In re National Institute of Technology (GST AAR Tamilnadu)
1. The National Institute of Technology, Tiruchirappalli (NITT) is a Government Entity under GST Law.
2.1 The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017 read with Notification No. 50/2018-C.T dt. 13.09.2018.
2.2. 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. In respect of security services Reverse charge mechanism will not apply as the services have been provided by a body corporate only as evidenced by the documents submitted by the applicants.
2.3 (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, TELANGANA
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. National Institute of Technology, Tiruchirappalli-620015 (hereinafter called the Applicant/ NITT) are registered under GST with GSTIN. 33AAACZ8255D1ZD. The applicant has sought Advance Ruling on the following questions:-
1. Whether National Institute of Technology, Tiruchirappalli (NITT) is a Government Entity under GST Law.
2. If the answer to question is in the affirmative, whether
a. The applicant is liable to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017.
b. 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.
3. Whether the entry provided under
A. Sl.No 3, 3A of Notification 12/2017 is applicable to them.
B. Composite supply of works contract provided to the applicant is covered by Sl.No.3(vi) of Notification 11/2017 dated 28.06.2017.
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 their institute NITT was started as a joint and co-operative venture of the Government of India and the Government of Tamil Nadu in 1964 with a view to catering to the needs of man-power in technology for the country. They were subsequently covered under the schedule of the National Institute of technology Act, 2007, and was declared as an Institution of National importance and to provide for instructions and research in branches of engineering, technology, management, education, sciences and arts and for the advancement of learning and dissemination of knowledge in such branches and for certain other matters connected with such institutions. They are under the direct supervision and control of the Ministry of Human Resource Development of India and the Board of Governors is constituted by the ministry of HRD and the latest Board of Governors was reconstructed in the year 2011. In the course of discharging the functions as per the NIT Act, 2007, the applicant engages suppliers to provide certain services like pure labor services and supply of composite services.
2.2. On 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 percent or more participation by way of equity or control, to cariy out a function entrusted by the Central Government, State Government, Union Territory or a local authority. They have 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 from the NIT Act, 2007, are as under
9 (1) The president of India shall be the Visitor of every Institute.
(2) The visitor may appoint one or more persons to review the work and progress of any institute and to hold inquiries into the affairs thereof and to report thereon in such manner as the Visitor may direct.
(3) Upon receipt of any such report, the Visitor may take such action and issue such directions as he considers necessary un respect of any of the matters dealt with in the report and the Institute shall be bound to comply with such directions within reasonable time.
Further clause 11 of the Act mandates that the chairperson of the Board of Governors is to be nominated by the Visitor.
20. 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.
21(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;
(2) All moneys credited to the fund of every Institute shall be deposited in such banks or invested in such manner as the Institute may, with the approval of the Central Government, decide.
26(1) The first Statutes of each Institute shall be frame by the Central Government with the prior approval of the Visitor and a copy of the same shall be laid as soon as may be before each House of Parliament.
They have stated that under clause 26(4) a new Statute amending or repealing the existing Statutes shall have no validity unless it has been assented to by the Visitor. In addition, the Central Government shall establish a Central body to be called “”the Council” for coordination of all Nation Institutes of Technologies. The council shall have the Minister in charge of technical education as ex officio chairman of the council. In view of the above, the applicant has stated that NITT is a Government entity as defined under Notification No. 12/2017- Central Tax (Rate) dated 28th June 2017.
2.2 The applicant has relied upon the ruling of AAR Uttarakhand: In RE: IT Development Agency, wherein it was held that IIT, Mumbai falls under the definition of Government in terms of Section 2(53) of CGST Act 2017. In view of the cited ruling, the applicant has stated that the constitution and management of NITTs are identical to IITs and hence are to be treated as Government/ Government entities, hence, the services received by them by way of pure labor services and composite services shall be covered by serial No.3 and 3A of the said Notification and also Serial No. 3 (vi) of Notification 11/2017 dated 28th June 2017. Further, being a Government entity, they will be governed by TDS provisions as per section 51 of CGST Act 2017 and they are entitled to be charged with NIL rated tax as per serial no: 3 and 3A of Notification No. 12/2017- Central Tax (Rate) as they are rendering educational services which finds a place in Twelfth Schedule under article 243G of the Constitution of India. Also, the applicant has stated that as a Government entity and a registered person under the GST law they are required to discharge tax liability as per Notification No. 13/2017-Central Tax (Rate) dated 28th June 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. The authorized representative, Shri. V.Ramkumar appeared for the hearing and they applicant was asked to furnish the following;-
1) NIT Act with relevance to NITT
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 s.no.3/3A.
4) Write up on the pure labour service and composite services likely to be undertaken for which the clarification has been sought.
It was also decided that on receipt of above another hearing may be extended.
3.2 In furtherance to the above hearing, the applicant vide their letter dated 13.09.2020 submitted the following:-
> Copy of National Institute of Technology act of 2017.
> The applicant has stated the following:-
i. In respect of works contract for National Institute of Technology, the tenders for construction are issued by CPWD and the amount payable for the construction is issued by CPWD and the amount payable for the construction will be paid by us to CPWD. The contractor who executes the work will claim GST on the taxable value from CPWD and the same will be paid by them.
ii. The applicant is availing the Security services and paying GST on them. There are certain Securities agencies which are not Limited Companies and the payment made to them are liable to GST under Reverse Charge Mechanism.
iii. In respect of legal Fees paid to advocates, they have stated that they are liable under Reverse Charge Mechanism to pay the GST. There also certain services which are covered under Notification No. 13/2017 for which they are liable to pay under Reverse charge Mechanism.
3.3 The Registry issued a notice to the applicant on 05.11.2020 seeking write up on goods/services envisaged for which applicability of Sl.No. 3/3A was asked to be furnished.
3.4 In response to the notice the applicant vide their letter received on 9.12.2020 submitted the following facts.
> Works Contract service: The tender for construction of buildings are issued by CPWD on behalf of National Institute of Technology, Trichy and the amount payable for the construction will be paid by us to CPWD
> S.No. 3 and 3A of Notification No. 12/2017 is applicable to them as said below:
