liability on a reverse charge basis for legal services received, while for security services provided by a body corporate, the reverse charge mechanism does not apply. The questions regarding the applicability of specific notifications were deemed inadmissible as the applicant was the recipient of services, not the service provider.

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Issues Involved:
1. Whether National Institute of Technology, Tiruchirappalli (NITT) is a Government Entity under GST Law.
2. Whether the applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017.
3. Whether the applicant is required to discharge liability on reverse charge basis on supply of services as per Section 9(3) and 9(4) of the CGST Act, 2017.
4. Whether the entry provided under Sl.No. 3, 3A of Notification 12/2017 is applicable to them.
5. Whether Composite supply of works contract provided to the applicant is covered by Sl.No.3 (vi) of Notification 11/2017 dated 28.06.2017.

Detailed Analysis:

1. Government Entity Status:
The applicant, National Institute of Technology, Tiruchirappalli (NITT), was established as a joint venture by the Government of India and the Government of Tamil Nadu in 1964. It is covered under the National Institute of Technology Act, 2007, and is declared as an Institution of National Importance. NITT is under the direct supervision and control of the Ministry of Human Resource Development of India. The corpus fund of the institute is provided by the Government of India. The term "Government Entity" is defined under Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017. Based on the submissions, the authority concluded that NITT satisfies the conditions prescribed to be held as a "Government entity" under the CGST Act, 2017.

2. Liability to Deduct Tax at Source (TDS):
As per Section 51 of the CGST Act, 2017, and Notification No. 50/2018 dated 13.09.2018, a Government entity is liable to deduct TDS. Since NITT is a Government entity set up by an Act of Parliament with more than 51% participation by way of funding, it is liable to deduct TDS from their suppliers.

3. Liability on Reverse Charge Basis:
Under Section 9(3) of the CGST Act, 2017, the Government may specify categories of supply of goods or services on which tax shall be paid on a reverse charge basis by the recipient. The Notification No. 13/2017 dated 28.06.2017 specifies such services.

- Security Services: The applicant submitted invoices from a registered Private Limited company for security services. Since the service provider is a body corporate, the tax liability will vest on the service provider, not the applicant.
- Legal Services: The applicant submitted bills for legal services received from individual advocates. As per Notification No. 13/2017, the applicant is liable to pay tax under RCM on the legal fees paid.
- Online Educational Journals: The applicant claimed exemption from IGST for online educational journals. However, they did not submit whether the journal is educational or non-educational. If the subscription is for non-educational journals, NITT is liable to pay tax under RCM.

4. Applicability of Sl.No. 3, 3A of Notification 12/2017:
The applicant sought clarification on the applicability of Sl.No. 3, 3A of Notification 12/2017. However, as per Section 95(a) of the Act, advance ruling can be sought only in respect of services undertaken or proposed to be undertaken. Since the applicant is a recipient of the supply of services, the question is not admissible.

5. Applicability of Sl.No.3 (vi) of Notification 11/2017:
The applicant sought clarification on the applicability of Sl.No.3 (vi) of Notification 11/2017 for composite supply of works contract. Similar to the previous issue, since the applicant is a recipient of the supply of services, the question is not admissible.

Ruling:
1. NITT is a Government Entity under GST Law.
2. NITT is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017 read with Notification No. 50/2018-C.T dated 13.09.2018.
3. NITT is required to discharge liability on reverse charge basis on legal services received. For security services, RCM will not apply as the services have been provided by a body corporate.
4. The questions regarding the applicability of Sl.No. 3, 3A of Notification 12/2017 and Sl.No.3 (vi) of Notification 11/2017 are not admissible.

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