TaxTMI 
TaxTMI 
2026 (2) TMI 1385
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....ct, 2017 provides for Tax Deduction at Source (TDS) and states that the Government may mandate certain categories of persons to deduct tax at source, at the rate of one percent from payments made to suppliers, where the total value of supply under a contract exceeds two lakh and fifty thousand rupees. Vide Notification No. 50/2018-Central Tax dated 13.09.2018, the following categories of persons were notified for the purpose of Section 51: "(a) an authority or a board or any other body,- (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent or more participation by way of equity or control, to carry out any function". 4. Circular No. 76/50/2018-GST dated 31.12.2018, issued by the CBIC, clarifies that the 51% government equity or control requirement applies to both statutory bodies set up by an Act of Parliament or a State Legislature and entities established by the Government. However, the Supreme Court in its judgment dated 13.10.2023 rendered in the case of Commissioner of Central Excise and Service Tax Vs Shapoorji Pallonji and Company Pvt. Ltd. reported in [(2023) 11 Centa....
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....le Supreme Court in Commissioner of Central Excise and Service Tax v. Shapoorji Pallonji and Company Pvt. Ltd. having been delivered in October, 2023, the CBIC has not withdrawn or modified Circular No. 76/50/2018-GST dated 31.12.2018. (iv) Section 9(1) of the said Indian Institute of Management Act, 2017 explicitly provides that every IIM shall be a not-for-profit legal entity and no part of its surplus shall be distributed for any purpose other than the growth and development of the Institute. Consequently, the Applicant has no share capital or equity holding structure in which the Central or State Government may participate. The condition of 51% or more participation by way of equity, as stipulated in clause (a) of Notification No. 50/2018-Central Tax dated 13.09.2018 and clarified by Circular No. 76/50/2018-GST, has, therefore, no application in the case of the Applicant. (v) The composition of the Applicant's Board of Governors, as prescribed under Section 10(2) of the Indian Institutes of Management Act, 2017 (as amended), further establishes that the Central or State Government does not exercise majority control over the Institute, as only 2 out of approxim....
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.... both oral and written during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant's submission/interpretation of law in respect of question on which the advance ruling is sought. 10. We find that there are two short issues to be decided - (i) whether the applicant would be liable to deduct TDS under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018. (ii) If yes, whether the threshold of Rs. 2,50,000 for deduction of tax at source is to be determined on the value of supply under each contract (excluding GST), regardless of the number of invoices issued. 11. The applicant's contention is that they would not be liable to deduct TDS as they do not fall under the definition of specified person under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018. Before proceeding, it would be prudent to reproduce the relevant provisions which deal with TDS and the notification issued under the said provisions. Section 51 of the CGST Act, 2017: "Notwithstanding anything to the contrary contained in this Act, the Governme....
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....y, under a contract, exceeds Rs. 2.5 lakhs. Further, the persons or category of persons mentioned under Section 51 (d) of the Act have been notified under Notification No. 50/2018-CT dtd. 13.09.2018. These are - an authority or a board or any other body, set up by an Act of Parliament or a State Legislature; or established by any Government, with fifty-one per cent or more participation by way of equity or control, to carry out any function has been notified as the specified persons. 13. The dispute, as per the applicant, has arisen because of the interpretation of the Notification No. 50/2018-CT by the Board, which is in contradiction to the interpretation of a similarly worded notification by the Supreme Court. The Board vide Circular No. 76/50/2018-GST dated 31.12.2018 has clarified that the long line mentioned in Clause (a) of the Notification No. 50/2018-CT i.e. "with fifty-one per cent. or more participation by way of equity or control, to carry out any function" is applicable to both the items (i) and (ii) of Clause (a) of the said notification. In other words, the provisions of Section 51 are applicable only to such authority or a board or any other body set up by an Act....
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....ding of the notification, which we reproduce below:- "16. While the aforesaid interpretation of amended clause 2(s) has been upheld by the Patna High Court, the appellants have countered the same by submitting that the amended definition of "governmental authority" as in clause 2(s) should be interpreted in a manner so as to make the long line under clause 2(s) applicable to both sub-clause (i) and sub-clause (ii). In other words, as per the appellants, to qualify as a "governmental authority" under clause 2(s)(i), such authority, board or body must not only be a statutory authority set up by an Act of Parliament or a State Legislature but must also have 90% or more participation of the Government by way of equity or control to carry out any like function that a municipality under Article 243W of the Constitution is entrusted to discharge. 17. We have no hesitation to disagree with the latter interpretation sought to be placed by the appellants, for the reasons that follow. 18. In Superintendent & Legal Remembrancer, State of West Bengal v. Corporation of Calcutta [(1967) 2 SCR 170], a nine-judge Bench of this Court, relying upon Craies' On Statute Law (6....
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....n it be assumed to make pointless legislation. Parliament does not indulge in legislation merely to state what it is unnecessary to state or to do what is already validly done. Parliament may not be assumed to legislate unnecessarily." 22. Having noticed some of the precedents in the field of interpretation of statutes, we now move on to a little bit of English grammar. The word "or" as well as the word "and" is a conjunction; and it is well known that a conjunction is used to join words, phrases, or clauses. On how the conjunctions "or" and "and" are to be read, guidance could be drawn from authoritative texts and judicial decisions. As per Justice G.P. Singh's Principles of Statutory Interpretation, the word "or" is normally disjunctive while the word "and" is normally conjunctive. In English law, the position is clear as crystal, as explained by Lord Scrutton in Green v. Premier Glynrhonwy Slate Co. [(1928) 1 K.B. 561, page 569] that one does not read "or" as "and" in a statute unless one is obliged, because "or" does not generally mean "and" and "and" does not generally mean "or". 23. When the meaning of the provision in question is clear and unambiguous by th....
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....e 2(s) which is applicable only to sub-clause (ii). 25. Applying a different lens, let us test the worth of Ms. Bagchi's submission in the light of the punctuations in clause 2(s). It has been held by a Bench of nine Hon'ble Judges of this Court in Kantaru Rajeevaru v. Indian Young Lawyers Association & Ors. [(2020) 9 SCC 121, para 18] that when a provision is carefully punctuated and there is doubt about its meaning, weight should undoubtedly be given to the punctuation; however, though a punctuation may have its uses in some cases, but it cannot certainly be regarded as a controlling element and cannot be allowed to control the plain meaning. While so observing, this Court considered several decisions as well as the punctuation comma in the relevant provision of the Supreme Court Rules, 2013. 26. What follows is that punctuation, though a minor element, may be resorted to for the purpose of construction. 27. In the present case, the use of a semicolon is not a trivial matter but a deliberate inclusion with a clear intention to differentiate it from sub-clause (ii). Further, it can be observed upon a plain and literal reading of clause 2(s) that while th....
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....ke it workable. We cannot, therefore, resort to a construction that would allow subsistence of the unworkability factor. Assuming what Ms. Bagchi contended is right, it was incumbent for the appellants to bring to our notice, if not by way of pleading, but at least with reference to the relevant statutes, which of the particular authorities/boards/bodies are created by legislation - Central or State - "with 90% or more participation by way of equity or control by Government". Each word in the definition clause has to be given some meaning and merely because promoting educational aspects is one of the functions of a municipality in terms of Article 243W of the Constitution read with Schedule XII appended thereto is no valid argument unless equity or control by the Government, to the extent of 90%, is shown to exist qua the relevant authority/board/body. Incidentally, neither is there any indication in the petition nor has Ms. Bagchi been able to disclose the identity of any such authority/board/other body which is covered by her argument. No such identified authority/board/body covered by the aforesaid construction of the definition of "governmental authority" in clause 2(s) of the ....
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....cant has no share capital or equity holding structure in which the Central or State Government may participate. Therefore, the condition of 51% or more participation by way of equity, as stipulated in clause (a) of Notification No. 50/2018-Central Tax dated 13.09.2018 and clarified by Circular No. 76/50/2018-GST, has no application in the case of the Applicant. Moreover, the composition of the Applicant's Board of Governors, as prescribed under Section 10(2) of the Indian Institutes of Management Act, 2017 (as amended), further establishes that the Central or State Government does not exercise majority control over the Institute, as only 2 out of approximately 14 members of the Board represent the Government. This clearly indicates that the Government does not exercise 51% or more control in the affairs or functioning of the Applicant Institute. Apart from the limited nomination of two members to the Board, the Central Government's role is confined to general oversight and the power to frame Rules under the Act. These powers do not translate into day-to-day operational control or decision-making authority. The Institute retains full academic, administrative, and financial autonomy.....
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.... this Act, be accountable to the Central Government. Section 12 : * * * (3) A member of the Board, other than a nominee of the Central Government or the State Government, who fails to attend three consecutive meetings of the Board without permission of the Chairperson, shall cease to be a member of the Board. Section 16:- (1) The Director shall be the Chief Executive Officer of the Institute and shall provide leadership to the Institute and be responsible for implementation of the decisions of the Board. (2) The Director shall be appointed by the Board with prior approval of the Visitor, in such manner and subject to such terms and conditions of service as may be prescribed. * ** * (7) The Board, with prior approval of the Visitor, may remove from office the Director, who- (a) has been adjudged as an insolvent; or (b) has been convicted of an offence which, in the opinion of the Board, involves moral turpitude; or (c) has become physically or mentally incapable of acting as a Director; or (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a ....
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...., make rules, for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :- (a) such other powers and duties of the Board under clause (w) of sub-section (2) of section 11; (b) the term and conditions of service of the Director under sub-section (2) of section 16; (c) the travelling and such other allowances payable to the members of the Coordination Forum for attending its meetings or its Committees under sub-section (4) of section 29; (d) any other matter which is to be or may be, prescribed or in respect of which provision is to be made by the Central Government by rules Section 37 : Every rule made by the Central Government and the first regulation made by the Board under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive ....
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..... The eminent member of the Co-ordination Forum, shall be nominated by the Visitor. The applicant institute shall furnish to the Central Government such returns or other information with respect to its policies or activities as the Central Government may, for the purpose of reporting to the Parliament or for the making of policy, from time to time. The Central Government also has the power to make rules for carrying out the provisions of the Act. 20. It can, therefore, be seen that there is a substantial amount of control over the functioning of the applicant. The submission of the applicant that the powers granted vide the Act do not translate into the day-to-day operational control may be to an extent correct, but Notification No. 50/2018-CT does not mandate a pervasive control by the Government on the applicant. The term "control" as contemplated in the Circular and Notification cannot, therefore, be interpreted to refer to day-to-day operational control, as there is nothing in the wordings of the notification which conveys so. A substantial regulatory control is what is required. The Supreme Court in Balmer Lawrie & Co. Ltd. Vs. Partha Sarathi Sen Roy reported in (2013) 8 SC....
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....ble by law". Contract can be written by using formal or informal terms, or could be entirely verbal or spoken. An invoice, which is representative of a transaction could fully cover a contract or cover a part of the contract. In case, a contract is for continuous supply of goods or services, and if part supplies under the contract are covered in an invoice, the invoice would not be equated to the contract. The set of invoices issued for all the supplies made as a consequence of the contract of supply would summate to the contract and not the individual invoice. The agreement between the supplier and the recipient is of prime consideration and if it is for a continuous supply to be made in parts, then the contract would include all the part supplies made and covered under separate invoices. Further, section 2(32) of the GST Act defines "continuous supply" as under: "continuous supply of goods" means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes....