TMI Blog2021 (1) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is having zero percent participation by way of equity or control. Being the similar issue raised by the applicant concerning the legal interpretation as clarified in Circular No. 76/50/2018-GST dated 31st December, 2018, we can state that the applicant does not fall under the governmental authority , as defined under Section2(16) of the IGST Act, 2017. We, therefore, conclude that the condition of with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under Article 243W of the Constitution would apply to both authorities whether set up by an Act of Parliament or a State Legislature; or established by any Government - thus, the applicant would not be eligible for claiming benefit of the exemption as provided in Sr. No.45 of the Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017, as amended from time to time, in respect of procurement of legal services (as a recipient). Whether services provided by Nirma are exempted under S. No. 4 of Notification No.12/2017-Central Tax (Rate)? - HELD THAT:- This entry exempts services by Central Government, State Government, Union Territory, local auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rma University, Sarkhej Gandhinagar Highway, Charodi, Ahmedabad, Gujarat-382481 is a University set up under a special Act passed by the Gujarat State Legislative Assembly and is registered with GST vide GSTIN 24AAATT6829N1ZY. A copy of the Act which lays down the constitution and entrusted functions of Nirma is enclosed. 2. The applicant is established with the objectives of developing the knowledge of science and technology, dental, medial, paramedical, physiotherapy, pharmacy, commerce, management, education and humanities for the advancement of mankind. It aims at establishing close linkage with the industry to make teaching, research and training at the university relevant to the needs of the economy at national and global level. 3. The applicant is empowered to create centres of excellence for providing knowledge, education, training and research facilities of high order in specific fields which would advance education. The relevant extract of Section 4 of the Nirma University Act has been reproduced herein below, for ready reference: (ii) to create centres of excellence for providing knowledge, education, training and research facilities of high order in specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2017-Central Tax (Rate) dated 28th June, 2017, as amended from time to time in respect of procurement of legal services? Part B- Whether services provided by Nirma are exempted under S. No. 4 of Notification No.12/2017-Central Tax (Rate)? Part C- Whether Nirma is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act? Statement containing the applicant s interpretation of law and/or facts, as the case may be, in respect of aforesaid question(s): 11. As can be seen from the Nirma University Act, the applicant would like to submit that they are set up by an Act passed by the Gujarat State Legislative Assembly and has been set up with the objectives of teaching, research and training at the university relevant to the needs of the economy at national and global level. During the Normal course of its operations, the University procures several input services including legal services. 12. The applicant refers to Notification No.13/2017-Central Tax (Rate) dated 28th June, 2017,which requires GST to be discharged under reverse charge mechanism in case of specific services. The list of services inter-alia includes: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation by way of equity or control, to carry out any function entrusted to a municipality under Article 243W would be applicable to body which is established by the Government. This means that the board/body set up by an Act of Parliament or State Legislatureis independent and is not bound by above condition. Once, the Organization is set up by an Act of Parliament or State Legislature, the same would become Governmental Authority from GST prospective. 18. Further, the applicant submitted that inference can be drawn from the fact that line item (i) is followed by ; whereas the line item (ii) is followed by , . This is indicative and suggestive to the interpretation that line item (i) is independent and line item (ii) should be read with the following condition. While interpreting this punctuation, full Bench of the Punjab and Haryana High Court in Rajindra Singh v. Kultar Singh [AIR 1980 P H 1: ILR (1979) 2 P H 486 (FB)] = 1979 (7) TMI 243 - PUNJAB AND HARYANA HIGH COURT held as follows: After the words administration of justice in Entry 3, there is a semicolon and this punctuation cannot be discarded as being inappropriate. The punctuation has been put up with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Constitution . It is apparent that the Authorities have considered it mandatory for a governmental authority to have been set up/established for the purpose of carrying out functions listed down in Article 243W of the Constitution of India. 22. In light of the above contradictions, the Applicant wishes to know whether they can merit the classification of Governmental Authority for the purpose of GST legislation and accordingly, claim benefit of the exemption notification in respect of procurement of legal services. PRT-B Discussion on whether services provided by Nirma University would be exempted under Sr. No.4 of the exemption Notification: 23. As discussed above, the Applicant would like to submit that the Applicant aims at disseminating, creating, preserving knowledge and understanding and making arrangements for training in higher education including professional education and allied fields. 24. The applicant wishes to understand if such service of providing higher education provided by them would qualify for exemption under Sr. No. 4 of the exemption notification. 25. From perusal of Article 243W, the applicant understands that one of the functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ields; (ii) to create centres of excellence for providing knowledge, education, training and research facilities of high order in specific fields of science, technical, dental, medial, paramedical, physiotherapy, pharmacy, commerce, management, education and humanities and other related professional education as per its current status and such other manner as develop in future, including continuing education and distance learning; 29. As a reason of this authority, the Applicant provides education, training and research facilities to students. The educational institutions has been incorporated for the welfare of mankind in accordance with statutory authority given by the law. The University is open to all irrespective of sex, religion, class, creed or opinion. Relevant extract is provided herein under: 5(1) No person shall be excluded from any office of the University or from membership of any of its authorities or from admission to any degree, diploma or other academic distinction or course of study on the sole ground of sex, race, creed, caste, class, place of birth, religious belief or political or other opinion. 30. Having said that, the Applicant would like to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one per cent. or more participation by way of equity or control, to carry out any function; 37. Considering the fact that Nirma University has been set up by a passing a separate Act, the line item extracted needs to be examined in detail. From review of the above mentioned line item, a question may arise as to whether the condition of fifty-one per cent. or more participation by way of equity or control, to carry out any function, is applicable to the body set up by an Act of Parliament. 38. As discussed earlier, usage of word or between (i) and (ii) coupled with the fact that clause (i) is followed by ; unlike the clause (ii) is followed by means that the condition of fifty-one per cent. or more participation by way of equity or control, to carry out any function, would be applicable to the body which is established by the Government. This means that the board/ body set up by an Act of Parliament or State legislature is independent and is not bound by above condition. 39. However, recently, a circular is issued vide reference No. 76/50/2018GST dated 31st December, 2018 wherein the clarity is provided on similar aspect or legal interpretation. Accordingly, to Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in Sr. No.45 of the Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017, as amended from time to time in respect of procurement of legal services? Question-2: Whether services provided by Nirma are exempted under S. No. 4 of Notification No.12/2017-Central Tax (Rate)? Question-3: Whether Nirma is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act? 46. Now, we first take up the 1st question, whether Nirma would be eligible for claiming benefit of the exemption for legal services as provided in Sr. No.45 of the Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017, as amended from time to time in respect of procurement of legal services? 46.1 In this regard, the applicant stated that during the normal course of its operations, the University procures several input services including legal services. Considering the wide definition of the term business , the applicant is of the view that they would be considered as a business entity from GST prospective. Accordingly, legal services received by them would be subject to tax under reverse charge mechanism. 46.2 The applicant ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to discharge any tax liability on procurement of legal services under reverse charge mechanism. 47. We find that Nirma University was established under a special act passed by the Gujarat State Legislative Assembly. The University Grants Commission (UGC) recognised it under section 2 (f) of the UGC Act. We further note that the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 exempts the Intra-state supplies of services including legal services. Further, Notification No.2/2018-Central Tax (Rate) dated 25.01.2018 amended Notification No.12/2017-Central Tax (Rate) dated 26.06.2017 and, thereby, legal services provided to a Central Government, State Government, Union Territory, local authority, Governmental Authority or Government entity were exempted. For proper appreciation of the case, relevant portion of the amended Entry of Sr. No. 45 of the said notification is reproduced herein below: Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (percent) Condition 45 Heading 9982 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act (TDS) in the context of Notification No. 50/2018-Central Tax dated 13.09.2018. 1. A doubt has arisen about the applicability of long line mentioned in clause (a) of Notification No. 50/2018-Central Tax dated 13.09.2018. 2. It is clarified that the long line mentioned in clause (a) in Notification No. 50/2018-Central Tax dated 13.09.2018 is applicable to both the items (1) and (ii) of clause (a) of the said Notification. Thus, an authority or board or any other body whether set up by an Act of Parliament or a State Legislature or established by any Government with fifty one percent or more participation by way of equity or control, to carry out any function would only be liable to deduct tax at source. 3. In other words, the provisions of Section 51 of the CGST Act, are applicable to only such authority or board or any other body whether set up by an Act of Parliament or a State Legislature or established by any Government in which fifty one percent or more participation by way of equity or control, is with the Government. 49.1 From the applicant s submission and the Nirma University Act, 2003, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil 53. On perusal of above entry, it amply clear that this entry exempts services by Central Government, State Government, Union Territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution. As already held in foregoing para, the applicant is not a Central Government, State Government, Union Territory, Local Authority or Governmental Authority. Further, we find that higher education is nowhere specified as an activity in relation to any function entrusted to a municipality under Article 243W of the Constitution. 54. In view of the above, we, therefore, hold that the higher education services provided by the applicant would not qualify for exemption provided under S. No. 4 of the exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. 55. We further note that Nirma University was established under a special act passed by the Gujarat State Legislative Assembly and the University Grants Commission (UGC) recognised it under section 2 (f) of the UGC Act. As they are providing higher education services, it is relevant to examine entry a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by an Indian Law. 55.3 In view of the above, we hold that only the services of higher education delivered as a part of curriculum by conducting degree courses by the applicant university, which leads grant of qualifications recognised by law, are entitled to avail exemption provided under Sl. No. 66 of the exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, as amended. 56. Now, we take up the last question is that whether the applicant is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act, 2017. 56.1 In this regard, we proceed to examine provisions of CGST Act, 2017, which mandates certain notified classes of assessee to deduct TDS under GST and to follow the relevant procedures. Section 51 of the CGST Act read with Notification No.50/2018-Central Tax dated 13.09.2018 mandates certain persons to undertake TDS deduction. We draw attention towards Sub-section (1) of Section 51 of the CGST Act, 2017, which reads as under: Section 51: Tax Deduction at Source: (1) Not with standing anything contrary containing in this Act, the Government may mandate, (a) department or establishment of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function; 57.1 The applicant has contended that the board/ body set up by an act of Parliament or State Legislature is independent and is not bound by the condition of fifty-one per cent. or more participation by way of equity or control, to carry out any function . 57.2 In this regard, we refer the Circular No.76/50/2018-GST dated 31st December, 2018 wherein CBEC has provided the clarity on similar aspect or legal interpretation. Relevant portion is reproduced herein below: Sr.No. Issue Clarification 4 Applicability of provisions of Section 51 of the CGST Act (TDS) in the context of Notification No. 50/2018-Central Tax dated 13.09.2018. 1. A doubt has arisen about the applicability of long line mentioned in clause (a) of Notification No. 50/2018-Central Tax dated 13.09.2018. 2. It is clarified that the long line mentioned in clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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