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

In Re: M/s. Jayshankar Gramin and Adivasi Vikas Sanstha

The AAAR Maharashtra held that reimbursement amounts received by an appellant from the State Government under the One Stop Crises Centre Scheme do not ... Levy of GST - supply or not - charitable activities or not - reimbursement amount received by the Appellant from the Department of Women and Child Development, Government of Maharashtra under the subject “One stop Crises Centre Scheme” - activities undertaken by the Appellant as an implementing agency of the Government can be construed as services or not - Applicability of N/N. 12/2017-C.T. (Rate) dated 28.06.2017 - HELD THAT:-The GST Law has given a very wide connotation to the term “services”, which cover any activities other than those which involve goods, money and securities. As the activities undertaken by the Appellant do not entail supply of any goods, money, or securities to their recipient, which in the present case is the Government of Maharashtra, who is compensating for the subject activities undertaken by the Appellant under the said scheme of “One stop Crises Centre”', the activities of the Appellant would aptly be construed as services. Whether the subject activities undertaken by the Appellant can be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017 or not? - HELD THAT:- The term “consideration” shall not include any “subsidy” given by the Central Government or State Government. Now, we would like to dissect as to whether the reimbursement amount received by the Appellant from the Women and Child Development Department of the Government of Maharashtra can be construed as subsidy or otherwise - Here, it is seen that the term “subsidy” has not been defined under the CGST Act, 2017 - The term “subsidy”, it is apparent that any money/amount granted by a government to any private person or company for undertaking any charitable activities, which are beneficial to the public, will be construed as subsidy. In the present case, the Appellant are being granted a fixed amount of money from the Government of Maharashtra under the “One stop crises Centre Scheme” for taking overall care of the destitute women who are litigating divorce, or homeless, or the victims of domestic violence. The said activities undertaken by the Appellant are clearly for the welfare of these destitute women, and thereby, serving the mankind in general. Since it has been established that the subject activities undertaken by the Appellant will not be construed as supply in terms of section 7(1 )(a) of the CGST Act, 2017, the issue as to whether the impugned activities undertaken 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, need not be interfered, as the determination of the same will have no bearing on the applicability of GST on the impugned transactions/activities. 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.