GST not leviable on handling charges of PDS distribution of Dhothies & Sarees/ School Uniforms to state government

In re Handloom Weavers Cooperative Society Ltd. (GST AAR Tamilnadu)

GST not leviable on handling charges of PDS distribution of Dhothies & Sarees/ School Uniforms to state government

The AAR, Tamilnadu in the matter of M/S. Handloom Weavers Cooperative Society Ltd. [Advance Ruling No. TN/47/ARA/2021 dated December 30, 2021] held that, the services rendered by the assessee towards handling of Dhothies & Sarees/ School Uniforms from Co-operative Societies to Public Distribution System / Revenue Department are exempted from payment of GST. Further held that, undertaking the activities of inspection, collection, storage, transportation, etc., are ‘Pure Services’ even if the supply is a composite supply.

Facts:

M/S. Handloom Weavers Cooperative Society Ltd. (“the Applicant”) has been appointed and acting as a Nodal Agency to inspect and procure cost Free Distribution Sarees & Dhothies to the poor people living in rural and urban areas and cost Free School Uniform to the students under ‘Noon Meal Scheme’ under Government Flagship Schemes, by the Government of Tamil Nadu. In 2021, 167.39 Lakh Sarees and 167.29 Lakh Dhothies were procured from the Applicant at a cost of INR 484.25 crore and dispatched for onward distribution to the beneficiaries, for which Handling Charges were paid to the Applicant for undertaking the activities of services of inspection, collection, storage, transportation, etc., as fixed by the Committee set up by the State Government.

Please become a Premium member. If you are already a Premium member, login here to access the full content.