TMI Blog2019 (8) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Competition Law and Market Regulation (iii) School of Corporate Governance Public policy (iv) School of Finance (v) School of Corporate Law (vi) Centre for E-governance (vii) Centre for Responsible Corporate Governance (viii) Centre for Micro Small Medium Enterprises (ix) Centre for Business Innovation (x) Centre for Institutional partnerships Corporate Communications (xi) Knowledge Resource Centre 4. For the purposes of learning and , development, providing metadata and implementation of projects in the field of corporate social responsibility, a body called National Foundation for Corporate Social Responsibility (NFCSR) was established at IICA in 2012 to be the apex national institution that aims to build an enabling environment for the corporate sector to work in partnership with the government, non-government and civil society organizations for effective contribution towards sustainable growth and development. It has been provided an initial corpus fund by the Ministry of Corporate Affairs, enabling India to take a lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies for 1 year. (b) Consequently, AICL gave its consent for implementation as per the following details from the detailed project report: (i) Installation of solar water pumps - 122 in Nos; (ii) Installation of solar lights 1230 in Nos; (iii) Sanitation (construction of toilets) - 3670 in Nos. 7. The relevant extracts from the MOU is produce below: (a) SCOPE OF THE WORK (i) The project Seeks to develop and improve village level facilities and infrastructure to mike significant difference in quality of life of the rural area. The specific objectives of the project are: a. Provision of drinking Water facility in covered Villages b. To provide solar street lights in villages c. To improve village sanitation by building household toilets and creating awareness (ii) Proposed project components: a. Provide one solar water lifting pump for a population of 1000 villagers b. Installing need-based solar street lights in selected villages c. Building household toilets and runni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CA is in the nature of grant as per para 2 of the Circular No. 127/09/2010, which States that Between the provider of donation/grant and the trainee there is no relationship other than universal humanitarian interest . In such a situation, service tax is not leviable, since the donation or grant-in-aid is not linked to specific trainee or training. 14. Similarly, in the arrangement between AICL and IICA there is no relationship, other than universal humanitarian interest, between the amount given by AICL and the charitable work done by IICA, as IICA carries full authority and decision making powers to decide as to who would be the recipient of the above mentioned services. PART-B 15. The activity done by IICA for the ultimate beneficiaries is a social activity/ without any consideration, therefore this would not fall under the definition of Supply given in section 7 of the CGST Act, 2017, and therefore, would not attract the provisions of GST Law. View-II 16. However, if the transaction between AICL and IICA is treated as supply from IICA to AICL as per the provisions of Section 9 of CGST Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real or existing danger. 25. Preservation as defined in Oxford dictionary:- The action of preserving, something. 26. Preservation as defined in Cambridge dictionary:- The act of keeping something the Same or of preventing it from being damaged. 27. Environment as defined in Environment (Protection) Act, 1986:- Environment includes water, air and land and the inter-relationship which exists among and between water, air and land, and human beings, other living creatures, plants, micro-organism and property. 28. From the definitions of preservation and environment, any activity which maintains the environment (water, air and land) in the present state or prevents it from further damage or destruction can be called as an activity relating to preservation of environment. 29. The activities of installation of solar water pumps and solar street lights through use of LEO technology. I. Traditional use of fossil fuels such as coal, oil and natural gas to generate electricity requires burning of fossil fuels which emits a number of air pollut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areness of preventive health, family planning or prevention of HIV infection. The activity of construction of toilets shall be succeeded by Creating mass awareness on hygiene and health and therefore should be exempted to the extent of creating public awareness of preventive health. (ii) As services provided by entity registered under Section 12AA of Income Tax Act, 1961 of charitable nature relating to preservation of environment including watershed, forest and wildlife. 32. In order to substantiate the importance of toilets preservation of environment, it pertinent to realise how open defecation impacts the environment and measures required to deal with this menace. Open defecation in its general sense refers to the practice whereby people go out in fields, bushes, forests, open bodies of water, or other open spaces rather than using the toilet to defecate. The environment suffers as result of open defecation because it introduces toxins and bacteria into the ecosystem in amounts that it cannot handle or break down at a time. Further, it is an important cause of water pollution and causes various waterborne diseases such as diarrhea, typhoid, choler ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other person but shall not include any subsidy given by the Central Government or a State Government: provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; 39. Section 2(52) of the CGST Act, 2017 reads as follows: goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, gross and things attached to or forming port of the land which are agreed to be severed before supply or under a contract of supply; 40. section 2(102) of the CGST Act, 2017 reads as follows: services means anything other than goods, money and securities but includes activities relating to the use money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; 41. Section 2(119) of the CGST Act, 2017 reads as follows: works contract means a contract for bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. **** (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipients if he is the person liable for paying the tax in relation to the supply of such goods or services or both. (4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as, the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both, (5) The government may, on the recommendations of the Council, by notification specify categories of services the tax on intra-state supplies of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llation of solar water pumps, solar lights and construction of toilets in the instant case are covered under charitable activities as M/s AICL would not be charging any consideration for uses of these facilities rural people. So, the actual cost incurred by M/s AICL towards construction/ installation of public activities would be Nil rated supply as per Notification No. 12/2017 dated 23.06.2017 CGST (Rate). However, as per 1.3.1 (d) of the statement of relevant facts from the transaction submitted applicant, it is clear that M/s IICA will be charging additional compensation towards management of the project. Hence, the supply in the form of management of the project by M/s IICA to M/s AICL is not covered under charitable activities and hence, liable to GST. DISCUSSIONS: 46. The applicant is registered as a society under the Societies Registration Act, 1860. It is a Government of India enterprise and is engaged in implementation of projects related to Corporate Social Responsibility (CSR). It has signed a Memorandum of Understanding (MoU) dated 16.01.2017 with Agriculture Insurance Company of India Limited (AICL) for implementation of Integrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rastructure and assets provided. 51. Efforts have been made to identify and Select designs and models of solar street tight and solar water pumps which are latest state-of-the-art, high quality and long lasting. Household toilets would be built on government approved design and as far as possible local labour would be engaged. 52. There is an inbuilt maintenance provision designed at the execution level through joint efforts of service provider, community and implementing agency. Households would be trained for use and maintenance of toilets. 53. The Project envisages to meet the daunting Challenge of infrastructure development in unserved and underserved villages. The improved facilities are likely to have, not only direct benefits, but also indirect spin offs and overall upliftment in the status of villages. Intervention-wise parameters for providing infrastructure facilities Intervention Intervention outreach selection parameters Solar water pump facility One pump to be installed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... build Sanitation facilities in their dwellings. Total 3760 beneficiaries would be covered under the project in all five states. 58. objectives: 1. Eradicating the practice of open defecation. 2. Ensuring clean, healthier environment. 3. Sustainable behaviour change with prpvision of sanitary facilities in villages. 59. As per clause of the MoU, the total Cost of the above mentioned project is ₹ 20,35,76,800 which shall be borne by AICL. 61. A person is liable to pay GST on its transactions which are falling within the scope of supply as prescribed in section 7 of CGST Act, 2017. appears that the activities of the applicant under the MoU with AICL are covered the abovementioned definition of Supply under Section 7 of the CGST Act, 2017. However, the applicant his claimed that the amount received by them from AICL is not in the nature of consideration and hence, their activities under the said MoU cannot be treated as Supply of goods or services. 63. GST is payable on supply of goods and services under Section 9 of the CGST Act, 2017 if such goods and services are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount received from AICL can be treated as grant-in-aid, which may be non-taxable. (ii) 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. Question No. 1: 65. The first issue mentioned above is whether the amount paid by M/s AICL to the applicant is in the nature of consideration for supply of good or services or the same can be considered as grant-in-aid. The applicant has claimed that the amount received by them from AICL is not covered in the definition of consideration as per Section 2(31) of the CGST Act, 2017. The first argument of the applicant is that the payment of money by AICL to them cannot be called consideration as the applicant is not providing any services to M/s AICL but the agreed services are being supplied directly to the ultimate recipients / beneficiaries of the scheme. The applicant has claimed that the whole activity can be divided into two parts. The first part consist of payment of the money / amount by AICL to the applicant for which no services are provided by them to AICL. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Question No. 2: 69. The second issue for decision is whether the said services supplied by the applicant are covered under S. No. 1 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 under which services supplied by the entities registered under Section 12AA of the Income Tax Act, 1951 are fully exempted from payment of CGST provided that the said services are by way of any charitable activity. Also, whether the said services are covered in S.No. 76 of the said notification under which services by way of public convenience such as provision of facilities of bathrooms, washroom, lavatories, urinal or toilets are exempted provided they are covered under Heading 9994 of Tariff. 70. It is also observed that the order of registration issued to the applicant under Section 12AA / 12A of the Income Tax Act, 1961, contain the following: i. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e health, family planning or prevention of HIV infection; (ii) advancement of religion, spirituality or yoga; (iii) advancement of educational programmes or skill development relating to, - (A) abandoned, orphaned or homeless children; (B) physically or mentally abused and traumatized persons; (C) prisoners; or (D) persons over the age of 65 years residing in a rural area; (iv) preservation of environment including watershed, forests and wildlife; 74. The applicant has claimed that the services supplied by them are covered in Clause (i) (B) and (iv) of the above definition of charitable activities. Hence, the activity installation of solar water pumps and installation of lights would be covered under S.No. I of Notification no. 12/2017 -Central Tax (Rate) dated 28.6.2017. 75. However, it is observed that Clause (i) (B) of definition of charitable activity covers: activities relating public health by way of public awareness of preventive health, family planning or preservation of HIV infection. 76. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
