TDS under GST is applicable only for taxable supply contracts

In re Mahalakshmi Mahila Sangha (GST AAR Karnataka)

The supply of services made by the applicant in the form of supply of food and drinks to the educational institutions is covered under entry no. 66 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 and entry 66 of Notification (12/2017) No. FD 48 CSL 2017 dated 29.06.2017 and are hence exempted from CGST and SGST.

As per Circular 65/39/2018 also TDS under GST is applicable only for taxable supply contracts

The amount received for such exempted service as covered under para 1 above is not liable for tax deduction at source under section 51 of the CGST Act and section 51 of KGST Act.

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,KARNATAKA

1. M/s Mahalakshmi Mahila Sangha, Ward No.14, Bazar Road, K.R.Nagara, Mysuru 571602, (hereinafter referred to “the applicant”)and having a GSTIN 29AACAM3500AlZ9, has filed an application for Advance Ruling under Section 97 of the CGST Act,2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of the KGST Act, 2017 read with Rule 104 of KGST Rules 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.

2. The applicant is an association of persons registered under the provisions of the Goods and Services Act, 2017. The applicant states that he is engaged in the provision of catering services to educational institutions.

3. The applicant has sought advance ruling in respect of the following questions:

1. We are providing catering services to educational institutions sponsored by State/ Central / Union territory which is exempted services under SI. No. 66 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. As per Circular 65/39/2018, TDS under GST is applicable only for taxable supply contracts and as we are the exempted service provider. TDS is not applicable for our services (HSN Code 9992)

4. The applicant furnishes some facts relevant to the stated activity.

a. The applicant states that he is engaged in providing catering services to educational institutions sponsored by State/ Central/ Union territory which is exempted services under SI.No.66 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017,

b. The applicant states that as he is doing exempted services (HSN Code 9992), TDS for GST on their services are not to be deducted from their As per Circular 65/39/2018, TDS under GST is applicable only for taxable supply contracts and they are providing exempted services and hence TDS is not applicable to them.

PERSONAL HEARING / PROCEEDINGS HELD ON 10.03.2020

5. Sri Srinivasa.S.N., Consultant and duly authorised representative appeared for personal hearing proceedings on 20.02.2020 before this authority and reiterated the facts and submitted as under:

5.1 The applicant is providing catering services to educational institutions as per Sarva Shikshana Abhiyana e-tendering and scheme is sponsored by the State Government. Hence the turnover of catering services is exempt from tax as per Notification No.12/2017-Central Tax (Rate) dated 28.06.2017

5.2 Since the applicant is dealing in exempted services, the same is also not liable for tax deduction at source under section 50 of the CGST Act, 2017.

FINDINGS & DISCUSSION

6. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by him when he appeared for the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts.

6.1 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act.

6.2 The applicant states he has entered into a contract of catering services to be provided to the educational institutions. The claim of the applicant is that this is exempt from tax as it is covered under entry no.66 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017

6.3 Entry No.66 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 reads as under: