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2019 (8) TMI 29 - AAR - GSTClassification of supply - classification of goods or services - grant-in-aid or not - use and construction of toilets - services by way of any charitable activity - entities registered under Section 12AA of the Income Tax Act, 1951 Whether the activities of the applicant can be considered as supply of goods or services and whether the applicant is liable to pay GST on the amount received by them from AICL if the Said amount is treated as "consideration" towards "supply" of goods or services. Also, whether the amount received from AICL can be treated as grant-in-aid, which may be non-taxable? - HELD THAT:- In the present case, there is a direct link between the amount paid and the supply of taxable service of installation of solar pumps, solar street lights and construction of toilets. The MoU clearly provides that the amount of ₹ 20,35,76,800 is to be paid by AICL to the applicant for installation of specific numbers solar pumps and solar street lights and for construction of Specific numbers of toilets. Further, the MoU specifies the details of the beneficiaries and guidelines to ensure that such services are delivered to them. Hence, it is not a case where IACL has donated lump sum to the applicant for carrying out activities which the applicant may be persuing. The amount paid in this case is linked to specific taxable activity. Use and Construction of toilets - Whether the said supply of goods or services by the applicant is exempted under S. No. 1 or under S. No. 76 of the Notification No. 12/2017 -Central Tax (Rate) dated 28.06.2017? - HELD THAT:- The exemption under Section 12A / 12AA and Section 10 (23C) and (v) of the Income Tax Act, 1961 does not cover all incomes or activities of the applicant. The exemption under said provisions are admissible based on the nature of activity and source of such incomes. In the present case, such income has not been received by the applicant for either any Charitable purpose of for running any Institute. Hence, exemption under CGST Act, 2017 on income is admissible only if the Same is towards charitable activity - for the said services to be covered in clause (iv) of the above definition of charitable activities, these must be relating to the preservation of environment. However, in the present case, the purpose of said services is to provide infrastructural facilities in the villages to improve quality of life of the rural population. It has been observed that most of the villages lack basic amenities like education, health, sanitation, roads, civil infrastructure and facilities, availability of adequate electricity, potable water and other necessary facilities. The said services are not covered in the definition of charitable activities and impugned services rendered by the applicant are not covered under S. No. 1 of Notification 12/2017 - Central Tax (Rate) dated 28.06.2017. Hence, in cases where the service provider is permitting use of toilet facility for a consideration from the user, the same may be possibly exempted from payment of CGST under the said exemption notification - However, construction of toilets is not covered under Service Code heading 9994 or in the Service description given in S. No. 76 of the said Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017.
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