In re Stationery Department, Government of Kerala (GST AAR Kerala)
The GST Authority for Advance Rulings (AAR) in Kerala has provided a comprehensive ruling on the Goods and Services Tax (GST) implications for the Stationery Department, Government of Kerala. The department, a registered taxpayer, sought clarity on various transactions ranging from supplying stationery to other government entities to levying penalties and disposing of scrap. The AAR’s decision distinguishes between activities considered “supply” under GST law and those that are not, impacting ITC eligibility and tax reversal obligations.
The AAR ruled that the supply of stationery materials by the department to other government offices, departments, and courts without consideration does not fall within the scope of “supply” under Section 7 of the CGST Act, 2017. This is because such activities are deemed statutory functions and not “in the course or furtherance of business” as defined under Section 2(17)(i). Consequently, the department is not entitled to Input Tax Credit (ITC) for inputs used exclusively for these non-business purposes, and ITC must be apportioned as per Rule 42 of the CGST Rules, 2017. Conversely, the supply of stationery items to local authorities, PSUs, government companies, or Central Government departments for a consideration is indeed a “supply” under Section 7(1)(a) and is taxable. Similarly, facilitating stationery procurement as an intermediary without consideration is not a “supply,” but the sale of physical tender forms, disposal of waste paper/printing supplies as scrap or through auction, and sale of used motor vehicles are all considered “supplies” as they are undertaken for consideration and in furtherance of business.
