Government reimbursement under One Stop Crises Centre Scheme not taxable supply under Section 7(1)(a) CGST Act 2017

The AAAR Maharashtra held that reimbursement amounts received by an appellant from the State Government under the One Stop Crises Centre Scheme do not constitute taxable supply under GST. The authority determined that while the appellant's activities qualify as services, the government reimbursement constitutes a subsidy rather than consideration. Since subsidies are excluded from the definition of consideration under section 7(1)(a) of the CGST Act 2017, GST is not applicable on these transactions undertaken for welfare of destitute women.

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Issues Involved:
1. Whether the impugned activities undertaken by the Appellant as an implementing agency of the Government can be construed as services.
2. Whether the same can be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017.
3. Whether the impugned activities undertaken by the Appellant can be construed as "charitable activities" in terms of the clause (r) of the definition section of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.

Issue-wise Detailed Analysis:

1. Whether the impugned activities undertaken by the Appellant as an implementing agency of the Government can be construed as services:

The definition of "services" under Section 2(102) of the CGST Act, 2017, includes anything other than goods, money, and securities. The activities undertaken by the Appellant, which involve providing shelter, education, guidance, clothing, food, and health services to destitute women, do not entail the supply of goods, money, or securities. Therefore, these activities are construed as services.

2. Whether the same can be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017:

For a transaction to qualify as "supply" under Section 7(1)(a) of the CGST Act, 2017, it must involve consideration and be in the course or furtherance of business. The term "consideration" under Section 2(31) of the CGST Act, 2017, excludes any subsidy given by the Central Government or State Government. The reimbursement amount received by the Appellant from the Government of Maharashtra is considered a subsidy, as it is a grant for undertaking charitable activities beneficial to the public. Consequently, this reimbursement amount does not qualify as "consideration." In the absence of consideration, the activities undertaken by the Appellant do not constitute "supply" under Section 7(1)(a) of the CGST Act, 2017.

3. Whether the impugned activities undertaken by the Appellant can be construed as "charitable activities" in terms of the clause (r) of the definition section of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017:

Since it has been established that the subject activities do not constitute "supply" under Section 7(1)(a) of the CGST Act, 2017, there is no need to further examine whether these activities qualify as "charitable activities" under the said notification. The determination of this issue will have no bearing on the applicability of GST on the transactions.

Order:

The ruling passed by the Maharashtra Authority for Advance Ruling (MAAR) is set aside. The activities undertaken by the Appellant are not construed as "supply" under Section 7(1)(a) of the CGST Act, 2017. Therefore, the reimbursement amount paid by the Maharashtra Government to the Appellant for activities under the "One Stop Crises Centre Scheme" will not be subject to the levy of GST. The appeal filed by the Appellant is disposed of accordingly.

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