In re Tamil Nadu Labour Welfare Board (GST AAR Tamilnadu)
1. Applicability of GST registration to Tamil Nadu Labour Welfare Board
Tamilnadu Labour Welfare Board, being a person liable to pay GST, has to get registered under GST.
2. Applicability of GST towards the rental income received by the board from Government and business entities.
The rental income received by the applicant from Government and business entities are taxable to GST
3. Applicability of Reverse Charge Mechanism for the rent on immovable properties received by the board from Government and business entities.
The applicant do not fall under the ‘specified class of supplier of services’ under Notification No.13/2017-C.T.(Rate) dated 28.06.2017 as amended by notification no.3/2018 – Central Tax(Rate) dt. 25.01.2018 and therefore ‘Reverse charge Mechanism’ is not available to the applicant.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, TAMILNADU
Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
M/s.Tamil Nadu Labour Welfare Board.No. 1, DMS Campus, 3rd Anna Salai, Teynampet, Chennai.Tamil Nadu.600 006. (hereinafter called the Applicant) are registered under GST with GSTIN.33AAATT3751D1ZT The applicant has sought Advance Ruling on:-
1. Applicability of GST registration to Tamil Nadu Labour Welfare Board
2. Applicability of GST towards the rental income received by the board from Government and business entities.
3. Applicability of Reverse Charge Mechanism on for the rent on immovable properties received by the board from Government and business entities.
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017.
2.1 The applicant has stated that they have been constituted by the Government of Tamilnadu in the year 1972 by Tamilnadu Labour Welfare Fund Act 1972 (Act No.36 of 1972) enacted by the Legislature of the State of Tamil Nadu with a view to promote the welfare of the employees and their family/dependents with the Minister of Labour, Govt of Tamilnadu as the Chairman of the Board to administer the Tamilnadu Labour Welfare Fund and such other actions as assigned by or under the Act. The Tamil Nadu Labour Welfare Board is executing and implementing various welfare schemes for the benefit of the workers who contribute to Labour Welfare Fund. The Board is receiving contribution from employees and matching contribution from employers and Government of Tamilnadu to the fund. The Tamil Nadu Labour Welfare Fund is receiving the following as its income which are in the nature of contributions, lines, donations, grand, borrowings etc (at present),-
a) Contribution by every Employee Rs.10/- per year
b) Contribution by employer Rs.20/- per employee per year
c) Contribution by Government of Tamilnadu -Rs. 10/- per employee per year
d) All Unpaid Accumulations due to workers
e) All fines realised from the employers
f) Deduction made under the proviso to Sub-section(2) of section 9 of the Payment of Wages Act, 1936 and the proviso to Sub-section (2) of section 36 of the Tamil Nadu Shops and Establishments Act, 1947.
g) Any interest by way of penalty, paid under Section 14 of the Tamil Nadu Labour Welfare Fund Act, 1972.
Besides the above, The Fund is also receiving income by way of Interest from Fixed Deposits kept in Banks created out of its income and rent from immovable properties leased out to Government and business entities
2.2 They have further stated that they are receiving rental income from services of leased out of commercial properties. Rental income from leased out properties is subjected to GST as per GST Act. However as per the notifications no. 12/2007-Central Tax (Rate) dt.28.06.2017, 13/2007- Central Tax(Rate) dt.28.06.2017 r.w. notification no.3/2018 – Central Tax(Rate) dt. 25.01.2018 issued by Government of India, Ministry of Finance (Department of Revenue), GST on services provided by way of letting out commercial properties by Central Government, State Governments and Local Authorities are to be paid by way of RCM by the recipient of the services. They are a Government Authority according to the explanation given in the notifications no. 12/2007-Central Tax (Rate) dt.28.06.2017. Hence this application seeking the ruling on the subjects has been filed by the applicants.
3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the appellant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media. The applicant consented and the hearing for admission of the application was held on 19.02.2021. The Authorized representatives Shri. M.Ravi, Financial Advisor and Chief Accounts Officer and CA Prasanna R, Chartered Accountant appeared for the hearing virtually and reiterated their written submissions. They claimed that they are local Authorities. They were asked to furnish documents/submissions to establish themselves as a ‘Local Authority’, Rent receipts, rental agreements in respect of which the ruling is sought. They undertook to furnish the above details in a week’s time.
3.2 In pursuant to the Virtual Personal Hearing held on 19.02.2021, the applicants submitted additional submissions vide their Letter No. E2/29880/2020-1 dated 26.02.2021, wherein apart from their earlier submissions, they stated as follows:-
> The Statutory Labour Welfare Board was formed with effect from 1.4.1975 with the Minister In-charge of Labour as Chairman, five representatives of employees, five representatives of employers, three members of State Legislative Assembly, four Official members and two Non-Official members.
> The mission of the Board is to uplift the living standards of the workers and their family members who contributes to Labour Welfare Fund in the State of Tamil Nadu, by way of providing them adequate welfare measures after enrolling them as beneficiaries with the Board. The Board provides benefits by way of direct transfer into their bank accounts, under various welfare schemes of the board in a very transparent and efficient manner. The establishments covered under the scheme are:-
