TMI Blog2021 (11) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... rusted to a Municipality under article 243W of the Constitution - The renting of immovable property services by the applicant is not liable for exemption under the provisions of Entry No. (3) Of Notification No. 12/2017-CT(R) dated 28.06.2017. Whether TDS provisions will be applicable in case where the supply of services is exempt? - HELD THAT:- The impugned services supplied by the applicant are liable to tax and therefore not exempt. Thus the TDS provisions under the relevant section 51 of the GST Act are applicable in the subject case. As the Applicant is not registered under GST and provide services to Social Welfare Department (Samaj Kalyan Department), a Department of State Government, then whether TDS notification issued under section 51 would be applicable for deduction of TDS? - HELD THAT:- TDS notification issued under section 51 would be applicable for deduction of TDS in the subject case. In case TDS is deducted, whether applicant would be entitled for refund of the same? - HELD THAT:- The said question pertains to entitlement of refund and is not covered under Section 97 of the CGST Act, 2017 and therefore we refrain from answering this question. - GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions made by Ms Borade Shital Tukaram, are as under:- 2.1 Mr. Borade co-owns immovable property situated at Nashik, which is given on rent to Public Welfare Department (PWD), Maharashtra Government. The Applicant is one of the co-owners of immovable property. All the co-owners, including the Applicant, hold proportionate share in the property in three separate agreements. The rental income and co-owner details as are under: Sr.No. Particulars Agreement 1 Agreement 2 Agreement 3 1. Property name and address Plo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST/UTGST (in case of intra-state) on the payment made or credited to supplier w.r.t. procurement of taxable goods or services . 2.7 In terms of provisions of section 22 of CGST Act read with notification issued under IGST Act, the person, who is making intra / inter-state taxable supply and having an aggregate turnover upto prescribed limit computed on PAN India basis, has been exempted from obtaining registration. At present, the threshold for services in Maharashtra is INR 20 lacs. In view of the threshold, it can be said that TDS provisions are not applicable in the instant case. 2.8 Further as per subsection (5) of section 51, deductee can claim credit of TDS deducted in his credit ledger. It is also evident from this provision that the registered person can claim credit. Hence, this provision is applicable only in case of registered Supplier. 2.9 Even further, as per GSTR FORM -07 (TDS return), GSTIN of deductee is required to be provided since tax deducted would reflect into the electronic cash ledger of said deductee onto GSTN Portal. Given this, it can be said that in case of unregistered supplier, the said mechanism is not intended to be applicable. 2.10 Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. It can be observed that there are three conditions to satisfy for the exemption: a. Service provided should be a pure service b. Service should be provided, inter-alia, to State Government c. Service provided should be by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. 2.17 In this regard, we submit that the services provided are renting of immovable property services and thus, it s a pure service (as no specific goods are supplied). Further, the services are given to Samaj Kalyan Vibhag of State Government of Maharashtra (Social Welfare Department). 2.18 Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43W) 3. Planning for economic and social development 9. Safeguarding the interest of weaker sections of society, including handicapped and mentally retarded. 2.22 In the instant case the State Government is taking the property of rent for welfare of under-privileged section of the society and in particular, girls. Thus, as the services are provided to Samaj Kalyan Vibhag for Magasvargiya Mulinche Shashkiya Vastigruha the services will be covered under the functions entrusted under Article 243W and / or 243G. 2.23 Given the aforesaid as the services are covered under the Sr. No. 3 of Not. No. 12/2017-CT dated 28.06.2017 (as amended from time to time), the said services are exempt from GST. 2.24 Section 51 of CGST Act, 2017 is applicable in case of payment made or credited to the supplier (hereafter in this section referred to as the deductee ) of taxable goods or services or both. Hence, unless the supply is taxable , provisions of Section 51 of CGST Act will not be applicable. 2.25 Additionally, applicant is not registered for GST purposes (as applicant has exempt income). In this regard, the Law Committee of GST Council, through a Standard Operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in the subject application. During the course of the hearing the applicant submitted that a building has been constructed on the plots owned by the applicant along with other co-owners and the said building is given on lease to the `Samaj Kalyan Vibhag (Department of Social Welfare) of the State Government of Maharashtra for Magasvargiya Mulinche Shashkiya Vastigruha (Government Hostel for Girls from the Backward class). Thus, the applicant has submitted that the building constructed on the plots is used as a government residential accommodation for housing girls from the backward class, by the Government of Maharashtra. 5.3.1 The first revised question asked is, whether the services provided by the applicant to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls is exempt from GST. 5.3.2 We observe that, the first question pertains to liability of GST on the applicant, i.e. whether applicant is taxable or exempt under the GST Laws. 5.3.3 The applicant has submitted that the total amount received by her along with Ms Gayatri Tukaram Borade, co-owner in the property, per annum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the applicant regarding the admissibility of entry no. (3) of Notification No. 12/2017-CTR in the subject case we need to find a. whether the subject supply is a supply of Pure Services b. provided to the Central Government, State Government or Union territory or local authority or a Governmental authority c. by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. 5.3.7 Schedule II of the CGST Act, 2017 sets out the activities which are to be treated as supply of goods or supply of service wherein renting of immovable property is treated as supply of service. 5.3.8 Thus, we find that in the instant case, the supply of leasing of immovable properties by the applicant is a supply of services. The applicant has submitted that there is no supply of goods whatsoever, along with the supply of leasing services in the subject case and therefore we conclude that the subject activity is a supply of pure services (condition a mentioned in para 5.3.6 is satisfied). 5.3.9 Further, we observe that the said pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plans for economic development and social justice; (b) The implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule. Article 243G of the Constitution refers to a list of functions enumerated in the Eleventh schedule. Entries 26 and 27 of the Eleventh schedule which is relevant states the following: 26. Social welfare, including welfare of handicapped and mentally retarded. 27. Welfare of weaker sections, and of scheduled castes and the scheduled tribes. 5.3.13 The applicant has submitted that the Samaj kalyan Vibhag of the Government of Maharashtra has taken the immovable property on rent from the applicant to house the girls from the backward class communities which can be considered as a welfare measure undertaken by the Government for the under-privileged section of the society. Other than making this statement, the applicant has not submitted any evidence or submissions to state as to how her activities are covered under Article 243G/243W of the Constitution. There are no submissions made to show that the impugned services are supplied by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Question 1:- In the instant case, whether the services provided by us to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls is exempt from GST? Answer : Answered in the negative. Question 2:- Whether TDS provisions will be applicable in case where the supply of services is exempt? We also would like to draw attention to the fact that 97 (b) of CGST Act, 2017 covers the question on which advance ruling can be sought i.e. (b) applicability of a notification issued under the provisions of this Act . Further, the issue has been addressed in Dolphin Techno Waste Management Pvt. Ltd. [2020 (35) G.S.T.L. 413 (A.A.R. - GST - W.B.)], Mahalakshmi Mahila Sangha [2020 (37) G.S.T.L. 385 (A.A.R. GST - Kar.)] etc. Answer :- TDS provisions will be applicable in the subject case.. Question 3:- As the Applicant is not registered under GST and provide services to Social Welfare Department (Samaj Kalyan Department), a Department of State Government, then whether TDS notification issued under section 51 would be applicable for deduction of TDS? Answer :- Answered in the affirmative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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