Section 8 company held a body corporate u/s2(11), must pay GST on sponsorship under forward charge

The AAR held that the applicant, a not-for-profit organization incorporated under the erstwhile Companies Act, 1882 and now governed by s. 8 of the Companies Act, 2013, qualifies as a "company" and hence a "body corporate" under s. 2(11) of the Companies Act, 2013. It is neither a co-operative society nor a notified excluded body corporate. Consequently, for sponsorship services supplied by the applicant to any body corporate or partnership firm located in the taxable territory, the reverse charge entry under the relevant GST notifications is inapplicable. The applicant is liable to discharge GST under the forward charge mechanism on such sponsorship services.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether a not-for-profit company limited by guarantee, incorporated under the Companies Act, 1882 and now governed by section 8 of the Companies Act, 2013, is a "body corporate" for purposes of GST law.

1.2 Whether such entity, while supplying sponsorship services, is to be regarded as a "body corporate" within the meaning of Explanation (b) to Notifications governing reverse charge on sponsorship services.

1.3 Whether, post amendment by Notifications dated 16.01.2025 inserting the words "other than a body corporate" in the description of "supplier of service" for sponsorship services, GST on sponsorship services supplied by such entity is payable under reverse charge by the recipient or under forward charge by the supplier.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Status of the applicant as "body corporate" for purposes of GST law

Legal framework

2.1 The GST enactments do not define "body corporate". Explanation (b) to Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 provides that "Body Corporate" has the same meaning as assigned in section 2(11) of the Companies Act, 2013.

2.2 Section 2(11) of the Companies Act, 2013 defines "body corporate" or "corporation" to include a company incorporated outside India but to exclude: (i) co-operative societies; and (ii) any other body corporate (not being a company as defined in the Act) which the Central Government may, by notification, specify.

2.3 Under section 2(20) of the Companies Act, 2013, "company" means a company incorporated under that Act or under any previous company law.

Interpretation and reasoning

2.4 The Tribunal noted that the applicant was incorporated as a company limited by guarantee on 16.10.1909 under the Companies Act, 1882, i.e., under a "previous company law", and thus squarely falls within the definition of "company" under section 2(20) of the Companies Act, 2013.

2.5 The Tribunal observed that the inclusive definition of "body corporate" in section 2(11) excludes only: (a) co-operative societies registered under co-operative law; and (b) such other body corporates (not being a company) as may be notified by the Central Government. The applicant is neither a co-operative society, nor an entity notified for exclusion. Hence, being a company under previous company law, it is included within "body corporate".

2.6 The Tribunal rejected the applicant's contention that, owing to its incorporation with charitable objects under section 8 (earlier section 26 of the 1882 Act), its non-profit character should take it outside the meaning of "body corporate" in the GST context. It held that the notification unequivocally adopts the Companies Act definition, leaving no scope to read in additional conditions such as profit orientation.

2.7 The Tribunal further held that the concept of "commercial activity" is not embedded in the definition of "body corporate" and cannot be imported by reference to GST objectives. Instead, GST is structured around the term "business" (section 2(17) CGST Act), which expressly covers activities "whether or not for a pecuniary benefit", indicating that profit motive is irrelevant for taxability.

Conclusions

2.8 The Tribunal concluded that the applicant meets the definitions of "company" and "body corporate" under the Companies Act, 2013, and is therefore a "body corporate" for purposes of the IGST, CGST and SGST Acts and related notifications, notwithstanding its non-profit, charitable character.

Issue 2 - Treatment of the applicant as "body corporate" for sponsorship services notifications

Legal framework

2.9 Original position (Notification No. 13/2017-Central Tax (Rate), Sl. No. 4 and corresponding IGST Notification No. 10/2017, Sl. No. 5):

- Category of service: "Services provided by way of sponsorship to any body corporate or partnership firm."

- Supplier: "Any person".

- Recipient liable under reverse charge: "Any body corporate or partnership firm located in the taxable territory."

2.10 Amended position (Notification No. 07/2025-Central Tax (Rate) dated 16.01.2025 and corresponding IGST Notification): in Sl. No. 4 (CT) / Sl. No. 5 (IGST), in column (3), after "Any person", the words "other than a body corporate" are inserted. Thus, reverse charge applies only where sponsorship services are supplied by "any person other than a body corporate".

Interpretation and reasoning

2.11 The Tribunal held that, by virtue of Explanation (b) to Notification No. 13/2017 referring to section 2(11) of the Companies Act, 2013, the same meaning of "body corporate" must be applied while determining the supplier's status for the sponsorship entry. There is no ambiguity or contextual basis to depart from this cross-reference.

2.12 Having already determined that the applicant is a "body corporate", the Tribunal held that the applicant must be regarded as a "body corporate" specifically for the sponsorship services entry as well. The fact that the entity is a section 8 company or not-for-profit does not carve it out of the statutory definition.

2.13 The Tribunal rejected arguments based on legislative intent and alleged discrimination between section 8 companies and similarly placed trusts/societies. It held that, in view of the clear textual adoption of the Companies Act definition, there is no room to read down "body corporate" to exclude not-for-profit companies.

Conclusions

2.14 The Tribunal concluded that the applicant, while rendering sponsorship services, is to be regarded as a "body corporate" for the purposes of Sl. No. 5 of Notification No. 10/2017-Integrated Tax (Rate) and Sl. No. 4 of Notification No. 13/2017-Central Tax (Rate), as amended, and for Explanation (b) thereto.

Issue 3 - Whether GST on sponsorship services is payable under reverse charge or forward charge post 16.01.2025

Legal framework

2.15 After amendment by Notification No. 07/2025-Central Tax (Rate) and corresponding IGST notification, reverse charge liability under the sponsorship entry arises only when:

- The service supplied is "services provided by way of sponsorship to any body corporate or partnership firm located in the taxable territory"; and

- The supplier is "any person other than a body corporate".

2.16 If the supplier is a "body corporate", the conditional phrase "other than a body corporate" is not met, and the sponsorship entry under reverse charge does not apply, resulting in normal (forward charge) liability on the supplier.

Interpretation and reasoning

2.17 Applying its finding that the applicant is a "body corporate", the Tribunal held that the statutory conditions for reverse charge under the amended sponsorship entry are not fulfilled when the applicant is the supplier. Consequently, the recipient is not liable under reverse charge in such cases.

2.18 The Tribunal rejected the applicant's contention that its non-profit character or registration as a trust under income-tax law or its categorisation in the GST registration (Society/Club/Trust/AOP) could alter its character as a "body corporate" for purposes of the notification, as there is no referential legislation in GST to the Income-tax Act or to such registration categorisation for defining "body corporate".

2.19 The Tribunal also rejected the attempt to characterise the applicant as a "trust" under GST by reference to its activities and income-tax registration. It noted that the applicant is not registered under the Indian Trusts Act, 1882, and the essential legal elements of a "trust" (author of trust, trustee, beneficiary, and trust obligation) are not present in its Articles of Association.

Conclusions

2.20 The Tribunal held that, as the applicant is a "body corporate", the sponsorship services supplied by it to recipients located in the taxable territory do not fall within the reverse charge entry (which applies only where the supplier is "other than a body corporate").

2.21 Accordingly, GST on such sponsorship services is payable by the applicant under the forward charge mechanism and not by the recipient under reverse charge.

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