Appellate Authority denies Nirma University tax exemptions for legal & municipal services.

The Appellate Authority upheld the denial of exemption to Nirma University for legal services under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate) as it does not qualify as a "governmental authority" due to not meeting the 90% participation condition. Additionally, Nirma University was not granted exemption under Sr. No. 4 of the same notification for services related to municipal functions under Article 243W of the Constitution. Consequently, Nirma University was deemed ineligible for both exemptions as per the Appellate Authority's decision.

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Issues Involved:
1. Eligibility for claiming benefit of the exemption for legal service under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate).
2. Exemption of services provided by Nirma University under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate).
3. Requirement for Nirma University to be registered as a Deductor under GST as per Section 24 of the CGST Act (not challenged in appeal).

Detailed Analysis:

Issue 1: Eligibility for Exemption under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate)
The appellant, Nirma University, sought to claim the benefit of the exemption for legal services under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate). The GAAR denied this exemption, determining that Nirma University does not qualify as a "governmental authority."

Key Points:
- The appellant argued that it qualifies as a "governmental authority" under Section 2(16) of the IGST Act, 2017, asserting that it was set up by an Act of a State Legislature.
- The appellant contended that the condition of 90% or more participation by way of equity or control applies only to item (ii) of the definition and not item (i), which is separated by a semi-colon.
- The GAAR and the Appellate Authority found that the conditions of 90% or more participation by way of equity or control apply to both items (i) and (ii) of the definition of "governmental authority."

Findings:
- The Appellate Authority confirmed that the condition of 90% or more participation by way of equity or control is applicable to both items (i) and (ii) of the definition of "governmental authority."
- Nirma University does not meet the 90% or more participation condition and thus does not qualify as a "governmental authority."
- Consequently, Nirma University is not eligible for the exemption under Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate).

Issue 2: Exemption of Services under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate)
The appellant also sought exemption for services provided under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate), which applies to services by a "governmental authority" in relation to functions entrusted to a municipality under Article 243W of the Constitution.

Key Points:
- The GAAR denied this exemption, determining that Nirma University does not qualify as a "governmental authority."
- The appellant argued that its educational activities fall under the functions entrusted to municipalities under Article 243W.

Findings:
- The Appellate Authority upheld the GAAR's determination that Nirma University does not qualify as a "governmental authority" because it does not meet the 90% or more participation condition.
- As Nirma University is not a "governmental authority," it is not eligible for the exemption under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate).

Conclusion:
The Appellate Authority confirmed the GAAR's Advance Ruling No. GUJ/GAAR/R/38/2020 dated 03.07.2020, holding that:
1. Nirma University is not eligible for claiming the benefit of Sr. No. 45 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.
2. Services provided by Nirma University are not exempted under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

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