LLP providing security services must use forward charge mechanism as body corporate under GST Act 2017 section 9(1)

The AAR, Haryana ruled that an LLP providing security services is considered a body corporate under GST Act, 2017, making forward charge mechanism applicable instead of reverse charge mechanism (RCM). The authority determined that RCM under notification 29/2018 applies only when security services are provided by entities other than body corporates to registered persons. Since LLP is a body corporate with separate legal entity status, perpetual succession, and limited liability features under LLP Act, 2008, it falls outside the scope of RCM provisions. The applicant must charge applicable tax under forward charge mechanism as per section 9(1) of CGST/HGST Act, 2017.

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Issues Involved:
1. Applicant's eligibility for seeking an advance ruling.
2. Whether services provided by the applicant LLP are covered by entry 14 of Notification No. 13/2017-CT(Rate) dated 28.06.2017 and liable for tax under reverse charge mechanism.

Issue-wise Detailed Analysis:

1. Applicant's Eligibility for Seeking an Advance Ruling:
The applicant must satisfy conditions under the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) and Haryana Goods and Services Tax Act, 2017 (HGST Act, 2017). The provisions of both Acts are pari materia. Sections 97(2) of the CGST Act, 2017 allow Advance Ruling on the applicability of notifications issued under the Act. As per Section 98(2), if the issue is pending or decided in any proceedings under the Act, the application may be rejected after providing an opportunity to be heard. The applicant declared that the issue is neither pending nor decided in any proceedings, and the applicable fees have been paid, making them eligible for an Advance Ruling.

2. Whether Services Provided by the Applicant LLP are Covered by Entry 14 of Notification No. 13/2017-CT(Rate) Dated 28.06.2017 and Liable for Tax Under Reverse Charge Mechanism:
The applicant, a Limited Liability Partnership (LLP), provides security services. The query is whether an LLP is considered a "Body Corporate" under GST provisions. If so, the LLP should charge tax on security services under the forward charge mechanism, not the reverse charge mechanism (RCM).

Applicant's Interpretation:
The applicant argued that under Section 2(98) of the CGST Act, the liability to pay tax under RCM falls on the recipient of services from a non-body corporate. They cited Notification No. 13/2017-CT(Rate) and its amendment by Notification No. 29/2018, which specifies that RCM applies to security services provided by any person other than a body corporate to a registered person. They contended that an LLP should be considered a body corporate, thus not subject to RCM.

Legal Definitions and Analysis:
- Body Corporate: Defined under Section 2(11) of the Companies Act, 2013, includes LLPs.
- LLP Act, 2008: Section 2(1)(d) and Section 3 describe an LLP as a body corporate with a separate legal entity and perpetual succession.
- Notification No. 13/2017-CT(Rate): Explanation (e) considers LLPs as partnership firms, but entry 14 refers to "body corporate."

Authority's Findings:
The authority examined whether an LLP is a body corporate under GST. They noted that the GST Act does not define "Body Corporate," but the term in Notification No. 13/2017-CT(Rate) aligns with the Companies Act, 2013. The authority concluded that LLPs are body corporates, thus not covered by entry 14 of the notification. Consequently, LLPs must charge tax on security services under the forward charge mechanism, not RCM.

Conclusion:
An LLP is a body corporate and excluded from entry 14 of Notification No. 13/2017-CT(Rate). Therefore, the applicant must charge applicable tax on security services under the forward charge mechanism.

Ruling:
Question: Whether services (Security services) provided by the applicant LLP are covered by entry 14 of Notification No. 13/2017-CT(Rate) dated 28.06.2017 and liable for tax under reverse charge mechanismRs.
Answer: No. The services provided by the applicant LLP are not covered under entry 14 of the notification, and the reverse charge mechanism is not applicable.

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