Receiver of Services can not apply GST Advance Ruling : AAR

AUTHORITY FOR ADVANCE RULINGS, TAMIL NADU

Dr. Dathu Rao Memorial Charitable Trust, In re

ORDER NO. 3/AAR/2018

JULY  30, 2018

RULING

1. Dr. Dathu Rao Memorial Charitable Trust, “PATHWAY” E-76/1, 12^th West street, Kamaraj Nagar, Thiruvanmiyur, Chennai 600041 (hereinafter called the Applicant or the Trust) is a registered society registered under the Tamil Nadu Societies Registration Act 1975 and are engaged in activities related to providing of education to Mentally Retarded Children. They have preferred an application seeking Advance Ruling on the following question.

“Since they are coming under exempted category, as per GST provisions, are they, liable to pay GST for the materials bought and construction services availed.”

2. The Applicant are engaged in activities related to providing of education for mentally retarded children and their home is situated in Melmaruvathur, in a 65 acre land. Due to encroachments to their property, they have decided to construct a permanent boundary wall replacing the present barbed wire structure for the entire property, which will entail a capital expenditure of approximately Rs.l Crore. They have also proposed to paint their entire existing building i.e. Interior as well as Exterior Building Walls, which will entail a capital expenditure of approximately Rs.2 Crores and there is also a proposal to renovate the school Toilets/Bathrooms in their existing property with new sanitary-ware fittings, which will involve a capital expenditure of approximately Rs.25 Lakhs.

2.1 For the above cited works, they are awarding works contract to registered GST vendors, who will charge GST for the materials supplied including the installation-cum-labour charges. In the light of the aforementioned, the Applicant has sought Advance Ruling seeking determination of liability to pay tax on goods or services purchased, when their trust is exempt from GST.

3. The Authorised Representative of the Applicant was heard in the matter on 26.07.2018. They submitted that they will be receiving construction service for repair and maintenance of the premises. They also stated that they are charitable Trust for mentally disabled children and also stated that they are not making any of this supply.

4. The Advance Ruling sought is whether the Trust is liable to pay GST on receipt of Goods/Services, when the Charitable Trust is exempted under the GST Act 2017. It is made clear that the applicant does not make any of the supplies in question, but are in fact the recipients of the various supplies as stated in their application. Thus, the question is on the liability to pay tax on their purchase and not on the supply.

4.1 Section 95 (a) of CGST and TNGST Act defines ‘advance ruling’ as

(a) “advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant;;

From the above, it is evident that an applicant can seek an Advance Ruling Authority in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant. In the case at hand, the applicant is the proposed recipient of the proposed works contract and accordingly, does not fall within the definition of advance ruling. Hence, the Application is not liable for admission and therefore rejected without going into the merits of the case, on the issue of lack of jurisdiction.

RULING

The Application for Advance Ruling dated 18.06.2018 of Dr. Dathu Rao Memorial Charitable Trust, Chennai is not admitted, under sub-section (2) of section 98 of the CGST Act, 2017 and the TNGST Act, 2017.