Services provided to the State Government under the Lunch Scheme are GST exempt.
The applicant, Handloom Weavers Cooperative Society has been appointed by the Government of Tamil Nadu as the nodal agency for inspection, purchase, storage and transportation of free distribution of dhotis, saris and school uniforms under various welfare schemes in the State.
Ruling sought in two respects
With the schemes introduced in 1983, the applicant moved the AAR seeking judgment on two issues.
First, it attracts GST at the rate of 18 per claim for the cost of handling the free distribution of saris, dhoti and school uniforms and supplying them to the Department of Revenue or the Department of Social Welfare. Second, if the answer is yes, do the handling charges for the pre-GST period of 2015-16 and 2016-17 also attract GST?
The AAR observed that the services rendered under the ‘Lunch Scheme’ for the free distribution of saris and dhotis and school uniforms to 1st to 8th class students under the applicant’s management gamut were activities related to the functions assigned to the Panchayats / Municipality. In Article 243G / 243W of the Constitution.
AAR found that as per Serial No. 3 of Notification 12/2017 of the Central Tax Rate dated June 28, 2017, any contract of supply of goods provided to the State Government or any other composite material is exempt from “pure services”. Payment. It noted that the applicant had provided management services to a committee set up by the state government. Furthermore, such services provided to the state government are pure services.
The Authority also noted that activities that provide various services under the applicant’s range of handling charges without the involvement of goods consumed during the supply or undertaking of such services are “pure services”. Services.
Based on the notification (No. 72 of 2017), the AAR ruled that “the services rendered by the applicant for the maintenance of dhotis & saris / school uniforms from the Co-operative Societies to the Public Distribution System / Revenue Department are exempt from GST payment”. However, the second question is related to the pre-GST period and is therefore not accepted.
Amit Maheshwari, a tax partner with tax and consulting firm AKM Global, said the AAR had rightly ruled that the various services provided by the co-operative society under the Government Welfare Scheme / Lunch Scheme were “pure services”. According to the relevant exemption notification, there will be an exemption under GST.
“The composition of the various services that lead to the fulfillment of the stated objective is a legal principle that describes eligibility for exemption,” he said.
April 14, 2022