RCM Applicability in Multistate coperative societies, Goods and Services Tax - GST

[VEKIT SHETTY]

Can anyone help me out with that the RCM is applicable to director remuneration in Multistate coperative societies in Maharashtra?

If yes then at what rate

Posts / Replies

[Padmanathan Kollengode]

Pls find the following RCM entry in Notification 13/2017 - central Tax (rate):

6

Services supplied by a director of a company or a body corporate to the said company or the body corporate.

A director of a company or a body corporate

The company or a body corporate located in the taxable territory.

Generally, the registration of a co-operative society will render it a body corporate status under the respective co-operative societies enactment. In that sense, the director remuneration will be covered under above RCM entry.

He the director is an employee of the said co-operative society, then it is not treated as supply under Sch III. See Circular No: 140/10/2020 - GST dated 10th June, 2020

Also see Circular 201/13/2023 dated 1-8-2023

2.2 It is hereby clarified that services supplied by a director of a company or body corporate to the company or body corporate in his private or personal capacity such as services supplied by way of renting of immovable property to the company or body corporate are not taxable under RCM. Only those services supplied by director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification No. 13/2017-CTR (Sl. No. 6) dated 28.06.2017.

[Sadanand Bulbule]

Dear Sir

Please refer the CBIC Circular No. 201/13/2023-GST dated the 1st August, 2023 on the issue under discussion.

I endorse the reply of Sri. Padmanathan ji.

 

[KASTURI SETHI]

The question arises whether a cooperative society is a body corporate or not.

As per Body Corporate (vakilsearch.com)

A company is a body corporate, an independent corporate existence that ‘distinguishes ‘ it from a partnership. In Indian Laws, a Body Corporate has been defined under Section 2 (7) of the Companies Act, 1956.

It includes all the corporations within India and outside India as well, EXCEPT:

(1) A Corporation Sole,

(2) A Co-operative Society registered under any co-operative societies laws, and

(3) Any such other corporations that the central government might include in the Official Gazette as not being a body corporate under the Companies Act, 1956.

Sh. Padmanathan Kollengode Ji,

What is the correct picture ? Will you please throw light ? Thanks a lot.

[Padmanathan Kollengode]

Shri Kasturi Ji,

Section 2 (84) “person” includes–

(a) an individual;

(b) a Hindu Undivided Family;

(c) a company;

(d) a firm;

(e) a Limited Liability Partnership;

(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;

(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013);

(h) any body corporate incorporated by or under the laws of a country outside India;

(i) a co-operative society registered under any law relating to co-operative societies;

(j) a local authority;

(k) Central Government or a State Government;

(l) society as defined under the Societies Registration Act, 1860 (21 of 1860);

(m) trust; and

(n) every artificial juridical person, not falling within any of the above;

In the above definition, it seems those "body corporates" incorporated by or under the laws of a country outside India is recognized as "body corporate" under GST Law.

Though respective co-operative societies enactments recognizes co-operative societies registered under said Acts as "body corporates", it appears GST Law does not recognize them as they are not "body corporate" incorporated by or under the laws of a country outside India.

As far as definition of "body corporate" in Companies Act, 2013 is concerned, can we import the same into GST law? if yes, then Multi-State Co-operative societies are not "body corporate" even though the respective enactments deem them to be so?

Let experts like Amit Ji, Shilpi Maam, Ganesh Ji also pool their thought into the issue

[KASTURI SETHI]

Sh.Padmanathan Kollengode Ji,

I agree with your latest reply.

(i) You know very well the jurisdiction of GST Acts extends to the whole of India. Hence we are not concerned with the definition of 'body corporate' outside India.

(ii) Here the definition of ' a person' is not in picture. There is no doubt that a co-operative society is a person and also a business entity.

(iii) The department recognizes/accepts the definitions of the Company Act.

In view of above, it can be inferred that A cooperative society is not a body corporate.

I welcome the views of other experts for enlarging the horizon of my knowledge on the issue.

[Shilpi Jain]

Body corporate is defined in the RCM notification as below

“Body Corporate” has the same meaning as assigned to it in clause(11) of section 2 of the Companies Act, 2013.

So definition of the CA, 2013 will be applicable to understand the term.

Another relevant clause in this notification is:

A “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a partnership firm or a firm.]

[Padmanathan Kollengode]

Just perused Notification No. 13/2017. I agree with shilpi maam and Kasturi sir. I stand corrected, RCM will not apply to MSCs.