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CGST - Applicant, a non-profit organisation is engaged exclusively in supplying goods and services that are wholly exempt from tax, and, therefore, not liable to be registered: AAR

By TIOL News Service

KOLKATA, APRIL 17, 2018: THE Applicant is a non-profit organisation set up by the Central Government under Clause 17 of the Iron & Steel (Control) Order vide SO 1567 dated 07/04/1971. Apart from six members from the Iron & Steel industry, representing both the Public and the Private sectors, and one each, from the Railway Board, Export Promotion Council and Indian Statistical Institute, the Committee is chaired by a Joint Secretary, Ministry of Steel, Government of India.

The Applicant declares that it has not been registered under any of the repealed Acts and wants a ruling on whether it is required to be registered under the  CGST / WBGST Act, 2017.

The functions of the Applicant include management and operation of the Steel Development Fund and other funds accumulated under the Iron & Steel (Control) Order, 1956, study and analysis of and maintenance of a comprehensive database on market situation in the Iron & Steel Sector including fluctuation in market price, production, availability and movement of material etc.

From the statement of accounts for the year ending on 31/03/2017, it is revealed that the main source of the Applicant's income is interest accrued on the deposits and on the loans provided from the Steel Development Fund. A secondary source of income is the consideration received from sale of journals and periodicals (claimed as exempt under sl. No. 20 of notfn. 2/2017-CT(R)) and from renting accommodation in its guest houses (claimed as exempt under serial no. 1 of Notfn. 12/2017-CT(R) as amended by 32/3027-CT(R)).

The authority observed that the consideration received by way of interest on services like extending deposits, loans or advances is wholly  exempt under Serial no. 27 of the Exemption Notifications for Services  (Tariff head: 9971).

Nonetheless, on the ruling sought by the applicant, the Authority observed that Section 24 of the GST Act requires a person to be registered under certain circumstances even if his aggregate turnover does not exceed the threshold specified under Section 22(1) of the GST Act viz. when the person is required to pay tax under the Reverse Charge.

The Authority, therefore, held -

++ Applicant is engaged exclusively in supplying goods and services that are wholly exempt from tax, and, therefore, not liable to be registered in accordance with the provisions under section 23(1) of the GST Act, subject to the condition that the Applicant is not otherwise liable to pay tax under the Reverse Charge mechanism under Section 9(3) of the GST Act or 5(3) of the   IGST Act.

++ As the applicant is unregistered and not liable to be registered, the provisions of Reverse Charge under section 9(4) of the GST Act or 5(4) of the  IGST Act  will not apply.

RULING:

The Applicant is not required to be registered under the GST Act if he is not otherwise liable to pay tax under reverse charge under section 9(3) of the GST Act.

(See 2018-TIOL-07-AAR-GST)


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