IIMs as Specified Persons for GST TDS and Determining the Two-and-a-Half Lakh Threshold

This ruling (February 2026) provides critical clarity for the Indian Institutes of Management (IIMs) and other statutory bodies regarding their obligations as “Deductors” under the GST regime. The Gujarat Authority for Advance Ruling (AAR) addressed two primary questions: the status of an IIM as a “specified person” and how the ₹2.5 lakh threshold applies to contracts.

I. Status of IIM as a ‘Specified Person’ for TDS (Section 51)

The Legal Dispute

Does an IIM, established under the IIM Act, 2017 as an “Institution of National Importance,” fall under the category of specified persons mandated to deduct TDS under Section 51?

The Ruling

The AAR ruled in favour of the Revenue, holding that IIMs are obliged to deduct TDS:

Statutory Body Status: The AAR noted that the notification covers “an authority or a board or any other body set up by an Act of Parliament.”
Regulatory Control: The IIM Act demonstrates “substantial regulatory control” by the Central Government over funding, audits (CAG), and appointments.
Control vs. Operations: “Control” for GST purposes refers to administrative and financial oversight, not day-to-day management. As a statutory body with government funding and accountability to Parliament, the IIM qualifies as a Specified Person.

II. Threshold Determination: Contract Value vs. Invoice Value

The Legal Dispute

How is the ₹2.5 lakh threshold calculated? Does it apply per invoice, per contract, or per supplier?

The Ruling

The AAR provided a clear, taxpayer-friendly breakdown on how to calculate the threshold:

The Contract is Supreme: TDS applicability is determined by the Total Contract Value, excluding GST. It does not matter if individual invoices are for smaller amounts; if they belong to a single contract exceeding ₹2.5 lakhs, TDS must be deducted from every payment.
Individual Contracts: If a supplier has separate contracts for different services each valued at ₹1 lakh, no TDS is required, even if the total payment to that supplier exceeds ₹2.5 lakhs.
Recurrent Supply: If a single contract covers a recurring service over time, the total value of that contract determines the threshold.
Exclusion of Taxes: For determining the ₹2.5 lakh limit, the value should be taken excluding CGST, SGST, IGST, and Cess.

Summary of TDS Compliance for IIMs

TDS Rate: 2% (1% CGST + 1% SGST for intra-state; 2% IGST for inter-state).
Mandatory Registration: Deductors must obtain a separate GST registration (Form GST REG-07).
Deadline: TDS must be deposited by the 10th of the following month.
Certificate: A TDS certificate in Form GSTR-7A must be issued to the supplier.

AUTHORITY FOR ADVANCE RULING , GUJARAT

Indian Institute of Management, In re

SUSHMA VORA and VISHAL MALANI, Member

No. GUJ/GAAR/R/2026/06

FEBRUARY 24, 2026

Paritosh Gupta, Adv. Patel Mit Dineshbhai, Asstt. Commissioner for the Applicant.

JUDGMENT

Brief facts:

1. M/s. Indian Institute of Management, Ahmedabad, Dr. Vikram Sarabhai Marg, Near Andhajan Mahamandal Vastrapur, Ahmedabad-380015 [for short-‘applicant’] is registered under GST and their GSTIN is 24AAATI1247F1Z4.

2. The Applicant is a prestigious educational institution in India established in 1961. The Indian Institute of Management Act, 2017 declared certain Institutes of Management, including the Applicant to be ‘institutions of national importance’ with a view to empower these institutions to attain standards of global excellence in management, management research and allied areas of knowledge.

3. Section 51 of the CGST Act, 2017 provides for Tax Deduction at Source (TDS) and states that the Government may mandate certain categories of persons to deduct tax at source, at the rate of one percent from payments made to suppliers, where the total value of supply under a contract exceeds two lakh and fifty thousand rupees. Vide Notification No. 50/2018-Central Tax dated 13.09.2018, the following categories of persons were notified for the purpose of Section 51:

“(a) an authority or a board or any other body,-

(i)

set 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”.

4. Circular No. 76/50/2018-GST dated 31.12.2018, issued by the CBIC, clarifies that the 51% government equity or control requirement applies to both statutory bodies set up by an Act of Parliament or a State Legislature and entities established by the Government. However, the Supreme Court in its judgment dated 13.10.2023 rendered in the case of Commissioner, Customs Central Excise and Service Tax v. Shapoorji Pallonji and Company (P.) Ltd. GST 547/79 GSTL 145 (SC)/[(2023) 11 Centax 180 (SC)] has interpreted a similarly worded notification under the erstwhile service tax regime and held that the requirement of 90% (or 51%) government participation by way of equity or control applies only to entities “established by Government” and not to those “set up by an Act of Parliament”.

5. Though the said judgment pertained to a different statutory regime, the similarity in the phrasing of Notification No. 50/2018-Central Tax dated 13.09.2018 has given rise to uncertainty regarding the correct interpretation of the said Notification, which has prompted the applicant to approach this Authority for a ruling on the following question:-

“Whether the Applicant, established under the Indian Institutes of Management Act, 2017 (an Act of Parliament), is a ‘specified person’ under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018, and whether the threshold of Rs. 2,50,000 for deduction of tax at source is to be determined on the value of supply under each contract (excluding GST), regardless of the number of invoices issued”

For the sake of ease, we reframe the question into two parts as under :-

Q.1 Whether the Applicant, established under the Indian Institutes of Management Act, 2017 (an Act of Parliament), is a ‘specified person’ under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018.

Q.2 Whether the threshold of Rs. 2,50,000 for deduction of tax at source is to be determined on the value of supply under each contract (excluding GST), regardless of the number of invoices issued”

6. The applicant’s interpretation of law in respect of the said question is as under :-

(i)

The interpretation adopted by the Hon’ble Supreme Court in Commissioner of Central Excise and Service Tax v. Shapoorji Pallonji and Company Pvt. Ltd. Commissioner, Customs Central Excise and Service Tax v. Shapoorji Pallonji and Company (P.) Ltd. GST 547/79 GSTL 145 (SC)/[(2023) 11 Centax 180 (SC)] may not be applicable in the context of Notification No. 50/2018-Central Tax dated 13.09.2018 issued under the CGST Act.

(ii)

The said clarification was issued under Section 168 of the CGST Act and reflects the contemporaneous administrative understanding and intent behind the Notification. Accordingly, the Circular must be followed for determining the scope and applicability of the Notification under Section 51 of the CGST Act.

(iii)

Despite the judgment of the Hon’ble Supreme Court in Commissioner of Central Excise and Service Tax v. Shapoorji Pallonji and Company Pvt. Ltd. having been delivered in October, 2023, the CBIC has not withdrawn or modified Circular No. 76/50/2018-GST dated 31.12.2018.

(iv)

Section 9(1) of the said Indian Institute of Management Act, 2017 explicitly provides that every IIM shall be a not-for-profit legal entity and no part of its surplus shall be distributed for any purpose other than the growth and development of the Institute. Consequently, the Applicant has no share capital or equity holding structure in which the Central or State Government may participate. The condition of 51% or more participation by way of equity, as stipulated in clause (a) of Notification No. 50/2018-Central Tax dated 13.09.2018 and clarified by Circular No. 76/50/2018-GST, has, therefore, no application in the case of the Applicant.

(v)

The composition of the Applicant’s Board of Governors, as prescribed under Section 10(2) of the Indian Institutes of Management Act, 2017 (as amended), further establishes that the Central or State Government does not exercise majority control over the Institute, as only 2 out of approximately 14 members of the Board represent the Government. This clearly indicates that the Government does not exercise 51% or more control in the affairs or functioning of the Applicant Institute.

(vi)

The Central Government’s role is confined to general oversight and the power to frame Rules under the Act. These powers do not translate into day-today operational control or decision-making authority. The Institute retains full academic, administrative, and financial autonomy. The term “control” as contemplated in the Circular and Notification must be interpreted to refer to substantive, effective control, and not mere statutory oversight or regulatory powers typical of public bodies.

(vii)

The contract value threshold of INR 2.5 lakhs for discharging TDS liability, is as under:-

Contract Value: The threshold of INR 2.5 lakhs applies to the total value of supply under a contract, excluding the tax payable under the GST Acts.

Individual Invoices: If multiple invoices are raised under a single contract, and the cumulative value exceeds INR 2.5 lakhs, TDS would be applicable even if individual invoices are below this threshold.

Separate Contracts: Each contract should be considered separately for the purpose of applying the threshold. If the Querist enters into multiple contracts with the same supplier, each contract would be evaluated independently to determine if its value exceeds INR 2.5 lakhs.

7. Personal hearing was granted on 06.02.2026 wherein Shri Paritosh Gupta, Advocate appeared for the applicant and Shri Patel Mit Dineshbhai, Assistant Commissioner (ST-1), Unit-9, SGST for the Department. Shri Gupta reiterated the facts & grounds as stated in the application. He also fairly admitted that the Supreme Court judgement would prevail over the Board’s Circular and therefore, the applicant would be liable to pay TDS.

Discussion and findings

8. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same, except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act.

9. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made both oral and written during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant’s submission/interpretation of law in respect of question on which the advance ruling is sought.

10. We find that there are two short issues to be decided –

(i)

whether the applicant would be liable to deduct TDS under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018.

(ii)

If yes, whether the threshold of Rs. 2,50,000 for deduction of tax at source is to be determined on the value of supply under each contract (excluding GST), regardless of the number of invoices issued.

11. The applicant’s contention is that they would not be liable to deduct TDS as they do not fall under the definition of specified person under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018. Before proceeding, it would be prudent to reproduce the relevant provisions which deal with TDS and the notification issued under the said provisions.

Section 51 of the CGST Act, 2017:

“Notwithstanding anything to the contrary contained in this Act, the Government may mandate,-

(a)

a department or establishment of the Central Government or State Government; or

(b)

local authority; or

(c)

Governmental agencies; or

(d)

such persons or category of persons as may be notified by the Government on the recommendations of the Council,

(hereafter in this section referred to as “the deductor”) to deduct tax at the rate of one per cent from the payment made or credited to the supplier (hereinafter in this section referred to as “the deductee”) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees .”

Notification No. 50/2018-Central Tax dated 13.09.2018

In exercise of the powers conferred by sub-section (3) of section 1 of the Central Goods and Services Tax Act, 2017 (12 of 2017) and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue No. 33/2017-Central Tax, dated the 15th September, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 1163 (E), dated the 15th September, 2017, except as respects things done or omitted to be done before such supersession, the Central Government hereby appoints the 1st day of October, 2018, as the date on which the provisions of section 51 of the said Act shall come into force with respect to persons specified under clauses (a), (b) and (c) of sub-section (1) of section 51 of the said Act and the persons specified below under clause (d) of sub-section (1) of section 51 of the said Act, namely:-

(a) an authority or a board or any other body, –

(i) set 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;

* * * *

12. Thus, Section 51 of the CGST Act, 2017 gives power to the Central Government to mandate a department or establishment of the Central Government or State Government; or a local authority; or Governmental agencies; or such persons or category of persons as may be notified by the Government on the recommendations of the Council, to deduct tax @ 1 % from the payment made or credited to the supplier of supplies made, where the total value of such supply, under a contract, exceeds Rs. 2.5 lakhs. Further, the persons or category of persons mentioned under Section 51 (d) of the Act have been notified under Notification No. 50/2018-CT dtd. 13.09.2018. These are – an authority or a board or any other body, set up by an Act of Parliament or a State Legislature; or established by any Government, with fifty-one per cent or more participation by way of equity or control, to carry out any function has been notified as the specified persons.

13. The dispute, as per the applicant, has arisen because of the interpretation of the Notification No. 50/2018-CT by the Board, which is in contradiction to the interpretation of a similarly worded notification by the Supreme Court. The Board vide Circular No. 76/50/2018-GST dated 31.12.2018 has clarified that the long line mentioned in Clause (a) of the Notification No. 50/2018-CT i.e. “with fifty-one per cent. or more participation by way of equity or control, to carry out any function” is applicable to both the items (i) and (ii) of Clause (a) of the said notification. In other words, the provisions of Section 51 are applicable only to such authority or a board or any other body set up by an Act of parliament or a State legislature or established by any Government in which fifty-one per cent. or more participation by way of equity or control is with the Government. However, in 2023, the Supreme Court while dealing with a similarly worded notification in the case of Shapoorji Pallonji and Company (P.) Ltd. case (supra) under the erstwhile service tax regime had held that the long line “with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution” applies only to entities “established by Government” and not to those “set up by an Act of Parliament”. For the sake of clarity, the relevant part of notification No. 25/2012-ST dtd. 20.06.2012 as amended by Notification No. 2/2014-ST dtd.30.01.2024, which was dealt with by the Supreme Court, is as under:-

(s) “governmental authority” means an authority or a board or any other body;

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by Government,

with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;”

14. From the above, it is clear that the wordings of both the Notifications i.e. the one which we are dealing in the present case and that dealt with by the Supreme Court, are substantially the same. The argument of the applicant is that the interpretation given by the Supreme Court in Shapoorji Paloonji & Company Pvt Ltd. may not be applicable in the context of the current notification i.e. 50/2018-CT because the judgment was rendered under the service tax regime and it involved a detailed inquiry into the legislative intent. However, in the current notification, the legislative intent is very clear by way of clarification by the Board vide Circular No. 76/50/2018-GST dated 31.12.2018 and more importantly, in absence of any revision or withdrawal of the Circular by the Government, post the judgement by the Supreme Court.

15. We, however, do not agree with the submissions of the applicant. We find that though the Supreme Court has spoken about the legislative intent while interpreting the notification in Shapoorji Paloonji & Company Pvt Ltd., it has in depth interpreted the wording of the notification, which we reproduce below:-

“16. While the aforesaid interpretation of amended clause 2(s) has been upheld by the Patna High Court, the appellants have countered the same by submitting that the amended definition of “governmental authority” as in clause 2(s) should be interpreted in a manner so as to make the long line under clause 2(s) applicable to both sub-clause (i) and sub-clause (ii). In other words, as per the appellants, to qualify as a “governmental authority” under clause 2(s)(i), such authority, board or body must not only be a statutory authority set up by an Act of Parliament or a State Legislature but must also have 90% or more participation of the Government by way of equity or control to carry out any like function that a municipality under Article 243W of the Constitution is entrusted to discharge.

17. We have no hesitation to disagree with the latter interpretation sought to be placed by the appellants, for the reasons that follow.

18. In Superintendent & Legal Remembrancer, State of West Bengal v. Corporation of Calcutta [(1967) 2 SCR 170], a nine-judge Bench of this Court, relying upon Craies’ On Statute Law (6th edn.), stated that where the language of a statute is clear, the words are in themselves precise and unambiguous, and a literal reading does not lead to absurd construction, the necessity for employing rules of interpretation disappears and reaches its vanishing point.

19. This Court in Union of India & Ors. v. Ind-Swift Laboratories Ltd. [(2011) 4 SCC 635 = 2011 (265) E.L.T. 3 (S.C.) = [2011] 30 STT 461 (SC)], held that harmonious construction is required to be given to a provision only when it is shrouded in ambiguity and lacks clarity, rather than when it is unequivocally clear and unambiguous.

20. What is plain and ambiguous from a bare reading of a provision under consideration must be interpreted in the same way as it has been stipulated and not in a way that it presumes deficiency and radically changes the meaning and context of the provision. This is the view expressed in the decision of a five-judge Bench of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. [(1961) 2 SCR 189]. The relevant passage therefrom reads as under:

“10. ………. In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency.”

21. It is a well-established principle of statutory interpretation that any authority, entrusted with the function of legislating, legislates for a purpose; it can, thus, safely be assumed that it will not indulge in unnecessary or pointless legislation. This Court, in Utkal Contractors & Joinery (P.) Ltd. v. State of Orissa [(1987) 3 SCC 279], lucidly explained thus :

“9. ……… It is again important to remember that Parliament does not waste its breath unnecessarily. Just as Parliament is not expected to use unnecessary expressions, Parliament is also not expected to express itself unnecessarily. Even as Parliament does not use any word without meaning something, Parliament does not legislate where no legislation is called for. Parliament cannot be assumed to legislate for the sake of legislation; nor can it be assumed to make pointless legislation. Parliament does not indulge in legislation merely to state what it is unnecessary to state or to do what is already validly done. Parliament may not be assumed to legislate unnecessarily.”

22. Having noticed some of the precedents in the field of interpretation of statutes, we now move on to a little bit of English grammar. The word “or” as well as the word “and” is a conjunction; and it is well known that a conjunction is used to join words, phrases, or clauses. On how the conjunctions “or” and “and” are to be read, guidance could be drawn from authoritative texts and judicial decisions. As per Justice G.P. Singh’s Principles of Statutory Interpretation, the word “or” is normally disjunctive while the word “and” is normally conjunctive. In English law, the position is clear as crystal, as explained by Lord Scrutton in Green v. Premier Glynrhonwy Slate Co. [(1928) 1 K.B. 561, page 569] that one does not read “or” as “and” in a statute unless one is obliged, because “or” does not generally mean “and” and “and” does not generally mean “or”.

23. When the meaning of the provision in question is clear and unambiguous by the usage of “or” in clause 2(s), there remains no force in the submission of Ms. Bagchi that “or” should be interpreted as “and”. In our opinion, the word “or” employed in clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word “or” in clause 2(s) clearly appears to us to have been used to reflect the ordinary and normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. We are fortified in our view by the decision of this Court in Sri Jeyaram Educational Trust v. A.G. Syed Mohideen [(2010) 2 SCC 513], where it was held thus:

“11. It is now well settled that a provision of a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a court should open its interpretation toolkit containing the settled rules of construction and interpretation, to arrive at the true meaning of the provision. While using the tools of interpretation, the court should remember that it is not the author of the statute who is empowered to amend, substitute or delete, so as to change the structure and contents. A court as an interpreter cannot alter or amend the law. It can only interpret the provision, to make it meaningful and workable so as to achieve the legislative object, when there is vagueness, ambiguity or absurdity. The purpose of interpretation is not to make a provision what the Judge thinks it should be, but to make it what the legislature intended it to be.”

24. In the present case, the word “or” between sub-clauses (i) and (ii) indicates the independent and disjunctive nature of sub-clause (i), meaning thereby that “or” used after sub-clause (i) cannot be interpreted as “and” so as to tie it with the condition enumerated in the long line of clause 2(s) which is applicable only to sub-clause (ii).

25. Applying a different lens, let us test the worth of Ms. Bagchi’s submission in the light of the punctuations in clause 2(s). It has been held by a Bench of nine Hon’ble Judges of this Court in Kantaru Rajeevaru v. Indian Young Lawyers Association & Ors. [(2020) 9 SCC 121, para 18] that when a provision is carefully punctuated and there is doubt about its meaning, weight should undoubtedly be given to the punctuation; however, though a punctuation may have its uses in some cases, but it cannot certainly be regarded as a controlling element and cannot be allowed to control the plain meaning. While so observing, this Court considered several decisions as well as the punctuation comma in the relevant provision of the Supreme Court Rules, 2013.

26. What follows is that punctuation, though a minor element, may be resorted to for the purpose of construction.

27. In the present case, the use of a semicolon is not a trivial matter but a deliberate inclusion with a clear intention to differentiate it from sub-clause (ii). Further, it can be observed upon a plain and literal reading of clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii) closes with a comma. This essentially supports the only possible construction that the use of a comma after sub-clause (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause (i), the scope of which ends with the semicolon. We are, therefore, of the opinion that the long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after subclause (i), followed by the word “or”, has established it as an independent category, thereby making it distinct from sub-clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word “and” and without the punctuation semicolon. While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define “governmental authority” whichever way it wished; however, “governmental authority” was re-defined with a purpose to make the clause workable in contra-distinction to the earlier definition. Therefore, we cannot overstep and interpret “or” as “and” so as to allow the alternative outlined in clause 2(s) to vanish.

28. Let us consider the problem from a different angle. The revised definition of “governmental authority” and the few punctuations in the definition (two semicolons and two commas) and the conjunction ‘or’ have been noticed above. Literally read, the conjunction ‘or’ between sub-clauses (i) and (ii) clearly divides the two clauses in two parts with the first part completely independent of the second part. The first part is by itself complete and capable of operating independently. A construction leading to an anomalous result has to be avoided and to so avoid, it has to be held that the long line of clause 2(s) starting with “with 90%” and ending with “Constitution” qualifies sub-clause (ii); and, if the conjunction ‘or’ is to be read as ‘and’, meaning thereby that the portion “with 90% . Constitution” has to be read as qualifying both sub-clauses (i) and (ii), then the intention of redefining “governmental authority” would certainly be defeated. As discussed earlier, the purpose for which “governmental authority” was re-defined must have been to make it workable. We cannot, therefore, resort to a construction that would allow subsistence of the unworkability factor. Assuming what Ms. Bagchi contended is right, it was incumbent for the appellants to bring to our notice, if not by way of pleading, but at least with reference to the relevant statutes, which of the particular authorities/boards/bodies are created by legislation – Central or State – “with 90% or more participation by way of equity or control by Government”. Each word in the definition clause has to be given some meaning and merely because promoting educational aspects is one of the functions of a municipality in terms of Article 243W of the Constitution read with Schedule XII appended thereto is no valid argument unless equity or control by the Government, to the extent of 90%, is shown to exist qua the relevant authority/board/body. Incidentally, neither is there any indication in the petition nor has Ms. Bagchi been able to disclose the identity of any such authority/board/other body which is covered by her argument. No such identified authority/board/body covered by the aforesaid construction of the definition of “governmental authority” in clause 2(s) of the Clarification Notification, which the appellants appeal to us to accept, having been brought to our notice, we are unable to find any fault in the decisions of the Patna High Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL.”

[Emphasis supplied]

Thus, it is clear that the Supreme Court has applied the principles of statutory interpretation to arrive at the above findings and has not based its interpretation solely on the intention of the legislature.

16. This bring us to the next question-the clarificatory Circular No. 76/50/2018-GST dated 31.12.2018 issued by the Board, which is in contradiction to the interpretation by the Supreme Court. Firstly, the said circular was issued prior to the judgement of the Supreme Court. Secondly, just because the said circular has not been withdrawn till date does not mean that we are bound to follow the said Circular. The Supreme Court in Columbia Sportswear Company v. DIT (11) SCC 224 held that as the Advance Ruling binds the applicant and the Department, the Authority is a body acting in a judicial capacity and is a Tribunal within the meaning of the expression in Articles 136 and 227 of the Constitution. Further, the Supreme Court in the case of CCE v. Minwool Rock Fibre Ltd. [2012] 278 ELT 581 (SC) has held that Circular/Instructions issued by the CBEC are not binding on quasi-judicial authorities and courts. Therefore, this Authority being a body acting in a judicial capacity is bound to follow the interpretation laid down by the Supreme Court over the clarificatory Circular issued by the Board.

17. Even, if we accept the contention of the applicant that the interpretation as clarified by Circular No. 76/50/2018-GST dated 31.12.2018 is applicable, we feel that it would not advance the applicant’s cause. As per the applicant, they are a not-for-profit autonomous body corporate and is not a company or corporation having any equity structure. This is because, Section 9(1) of the Indian Institutes of Management Act, 2017 explicitly provides that every IIM shall be a not-for-profit legal entity and no part of its surplus shall be distributed for any purpose other than the growth and development of the Institute. Consequently, the Applicant has no share capital or equity holding structure in which the Central or State Government may participate. Therefore, the condition of 51% or more participation by way of equity, as stipulated in clause (a) of Notification No. 50/2018-Central Tax dated 13.09.2018 and clarified by Circular No. 76/50/2018-GST, has no application in the case of the Applicant. Moreover, the composition of the Applicant’s Board of Governors, as prescribed under Section 10(2) of the Indian Institutes of Management Act, 2017 (as amended), further establishes that the Central or State Government does not exercise majority control over the Institute, as only 2 out of approximately 14 members of the Board represent the Government. This clearly indicates that the Government does not exercise 51% or more control in the affairs or functioning of the Applicant Institute. Apart from the limited nomination of two members to the Board, the Central Government’s role is confined to general oversight and the power to frame Rules under the Act. These powers do not translate into day-to-day operational control or decision-making authority. The Institute retains full academic, administrative, and financial autonomy. In this regard, the term “control” as contemplated in the Circular and Notification must be interpreted to refer to substantive, effective control, and not mere statutory oversight or regulatory powers typical of public bodies.

18. We do not subscribe to the applicant’s view that just because only 2 out of approximately 14 members of the Board represent the Government, the control of the Government is less than 51%. We also do not agree that the Central Government’s role is confined to general oversight and the power to frame Rules under the Act. We observe that the Central Government has substantial control over the applicant. We have found this after going through the various provisions of The Indian Institutes of Management Act, 2017 (as amended vide The Indian Institutes of Management Act, 2023). The relevant sections of the Act are reproduced below:-

Section 8 : * **

Provided further that every such Institute shall be a Central Educational Institution for the purposes of the Central Educational Institutions (Reservation in Admission) Act, 2006.

Section 10A : (1) The President of India shall be the Visitor of every Institute.Section 11: * * *

(2) Without prejudice to the provisions of sub-section (1), the Board shall have the following powers, namely:

* * *

(i) to create academic, administrative, technical and other posts and to make appointments thereto

Provided that the cadre, the pay scales, allowances and term of employment of such posts shall be such as may be determined by the Central Government;

** *

(5) The Board shall, through an independent agency or group of experts, within a period of three years from the date of incorporation of the Institute, and thereafter at least once every three years, evaluate and review the performance of the Institutes, including its faculty, on the parameters of long term strategy and rolling plans of the Institutes and such other parameters as the Board may decide and the report of such review shall be placed in public domain

* * *

(7) The report of the evaluation and review under sub-section (5) shall be submitted by the Board to the Central Government along with an action taken report thereon.

* * *

(9) The Board shall in the exercise of its power and discharge of its functions under this Act, be accountable to the Central Government.

Section 12 : * * *

(3) A member of the Board, other than a nominee of the Central Government or the State Government, who fails to attend three consecutive meetings of the Board without permission of the Chairperson, shall cease to be a member of the Board.

Section 16:- (1) The Director shall be the Chief Executive Officer of the Institute and shall provide leadership to the Institute and be responsible for implementation of the decisions of the Board.

(2) The Director shall be appointed by the Board with prior approval of the Visitor, in such manner and subject to such terms and conditions of service as may be prescribed.

* ** *

(7) The Board, with prior approval of the Visitor, may remove from office the Director, who-

(a) has been adjudged as an insolvent; or

(b) has been convicted of an offence which, in the opinion of the Board, involves moral turpitude; or

(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a Director; or

(e) has so abused his position or so conducted himself as to render his continuance in office prejudicial to the public interest:

* * *

(10) The services of the Director may be terminated by the Visitor, in such manner as may be prescribed

Section 21:- For the purpose of enabling the Institutes to discharge their functions efficiently under this Act, the Central Government may, after due appropriation made by Parliament by law in this behalf, pay to every Institute such sums of money in such manner as it may think fit

Section 23:- * * *

(3) The accounts of every Institute shall be audited by the Comptroller and Auditor General of India and any expenditure incurred by audit team in connection with such audit shall be payable by the Institute to the Comptroller and Auditor-General of India.

(5) The accounts of every Institute as certified by the Comptroller and Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament in accordance with such procedure as may be laid down by the Central Government.

Section 28:- * * *

(4) The annual report of each Institute shall be submitted to the Central Government who shall, as soon as may be, cause the same to be laid before both Houses of Parliament.

Section 29:- (1) With effect from such date as the Central Government may, by notification, specify in this behalf, there shall be established a Coordination Forum for all the Institutes.

(2) The Coordination Forum shall consist of the following members, namely :-

(a) an eminent person to be nominated by the Visitor as Chairperson:

* * *

Section 30: (1) The Coordination Forum shall facilitate the sharing of experiences, ideas and concerns with a view to enhancing the performance of all Institutes.

Section 32: Every Institute shall furnish to the Central Government such returns or other information with respect to its policies or activities as the Central Government may, for the purpose of reporting to the Parliament or for the making of policy, from time to time, require.

Section 34: (1) The Central Government may, by notification, make rules, for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :-

(a) such other powers and duties of the Board under clause (w) of sub-section (2) of section 11;

(b) the term and conditions of service of the Director under sub-section (2) of section 16;

(c) the travelling and such other allowances payable to the members of the Coordination Forum for attending its meetings or its Committees under sub-section (4) of section 29;

(d) any other matter which is to be or may be, prescribed or in respect of which provision is to be made by the Central Government by rules

Section 37 : Every rule made by the Central Government and the first regulation made by the Board under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation shall not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.

[Emphasis supplied]

19. From the above reproduced provisions of the Indian Institutes of Management Act, 2017, as amended by the Amendment Act of 2023, it can be seen that the applicant has to provide reservations to the Scheduled castes/ Scheduled Tribes/Other Backward Classes as per the Central Educational Institutions (Reservation in Admission) Act, 2006. The President of India is the Visitor of the applicant institute and the Director of the applicant institute, who is the Chief Executive Officer, can be appointed by the Board only with the prior approval of the Visitor. He can also be removed by the Board only with the prior approval of the Visitor. The Visitor can also terminate the services of the Director. The Board is accountable to the Central Government in the exercise of its power and discharge of its functions under the IIM Act. The cadre, pay scales, allowances and terms of employment of the academic, administrative, technical and other posts are determined by the Central Government. The evaluation and review report regarding the performance of the applicant institute shall be submitted to the Central Government along with an action taken report. The Central Government may after due appropriation made by the Parliament by law in this behalf, pay to every institute such sums of money as it may think fit for the purpose of enabling the applicant institute to discharge their functions efficiently under the Act. The accounts of the applicant institute shall be audited by the Comptroller and Auditor General of India. The account of the applicant institute certified by Comptroller and Auditor General of India shall be forwarded annually to the Central Government and the Government shall cause the same to be laid before each House of Parliament. The Annual Report of the applicant institute shall be submitted to the Central Government who shall, as soon as may be, cause the same to be laid before both Houses of Parliament. The eminent member of the Coordination Forum, shall be nominated by the Visitor. The applicant institute shall furnish to the Central Government such returns or other information with respect to its policies or activities as the Central Government may, for the purpose of reporting to the Parliament or for the making of policy, from time to time. The Central Government also has the power to make rules for carrying out the provisions of the Act.

20. It can, therefore, be seen that there is a substantial amount of control over the functioning of the applicant. The submission of the applicant that the powers granted vide the Act do not translate into the day-to-day operational control may be to an extent correct, but Notification No. 50/2018-CT does not mandate a pervasive control by the Government on the applicant. The term “control” as contemplated in the Circular and Notification cannot, therefore, be interpreted to refer to day-to-day operational control, as there is nothing in the wordings of the notification which conveys so. A substantial regulatory control is what is required. The Supreme Court in Balmer Lawrie and Co. Ltd. v. Partha Sarathi Sen Roy (SC)/(2013) 8 SCC 345 while discussing pervasive control has held that the term “control” is taken to mean check, restraint or influence. Control is intended to regulate, and to hold in check, or to restrain from action. The word “regulate”, would mean to control or to adjust by rule, or to subject to governing principles.” The Act contains sufficient provisions for the Central Government to regulate the functioning of the applicant institute. Further, even the fifty one percent mandated in the Notification is only for the equity, because there is no formula to numerically quantify the control in percentage terms. Thus, the contention of the applicant, that the control is less than 50% as the number of the nominee members from the Government side does not exceed more than 50% of the total members of the Board of Governors, does not appeal to us. Even otherwise, as per Section 11(9) of the IIM Act, the Board is accountable to the Central Government in the exercise of its power and discharge of its functions under the Act. Further, the Director of the applicant institute, who is the Chief Executive Officer, can neither be appointed nor removed by the Board, without the prior approval of the President of India. Therefore, the composition of the Board cannot be a determinative factor to ascertain the quantum of control by the Central Government. The applicant, therefore, falls under the category of persons notified under Notification No. 50/2018-CT dated 13.09.2018 and is consequently liable for deduction of TDS under Section 51 of the CGST Act, 2017.

21. We further find that the Authority for Advance Ruling, Tamil Nadu in the case of Indian Institute of Management, In re (AAR – TAMILNADU)/Order No. 20/AAR/2021 dtd. 18.06.2021 held that it is a Government Entity under GST law and is liable to deduct TDS under Section 51 of the CGST Act, 2017 read with Notification No. 50/2018-CT dtd. 13.09.2018.

22. In any case, the applicant during the course of personal hearing held on 06.02.2026 has fairly admitted that the Supreme Court judgement would prevail over the Board’s Circular and therefore, they are liable to pay TDS.

23. We now move on the next question of the applicant i.e. how to calculate the contract value threshold of Rupees 2.5 lakhs for discharging the TDS liability. As per Section 2(h) of ‘The Contract Act, 1872’, a contract means “any agreement which is enforceable by law”. Contract can be written by using formal or informal terms, or could be entirely verbal or spoken. An invoice, which is representative of a transaction could fully cover a contract or cover a part of the contract. In case, a contract is for continuous supply of goods or services, and if part supplies under the contract are covered in an invoice, the invoice would not be equated to the contract. The set of invoices issued for all the supplies made as a consequence of the contract of supply would summate to the contract and not the individual invoice. The agreement between the supplier and the recipient is of prime consideration and if it is for a continuous supply to be made in parts, then the contract would include all the part supplies made and covered under separate invoices. Further, section 2(32) of the GST Act defines “continuous supply” as under:

“continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify;”

Thus, a contract is what determines, how much quantity needs to be supplied and when. The supply may be made on a continuous basis or a recurrent basis, but should be part of the original contract. Therefore, in case of a single contract, the threshold value of Rupees 2.5 lakhs applies to the total value of supply under the contract, excluding the GST payable. In case of separate contracts with the same supplier, each contract would be considered individually for the purpose of applying the threshold value of Rupees 2.5 lakhs. However, if the supply is made on a continuous basis or a recurrent basis, but is part of the original contract, the threshold value would be applicable on the contract and not the individual supplies. Therefore, it is the contract which determines the threshold value of Rupees 2.5 lakhs and not the invoices.

24. In view of the foregoing, we rule as under:-

RULING

Ques. 1:- Whether the Applicant, established under the Indian Institutes of Management Act, 2017 (an Act of Parliament), is a ‘specified person’ under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018?

Ans 1:- Yes, the applicant is a ‘specified person’ under Section 51 of the CGST Act read with Notification No. 50/2018-Central Tax dated 13.09.2018

Ques. 2:- Whether the threshold of Rs. 2,50,000 for deduction of tax at source is to be determined on the value of supply under each contract (excluding GST), regardless of the number of invoices issued?

Ans 2:- In case of a single contract, the threshold value of Rupees 2.5 lakhs applies to the total value of supply under the contract, excluding the GST payable. In case of separate contracts with the same supplier, each contract would be considered individually for the purpose of applying the threshold value of Rupees 2.5 lakhs. However, if the supply is made on a continuous basis or a recurrent basis, but is part of the original contract, the threshold value would be applicable on the contract and not the individual supplies. It is the contract which determines the threshold value of Rupees 2.5 lakhs and not the invoices.