2022 (10) TMI 309 - AAAR - GST

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 ... Services - supply in the course or furtherance of business - consideration excludes subsidy - subsidy (grant) as dictionary meaning of government grant - reimbursement of expensesServices - Activities undertaken by the Appellant under the One Stop Crisis Centre Scheme constitute 'services' under the CGST Act, 2017. - HELD THAT: - The term 'services' under Section 2(102) of the CGST Act has a wide connotation covering any activities other than goods, money and securities. The activities performed by the trust - providing shelter, food, medical assistance, counselling and legal facilitation to destitute women as implementing agency of the Government - do not involve supply of goods, money or securities to the Government and therefore fall within the statutory meaning of 'services.' The Appellate Authority so concludes on the facts of the case and the statutory definition. [Paras 16]The impugned activities are services.Supply in the course or furtherance of business - consideration excludes subsidy - subsidy (grant) as dictionary meaning of government grant - reimbursement of expenses - Reimbursement received by the Appellant from the Government under the Scheme is a subsidy and not 'consideration,' and therefore the activities do not constitute 'supply' under Section 7(1)(a) of the CGST Act, 2017. - HELD THAT: - For a transaction to qualify as 'supply' under Section 7(1)(a), it must be made for a consideration and in the course or furtherance of business. Section 2(31) expressly excludes any subsidy given by Central or State Government from the definition of 'consideration.' The Authority examined the nature of the grant paid under the One Stop Crisis Centre Scheme and, applying recognised dictionary meanings of 'subsidy,' held that the amounts reimbursed by the Government to the trust are grants/subsidies made for activities advantageous to the public. As such, those payments do not amount to consideration. In absence of consideration, the statutory pre-condition for 'supply' under Section 7(1)(a) is not satisfied; accordingly the impugned transactions are not liable to GST. [Paras 20, 21, 22, 23, 26]The reimbursement is a subsidy (not consideration); hence there is no 'supply' under Section 7(1)(a) and the amounts are not subject to GST.Final Conclusion: The Advance Ruling of the MAAR is set aside: the activities of the trust are services but the reimbursements received from the Government under the One Stop Crisis Centre Scheme are subsidies (not consideration), and therefore the transactions do not constitute 'supply' under Section 7(1)(a) of the CGST Act, 2017 and are not taxable under GST. 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.