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June 23, 2021
All Articles by: Mr. M. GOVINDARAJAN       View Profile
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GST Council meeting

43rd meeting of GST Council was held on 28.05.2021.  The Council discussed various matters in the present COVID situation.  The Council has recommended exemptions to medical equipments and other issues.  Notifications have already been issued in relation to the rate exemption, concessional rate etc. vide Notifications No. 4 and 5 dated 14.06.2021.


Now the Government of India has issued certain clarifications in the following circulars-

Circular No. 149/05/2021-GST

The Government of India clarified that the services provided to an educational institution by way of serving of food ( catering including mid- day meals) is exempt from levy of GST irrespective of its funding from government grants or corporate donations, under the  entry 66 (b)(ii). Educational institutions as defined in the notification include aganwadi. Hence, serving of food to anganwadi shall also be covered by said exemption, whether sponsored by government or through donation from corporate.

It is observed that the scope of Entry 66 (b)(ii) of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 is wide enough to cover any serving of any food to a school, including pre-school. Further, an Anganwadi inter alia provides pre-school non formal education. Hence, aganwadi is covered by the definition of educational institution (as pre-school)

Circular No. 150/06/2021-GST

This circular issued clarification regarding applicability of GST on annuities paid for construction of road where certain portion of consideration is received upfront while remaining payment is made through deferred payment (annuity) spread over years.

Entry No. 23A of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 exempts the  service, falling under heading 9967, by way of access to a road or a bridge on payment of annuity.  Heading 9967 covers supporting services in transport” under which code 996742 covers “operation services of National Highways, State Highways, Expressways, Roads & streets; bridges and tunnel operation services’Entry 23 of said notification exempts “service by way of access to a road or a bridge on payment of toll.

It was observed that the services by way of construction of road fall under heading 9954 which  covers general construction services of highways, streets, roads railways, airfield runways, bridges and tunnels. Consideration for construction of road service may be paid partially upfront and partially in deferred annual payments (and may be called annuities).  Entry 23A does not apply to services falling under heading 9954.  The plain reading of entry 23A makes it clear that it does not cover construction of road services (falling under heading 9954), even if deferred payment is made by way of installments (annuities).  It is clarified that Entry 23A of notification No. 12/2017-Central Tax (Rate) does not exempt GST on the annuity (deferred payments) paid for construction of roads.

Circular No. 151/07/2021-GST

Clarifications have been sought from the Government in respect of taxability of various services supplied by Centre and State Boards such as National Board of Examination.  The said services include entrance examination ( on charging a fee) for admission to educational institution, input services for conducting such entrance examination for students, accreditation of educational institutions or professional so as to authorise them to provide their respective services.

It is observed that the National Board of Education provides services of conducting entrance examinations for admission to courses including Diplomat National Board and Fellow of National Board, prescribes courses and curricula for PG medical studies, holds examinations and grant degrees, diplomas and other academic distinctions. It carries out all functions as are normally carried out by central or state educational boards and is thus a central educational board.   Explanation 3(iv) of the notification No. 12/ 2017- Central Tax (Rate), ‘Central and State Educational Boards’ are treated as Educational Institution for the limited purpose of providing services by way of conduct of examination to the students.  Therefore, National Board of Education  is an ‘Educational Institution’ in so far as it provides services by way of conduct of examination, including any entrance examination, to the students.

It has been clarified as below-

  • GST is exempt on services provided by Central or State Boards, including the boards such as National Board of Education, by way of conduct of examination for the students, including conduct of entrance examination for admission to educational institution under S. No. 66 (aa) of Notification No. 12/2017-Central Tax (Rate). Therefore, GST shall not apply to any fee or any amount charged by such Boards for conduct of such examinations including entrance examinations.
  • GST is also exempt on input services relating to admission to, or conduct of examination, such as online testing service, result publication, printing of notification for examination, admit card and questions papers etc, when provided to such Boards under S. No. 66 (b) (iv) of Notification  No. 12/2017-Central Tax (Rate).
  • GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional (accreditation fee or registration fee such as fee for FMGE screening test) so as to authorize them to provide their respective services.

Circular No.152/08/2021-GST

In this circular the Government has taken into consideration whether services supplied to a Government Entity by way of construction such as of “a ropeway” are eligible for concessional rate of 12% GST under entry No. 3 (vi) of Notification No. 11/2017- Central Tax (Rate) dated. 28.06.2017.   Entry No 3(vi) provides GST rate @ 12% on Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above) provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession.

It is observed that  said entry No 3 (vi) does not apply to any works contract that is meant for the purposes of commerce, industry, business of profession, even if such service is provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity. The doubt seems to have arisen in the instant cases as Explanation to the said entry states, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. However, this explanation does not apply to Governmental Authority or Government Entity, as defined in clause (ix) and (x) of the explanation to said notification. Further, civil constructions, such as rope way for tourism development shall not be covered by said entry 3(vi) not being a structure that is meant predominantly for purposes other than business. While road, bridge, terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification, structures like ropeway are not covered by these entries too. Therefore, works contract service provided by way of construction such as of rope way shall fall under entry at Sl. No. 3(xii) of notification 11/2017-Central Tax (Rate) and attract GST at the rate of 18%.

Circular No. 153/09/2021-GST

Certain representations have been received seeking clarification whether composite supply of service by way of milling of wheat into wheat flour, along with fortification, by any person to a State Government for distribution of such wheat flour under Public Distribution System is eligible for exemption under entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and also as regards the rate of GST on such milling, if it does not fall in said entry No. 3A. The issue has been examined by GST Council in its 43rd meeting held on 28th May, 2021.

It is clarified on the above said issue as below-

  • Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which lists the activities that may be entrusted to a Panchayat under Article 243G of the Constitution. Hence, said entry No. 3A would apply to composite supply of milling of wheat and fortification thereof by miller, or of paddy into rice, provided that value of goods supplied in such composite supply (goods used for fortification, packing material etc) does not exceed 25% of the value of composite supply. It is a matter of fact as to whether the value of goods in such composite supply is up to 25% and requires ascertainment on case-to-case basis.
  • In case the supply of service by way of milling of wheat into flour or of paddy into rice, is not eligible for exemption under Sl. No. 3 A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 for the reason that value of goods supply in such a composite supply exceeds 25%, then the applicable GST rate would be 5% if such composite supply is provided to a registered person, being a job work service (entry No. 26 of notification No. 11/2017- Central Tax (Rate) dated 28.06.2017). Combined reading of the definition of job-work [section 2(68)2(94), 222425 and section 51] makes it clear that a person registered only for the purpose of deduction of tax under section 51 of the CGST Act is also a registered person for the purposes of the said entry No. 26, and thus said supply to such person is also entitled for 5% rate.

Circular No. 154/10/2021-GST

The GST council examined the issue regarding applicability of GST on supply of service by State Govt. to their undertakings or PSUs by way of guaranteeing loans.   The Council observed that Entry No. 34A of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 exempts the services supplied by Central Government, State Government, Union territory to their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the banking companies and financial institutions.  It is clarified that guaranteeing of loans by Central or State Government for their undertaking or PSU is specifically exempt under said entry No. 34A.

Circular No. 155/11/2021-GST

In this circular the issue taken up for clarification is  regarding GST rate on parts of Sprinklers or Drip Irrigation System, when they are supplied separately ( i.e. not along with entire sprinklers or drip irrigation system).   It is observed that Sl. No. 195B under Schedule II of Notification No.01/2017-Central Tax (Rate), dated 28.06.2017 fixes the GST rate @ 6% for Sprinklers; drip irrigation systems including laterals; mechanical sprayer under heading 8424.

It is clarified that the intention of the entry 195B has been to cover laterals (pipes to be used solely with sprinklers/drip irrigation system) and such parts that are suitable for use solely or principally with 'sprinklers or drip irrigation system', as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN. Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which is classifiable under heading 8424, would attract a GST of 12%, even if supplied separately. However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract GST as applicable to the respective heading.


By: Mr. M. GOVINDARAJAN - June 23, 2021



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