TaxTMI 
TaxTMI 
2025 (12) TMI 986
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....Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression "GST Act" would mean the CGST Act and the WBGST Act both. 1.2 The applicant is Professional non-profit association of mining, geology, and metallurgy professionals, incorporated as a public company limited by guarantee under the Companies Act, 1882 on the 16th of October 1909, and registered under section 12A of the Income-tax Act as a not-for-profit institution. Its primary objectives are to promote and advance the disciplines of mining, geology, and metallurgy in India by organizing national and international conferences, exhibitions, seminars, technical lecture....
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....n No. 07/2025-Integrated Tax (Rate) dated 16.01.2025 (amending serial number 5, column (3) of Notification No. 10/2017-Integrated Tax (Rate)) and the corresponding Notification No. 07/2025-Central Tax (Rate) dated 16.01.2025 (amending serial number 4, column (3) of Notification No. 13/2017-Central Tax (Rate)), whereby in the description of 'supplier of service' the words "other than a body corporate" have been inserted after the words "any person," the sponsorship services supplied by MGMI (being a body corporate) to recipients located in the taxable territory is liable to GST under the reverse charge mechanism, or GST liability is to be discharged by MGMI under the forward charge mechanism? 1.4 The aforesaid questions on which the advance ruling is sought for are found to be covered under clause (b) of sub-section (2) of section 97 of the GST Act. 1.5 The applicant states that the questions raised in the application have neither been decided by nor are pending before any authority under any provision of the GST Act. 1.6 The officer concerned from the Revenue has raised no objection to the admission of the application. 1.7 The application is, therefore, admitted. 2. ....
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....ii) Thus, with effect from 16.01.2025, this amendment shifts the onus of payment of GST on supply of sponsorship services on the supplier if such supplier is a "body corporate". (iv) The applicant is incorporated under the Companies Act as a company limited by guarantee (now aligned to Section 8). It does not declare dividends or distribute profits, and has no beneficial owners. Its activities are confined to professional and educational advancement in mining, geology and metallurgy. Explanation (b) to Notification No. 10/2017-Integrated Tax (Rate) and the corresponding Notification No. 13/2017-Central Tax (Rate) defines "body corporate" with reference to clause (11) of section 2 of the Companies Act, 2013. This gives rise to the question whether the applicant, as a Section 8 company incorporated under the Companies Act, is to be treated as a "body corporate" under the GST Act, for determination of GST liability for sponsorship services on a forward charge or a reverse charge mechanism from 16.01.2025. 2.3 (i)The definition of "person" under Section 2(84) of the CGST Act, 2017 is inclusive and covers individuals, Hindu undivided families, companies, firms, limited liabi....
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....rporate" must be construed in line with the objectives of GST, i.e., ensuring tax collection from entities engaged in commercial activity, while recognizing that Section 8 companies operate under statutory restrictions distinct from profit-oriented corporates. 2.5 Judicial Guidance on Non-Profit Entities Judicial precedents consistently affirm that societies and trusts lack corporate personality and are not "body corporates." The Supreme Court in Board of Trustees, Ayurvedic & Unani Tibia College v. State of Delhi [AIR 1962 SC 458] held that societies registered under the Societies Registration Act, 1860 do not constitute corporate bodies. Similarly, in Duli Chand v. Mahabir Pershad Trilok Chand [AIR 1984 Delhi 144], it was observed that trusts have no separate juristic personality. The Kerala High Court in K.P. Shibu v. State of Kerala also held that societies and trusts cannot be treated as body corporates. Moreover, jurisprudence relating to non-profit purpose indicates that the dominant charitable character of an institution prevails over incidental commercial activities. In CIT v. Surat Art Silk Cloth Manufacturers' Association [(1980) 2 SCC 31], the Supreme Court hel....
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.... a literal interpretation would disregard the object and scheme of GST. Courts have consistently endorsed contextual interpretation of definitions, even when imported from another statute. Another anticipated argument could be that the notification itself refers to the Companies Act definition. However, as clarified by the Supreme Court in Bharat Cooperative Bank (supra), statutory definitions cannot be applied divorced from context. Hence, for GST purposes, "body corporate" must be restricted to profit-making entities and not extended to not-for-profit institutions such as Section 8 companies. 2.9 Constitutional Considerations If the department proposes an interpretation considering Section 8 companies as 'body corporates', it would also result in constitutional infirmities. Article 14 prohibits arbitrary and discriminatory classification. Treating trusts and societies as outside the scope of "body corporate" while including Section 8 companies, despite their identical charitable character, would amount to hostile discrimination. Further, Article 265 mandates that no tax shall be levied or collected except by authority of law. Extending the RCM scheme to Section 8 companies ....
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....s, it is submitted that although applicant is incorporated under the Companies Act, its substantive non-profit character, statutory restrictions and judicial interpretation preclude it from being treated as a "body corporate" for purposes of sponsorship services under GST. The liability to pay GST on sponsorship services provided by the applicant should therefore continue to rest with the recipient under reverse charge, even after the amendment of 16.01.2025. To hold otherwise would be contrary to legislative intent, constitutional principles, and settled judicial guidance. 3. Submission of the Revenue 3.1 The concerned officer from the revenue has not expressed any view on the merit of the issue raised by the applicant. 4. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorized representative of the applicant during personal hearing. 4.2 According to the facts narrated by the applicant, The Mining, Geological & Metallurgical Institute of India (in short MGMI) is a not-for-profit organization incorporated as a company limited by guarantee under the Companies Act, 1882 on 16.10.1909, bear....
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....e above context the applicant has placed before this authority the following three questions: Ǫ1. Whether MGMI, a not-for-profit organization incorporated under the Indian Companies Act, 1882 and presently governed by the provisions of Section 8 of the Companies Act, 2013 is a "body corporate" for the purposes of the IGST Act, CGST Act and SGST Act, 2017, read with the applicable rules, notifications and circulars ? Ǫ2. Whether MGMI, while rendering sponsorship services is to be regarded as a "body corporate" for the purposes of serial number 5, column (3) of Notification No. 10/2017-Integrated Tax (Rate) dated 28/06/2017 as amended by Notification No. 07/2025-Integrated Tax (Rate) dated 16.01.2025, and the corresponding serial number 4, column (3) of Notification No. 13/2017-Central Tax (Rate) dated 28/06/2017, as amended by Notification No. 07/2025-Central Tax (Rate) dated 16.01.2025, and having regard to Explanation (b) therein ? Ǫ3. Whether in view of Notification No. 07/2025-Integrated Tax (Rate) dated 16.01.2025 (amending serial number 5, column (3) of Notification No. 10/2017-Integrated Tax (Rate)) and the corresponding Notification ....
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....ective collection of tax from large commercial corporate and partnership firms that regularly sponsor business, cultural or sporting events. The legislative intent is never to impose such obligations on non-profit professional institutions. If Section 8 companies were to be treated as body corporate for this purpose, the result would be discriminatory and absurd. Charitable NGOs incorporated under the Companies Act would be subject to forward charge, whereas similarly placed trusts or societies would remain under reverse charge. Such unequal treatment would defeat the purpose of the law and create inconsistency within the framework of GST. According to the statement of the applicant, the very facts of the company being registered under Section 26 of the repealed Indian Companies Act, 1882 (or Section 8 of the Companies Act, 2013) and the company being shown as 'Society/ Club/ Trust/ AOP' in the GST registration certificate clearly establishes the applicant's substantive identity as non-profit professional body distinct from commercial corporate entities. During the course of personal hearing the applicant's representative furnished an additional submission. In the said submis....
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....orate. So the issue ultimately boils down to the point whether MGMI can be regarded as 'body corporate'. 4.7 The GST Act nowhere defines the term 'body corporate'. However, we find reference to this concept in the Explanation of Notification No. 13/2017-Central Tax (Rate) Dated 28.06.2017. In clause (b) of Explanation it is stipulated that "Body Corporate" has the same meaning as assigned to it in clause (11) of section 2 of the Companies Act, 2013. So we should refer to the Companies Act, 2013 for the definition of the term. As per Section 2(11) of the said act "body corporate" or "corporation" includes a company incorporated outside India, but does not include- (i) a co-operative society registered under any law relating to co-operative societies; and (ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf; It is clear from the inclusive definition of 'body corporate' as above that only two kinds of entities are excluded from the definition of the term viz. 1) a co-operative society registered under any law relating to co-operative societie....
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....s" includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such club; and (i) any activity or transaction undertaken by the Central Government, a State Government....
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.... (the person for whose benefit the confidence is accepted). In the Articles of Association we do not find any such descriptions. So we are not inclined to accept the applicant as a trust. Again, the applicant being treated as public charitable trust under the Income Tax Act cannot be be an argument for claiming the status of trust under the GST Act. The two acts are different and there is no referential legislation, whatsoever, in the GST Act in this respect. 4.10 On the basis of preceding discussions we are of the considered view that the applicant is a 'body corporate' as defined in Notification No. 13/2017-Central Tax (Rate) Dated 28.06.2017. As such, the services provided by the applicant by way of sponsorship to any body corporate or partnership firm located in the taxable territory will not qualify for serial number 4 of the table in Notification No. 13/2017-Central Tax (Rate) Dated 28.06.2017 as amended (Corresponding State Tax Notification No. 1137-FT Dated 28.06.2017). For such supply of service, GST is payable by the applicant on forward charge basis. In view of the foregoing discussion, we rule as under: RULING Ǫ1. Whether MGMI, a not-for-profit or....