In re Indian Institute of Management, Tiruchirapalli (GST AAR Tamilnadu)
1. Whether Indian Institute of Management, Tiruchirappalli (IIM) is a Government Entity under GST Law.
The Indian Institute of Management, Tiruchirappalli (IIM) is a Government Entity Under GST Law.
2. If the answer to question is in the affirmative, whether
2.1 The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017.
The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017 read with Notification No.50/2018 dt. 13.09.2018.
2.2 Whether the applicant is required to discharge Liability on reverse charge basis on supply of services as per Section 9(3) and 9(4) of the CGST Act, 2017.
The applicant is required to discharge Liability on reverse charge basis on supply of services as per Section 9(3) of the CGST Act, 2017, in respect of Legal services received by them for which documentary evidence was submitted.
2.3.Whether the entry provided as under is applicable
A) Serial No.3/3A of Notification 12/2017 is available to IIMT.
B) Composite supply of works contract provided to the applicant is covered by Serial No.3 (vi) of Notification 11/2017 dated 28th June 2017.
(A&B). The Question 2.3 is not admissible for the reasons stated in Para 7.4 above and therefore not admitted.
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. Indian Institute of Management, Tiruchirapalli.,(hereinafter called the ‘Applicant/ IIMT’) are registered under GST with GSTIN. 33AAAA15004R1Z0. The applicant has sought Advance Ruling on:-
1. Whether Indian Institute of Management, Tiruchirapalli, Tiruchirappalli(IIM) is a Government Entity under GST Law.
2. If the answer to question is in the affirmative, whether
2.1 The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017.
2.2. Whether the applicant is required to discharge Liability on reverse charge basis on supply of services as per Section 9(3) and 9(4) of the CGST Act, 2017.
2.3 Whether the entry provided as under is applicable
A) Serial No.3 of Notification 12/2017 is available to IIMT.
3 – Chapter 99 – Pure Services (excluding works contract service or other composite supplies involving supply of any goods) Provided to the Central Government, State Government or Union territory or local authority or a Governmental authority (or a Government Entity) by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.
3A – Chapter 99 – Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 percent of the value of the said composite supply provided to the Central Government, State Government or Union Territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.
B) Composite supply of works contract provided to the applicant is covered by Serial No.3 (vi) of Notification 11/2017 dated 28th June 2017.
The Applicant has submitted the copy of application in Form GST ARA – 01 and also 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 are an educational institution of excellence established in the year 2011 with the objectives of imparting high quality management education and training, conducting industrial and management research etc. The institute was established under the auspices of the Ministry of Human Resources Development (MHRD), Government of India as a premier educational institution and is renowned in India for its management education programmes. They were registered as a society with the Registrar of Societies, Tamilnadu and is recognized world over as an institution of higher learning and seat of academic excellence in the field of management. The Indian Institute of Management Act, 2017 was passed and it received the assent of the President on 31st December, 2017 with an objective to declare certain institutes of Management (IIMT is one among the schedule annexed to the Act) to be Institutions of National Importance with a view to empower these Institutions to attain global excellence in management, management research and allied areas of knowledge and to provide certain other matters connected therewith or incidental thereto. The Government of India notified the Act in the Gazette of India on 31st January 2018. Now by the enactment of the Indian Institute of Management Act 2017, IIMT is a body corporate as per Section 4 of the said Act. The Institutes of management are directly under the supervision and control of the Ministry of Human Resources Development of India. In the course of discharging the functions as per the IIMT Act 2017, the applicant engages certain suppliers to provide certain services like pure labour services and supply of composite services.
2.2 On the Interpretation of Law the applicant has stated that they are a Government entity in view of the following:-
“Government Entity” means an authority or a board or any other body including a society, trust, corporation, (i) set up by an Act of Parliament or State Legislature; or
(ii) established by any Government, with 90 per cent or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.”
The applicant has stated that the initial corpus fund of the institute is provided by the Government of India by way of Grants. Thus, it can be seen 100% of the initial corpus (akin to share capital in case of the body corporate) is fully provided by the Government of India. They have submitted few relevant extracts of IIM Act 2017 as under:-
“9. (1) Every Institute shall be a not-for-profit legal entity and no part of the surplus, if any, in revenue of such Institute, after meeting all expenditure in regard to its operations under this Act, shall be invested for any purpose other than for the growth and development of such Institute or for conducting research therein
21. For the purpose of enabling the Institutes to discharge their functions efficiently under this Act, the Central Government may, after due appropriation made by Parliament by law in this behalf, pay to every Institute such sums of money in such manner as it may think fit.
22. (1) Every Institute shall maintain a Fund to which shall be credited,-
a) all moneys provided by the Central Government;
(b) all fees and other charges received by the Institute;
(3) Each Institute shall create a corpus fund for long term sustainability of the Institute, to which shall be credited such per cent, of the net income of the Institute and donations made specifically towards such corpus fund as the Central Government may in accordance with the provisions of the Income tax Act, 1961, notify.
23(3) The accounts of every Institute shall be audited by the Comptroller and Auditor General of India.
(5) The accounts of every Institute as certified by the Comptroller and Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament in accordance with such procedure as may be laid down by the Central Government. “
2.3 In view of the aforementioned facts, the applicant is of the view that they are a Government entity as defined under Notification 12/2017 CT (Rate) dated 28.06.2017 and the service received by them by way of pure labour service and composite service shall be covered by Serial No 3 & 3A of Notification 12/2017 and Serial No.3(vi) of Notification no. 11/2017 CT(Rate) dated 28.06.2017. They have also stated that being a Government entity they will be governed by TDS provisions as per Section 51 of CGST Act 2017 and they are entitled for exemption under SI.No.3 & 3A of Notification 12/2017 as they are rendering educational services which is covered under Twelfth Schedule under Article 243W as well as in Eleventh Schedule under Article 243G of Constitution of India. They have stated that being a Government entity and a registered person under GST law they are required to discharge tax liability as per Notification 13/2017 CT (Rate) dated 28.06.2017.
3.1 Due to the prevailing pandemic situation and in order not to delay the proceedings, the applicant was addressed through the email address mentioned in their application to seek their willingness to participate in the digital hearing vide email dated 06.07.2020. The applicant consented and the hearing for the admission of application was held on 06.08.2020. Theauthorized representative, Shri. V. Ramkumar, appeared for the hearing. He reiterated their written submissions and they were asked to furnish the following:-
1. Gazette Notification notifying IIMT as corporate body.
2. Details of Board of Governors with equity on control and finance
3. Write up on the goods/ services envisaged for which applicability under Section 9(3)/9(4) and applicability of Sl.No.3/3A.
It was also recorded that on receipt of above another hearing may be extended for deciding on the admission of the application.
3.2 In furtherance to the above hearing, the applicant vide their letter dated 13.09.2020 submitted the Copy of Indian Institute of Management Act, 2017. They also stated the following:-
i. In respect of works contract service the tenders for construction is issued by CPWD and the amount payable for the construction will be paid by the applicant to the CPWD. The contractor who executes the work will claim GST on taxable value from CPWD and the same will be paid by the applicant.
ii. The applicant is availing security services and paying GST for the same. There are certain security agencies which are not limited companies and the payment made by them are liable to GST under reverse charge mechanism.
iii. In respect of legal fee paid to the advocate, the applicant is liable to pay GST under reverse charge mechanism. There are also certain services which are covered under Notification 13/2017 for the applicant is liable to pay under reverse charge mechanism.
3.3 The applicant was reminded vide letter dt. 5.11.2020 of the Registiy to submit a copy of the Gazette notification notifying IIMT as a corporate body, Details of Board of Governors with equity on control and finance, a write-up on the goods/Services envisaged for which applicability under Section 9(3)/9(4) and applicability of Sl.no.3/3A, which was asked to be furnished during the hearing and not submitted till that date. In reply the applicant vide their letter received on 09.12.2020, submitted as below: –
1) Enclosing herewith the Indian Institute of Management Act of 2017.
2) Works Contract service.-
a. The tender for construction of buildings are issued by CPWD on behalf of Indian Institute of Management, Trichy and the amount payable for the construction will be paid by them to CPWD
3) S.No.3 and 3A of Notification 12/2017 is applicable to them as said Below:
