In re lndian Institute of Engineering Science and technology Shibpur (GST AAR West Bengal)
Summary: The West Bengal Authority for Advance Ruling considered an application filed by Indian Institute of Engineering Science and Technology Shibpur concerning the GST treatment of amounts distributed by the Institute to its full-time faculty members out of consultancy receipts. The Institute undertakes consultancy, scientific testing and related activities through its Research and Consultancy Division, enters into consultancy arrangements with external clients, raises invoices and receives consideration, and thereafter distributes specified portions of consultancy receipts to faculty members under its institutional Consultancy Rules. The applicant contended that such distributions were internal allocations of consultancy remuneration to employees and did not constitute consideration for an independent supply of services by the faculty member; consequently, the amounts should fall within Entry 1 of Schedule III to the CGST Act, relating to services by an employee to the employer in the course of or in relation to employment. The application also raised consequential questions concerning GST liability, registration under Section 22 and issuance of a tax invoice under Section 31. The Authority, however, did not adjudicate the substantive GST treatment. Referring to Section 95, particularly the statutory definition of “advance ruling”, the Authority observed that an advance ruling must concern a supply being undertaken or proposed to be undertaken by the applicant. According to the Authority, all three questions in the application related to the supply of services by the Consultancy In-charge to the applicant, including the Consultancy In-charge’s registration and tax-invoice obligations. The applicant itself did not appear to be the supplier of the service contemplated by the questions. The Authority therefore held that the application did not satisfy the statutory scope of advance ruling and, in view of the facts and the provisions of the Act, the application was not admitted. The ruling consequently leaves the substantive questions concerning the employee-employer exclusion under Schedule III, GST liability on the distributed amount, registration and tax invoicing unanswered in the present proceedings.
