IN RE: THE MAHARASHTRA RAJYA SAHAKRI SANG MARYADIT
GST
2018 (11) TMI 883 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (19) G. S. T. L. 369 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AAR
Dated:- 18-7-2018
GST-ARA- 11/2018-19/B-70
GST
SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER
PROCEEDINGS
(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by THE MAHARASHTRA RAJYA SAHAKRI SANG MARYADIT, the applicant, seeking an advance ruling in respect of the following question.
The Maharashtra Rajya Sahakari Sangh Ltd. conducts education and training programmers through its 13 co-operative training centres and 33 district co-operative boards by charging fees to particip
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institute registered under Maharasthra Co-operative Societies Act, 1960 on 13th of July 1918. The Maharashtra Rajya Sahakari Sangh Ltd. gives education to members of co-operative societies in the state (Total number is as on 31.3.2017) and training to office-bearers : committee members/ officers and employees of the co-operative societies. As per section 24 A of of M.C.S Act. 1960 and rules thereunder, every society has to give education & training through state apex training institute. Accordingly The Maharashtra Rajya Sahakari Sangh Ltd.is notified by the Government of Maharashtra on the 10 sep. 2014 for this purpose. Earlier, The Maharashtra Rajya Sahakari Sangh Ltd. was exempted by even income tax department. Income Tax tribunal order is enclosed for ready reference. As Maharashtra Rajya Sahakari Sangh Ltd.is doing work purely of education and training, it needs to be exempted from CST. This institute is not profit making organization and giving education and training by charging
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of the appellant – the assessee is a co-operative educational institute registered under Maharashtra State Co-op. Societies Act, 1960. The Sangh conducts cooperative education and training through its 13 co operative training centres. These training programmes are recognised as the essential minimum educational qualifications for principles of co. Operations. (Its State Level Apex cooperative institution).
b. Educational institution existing solely for educational purposes and not for purposes of profit.
C. Assessee has over 100 years of establishment and had the memorable association with the honourable Mohandas Karamchand Gandhi, father of our nation.
d. Incorporation of the assessee has everything to do with the then ongoing cooperative movement during the period of the father of the nation and therefore, the main object of the assessee is to educate the people of India on the cooperative movement. Regarding finances to the trust, the assessee has by virtue of section 68 of t
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the member society by virtue of section 68 of the Maharashtra Co-operative Societies Act, 1960.
g. The main objects of the society read that (i) To provide education and training to members of various co-operative societies, be present or future to make the movement of co-operative more people friendly and (ii) To homogenize the education structure relating to co-operation and to act as nodal agency in this respect”
h. The Government provided the finance to the assessee by way of making of a legislation, which cast statutory responsibility on the member societies by way of compulsory contributions to the education fund of the assessee.
i. In the background of the above, the relevant provisions reads as follows, “any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or As seen from the above, the legislature has not used the words such as direct or i
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ficit, if any was to be met through grants, this was sufficient to conclude that the institute was substantially financed by the Government. The requirement is that institute wholly or substantially financed by the Government. It does mean that one has to see the financing in each year. Financed here means that the institute was set-up with the finances made available by the Government Such requirement was met in instant case. After setting-up infrastructure, the institute started imparting education and charged fees as prescribed by the Government.
l. The finances received by the assessee in the form of training receipts from the member cooperative societies by way of compulsory subscriptions in accordance with a State legislation tantamount to “financed by the Government”.
m. The instant assessee earlier has also got the requisite finance out of the exclusive Education Fund of the State Federal Society created by way of law in the name of Maharashtra Co-operative Societies; 1960,
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financing such educational institution rightly should stop with the role as a facilitator by providing requisite legislation for enabling the member societies to contribute to the assessee and contribute mandatorily. Therefore, in our opinion, it is a case of indirect financing of the educational institution of the cooperative movement by the Government and it is evolved in order to promote participation of the members and respect the financial independency of the movement in general and institution in particular. In any case, the provisions of the clause do not expressly bar the claim of tax exemptions to the cases of indirect financing by the Government in such cases of indirect financing to the educational institutions of the cooperative movement in India, the aspects of consolidated Fund of India to be the source of finance for claim of exemption become irrelevant for the reasons of minimum control of the Government on cooperative societies. Considering the peculiarities of the coo
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herefore, in the circumstances, where the Government created a special enactment i.e. Maharashtra Co-operative Societies, 1960 in general and section 68 of the said Act in particular, where by an education fund is created in this regard to constitute a fund set apart to be the source of finance to the institution. Further, we are also Of the opinion, the assessee being the case of the society engaged in the running the educational institution for promoting the cooperative movement in India, liberal interpretation of the statute is the need of the time. The cases of this kind, where the Government legislates law to provide for compulsory contributions by the member societies to an Education fund which is set apart to be the source of finance for an educational institution Of this kind engaged in the cooperative movement in India, which constitutes indirect financing by the Government.
Statement containing the applicant's interpretation of law and/or facts, as the case may be, in re
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embers of cooperative societies, office bearers, etc. and charging fees to participants for the same. They have claimed that they are not doing any commercial activity and are a non profit making organisation conducting this activity as a statutory requirement of Maharashtra Cooperative Societies Act, 1960.
3. On perusal of the documents submitted by the taxpayer in support of their claim, viz., Order dated 30.04.2010 by the Income Tax Appellate Tribunal, Pune Bench, it is seen that the taxpayer has been given the benefit of exemption only in respect of the funds received by the institution under section of the Act but were not granted exemption and denied registration under section 12AA (I)(ii) of the Income Tax Act, 1961 as a charitable trust.
4. Section 10 of the Income Tax Act, 1961 provides for income which shall not be included in the total income. Section provides that income of any university or other educational institution existing solely for educational purposes and not fo
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rdingly fall under the purview of GST as detailed below:
5.1 Under CGST Act, 2017, Section 2 (84), the definition of “Person” includes –
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company is defined in clause (45) of section 2 of the Companies Act, 2013 (18 Of 2013)1;
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860 (21 of 1860);
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
5.
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–
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transacti01v,
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a lic
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ll not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply.
6. A cooperative society (being a person as defined above) provides services to its members in the form of facilities or benefits to its members (in course of business) for a consideration. It has been admitted by the taxpayer in their application that they charge a fee from the participant members to whom the training is being imparted.
7. Thus it appears that the said training is against a consideration, i.e., a payment made in money (fee collected from the members) for supply of services and thus the cooperative society also gets covered under the ambit of GST and is leviable to GST under Section 9(1) of the CGST Act, 2017.
8. This service provided by the taxpayer falls under the Service Accounting Code 999293 – Commercial Training and Coaching. In terms of Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017, Commercial Training and Co
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pt., Pune -I Commissionerate appeared and made written submissions.
05. OBSERVATIONS
We have perused the records on file and gone through the facts of the case and the submissions made by the applicant and the department.
The applicant has submitted that they are a state level apex training institute registered under Maharashtra Co-operative Societies Act, 1960 and as per the provisions of Section 24 A of of M.C.S Act. 1960, they are giving education/ training, though their 13 training centres, to the members of co-operative societies in the state of Maharashtra and the same is not a commercial activity. They have submitted that they do not receive any funds or grants from the Government directly and their funding is indirectly by way of mandatory contributions by the member co-operative societies under the provisions of Section 68 of the Maharashtra Co-op. Societies Act and they are not a profit making organization but only an educational institution and therefore on the similar l
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, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration are exempt.
3. Services provided by educational institution to its students, faculty and staff are exempt: Service supplied by an educational institution to its students, faculty and staff is exempt from GST – Sr. No. 66(a) of Notification No. 12/ 2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017.
We now reproduce Section 24 A of the Maharashtra Cooperative Societies Act is relevant in the present case as under:-
24A. Cooperative Education and training to members, etc. – (1) Every society shall organisc co-operative education and training, for its members, officers and employees through such State federal societies or the State Apex Training Institutes, as the State Government may, by notification in the Official Gazette, specify. Such education and training shall.-
(i) en-sur
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ng fund of such State federal societies State Apex Training Institutes, notified under subsection (1), at such rates as may be prescribed, and different rates may be prescribed for different societies or classes of societies. Hence it is clearly seen that there is no funding from the Government directly or indirectly to the applicant as claimed by them in their submission and also that there may be other such State Federal Societies and State Apex Training Institutes which have been notified for providing such education/coaching/ training.
We find from the submissions made by the applicant that they are neither providing any services to the Central Government, State Government, Union territory administration under any training programme nor is the expenditure borne by the Central Government, State Government, Union territory administration. In their case they are funded by the fees received from the societies for the training of their members. It is also seen from their submissions th
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loyees from the applicant or other notified institutes and every society shall contribute annually towards the education and training fund of the State federal societies or State Apex Training Institutes. Hence it is very clear that there is no funding by the Government in this case.
The second issue is that the services provided by them are not in respect of their own students, faculty and staff. Services supplied /provided by an educational institution to its students, faculty and staff is exempt from GST – Sr. No. 66(a) of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017. They are in fact supplying services to other cooperative societies and their members and not to their own faculty, etc. Hence there is no way that their remuneration recovered from the societies can be treated as non-taxable.
From the submissions we find that the applicant are providing services of coaching and training to the members of cooperative societies for which they receive
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perative societies to obtain training for their members from the applicant or other similar institutes. It seems that it would be optional for societies to avail of such services either from the applicant of some other such institute. Thus the member societies are not under any legal compulsion to become members and get training from the applicant only. The obtaining of such membership by way of payment of annual fees implies that the applicant would supply such educational and training services only to societies who pay annual fees and not to those societies who do not pay the applicant such fees.
The applicant has submitted that The Maharashtra Societies Act, vide Section 24 provides for guidelines, which are mandatory for each and every Co-Operative Society in Maharashtra. The Applicant provides training to members of such cooperative societies which is in consonance with Section 24 of the said act, but this supply of service is provided only to those member cooperatives and not to
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(for a subscription or any other consideration) of the facilities or benefits to its members”).
To summarise, the applicant, a co-operative educational institute registered under Maharashtra State Co-op. Societies Act, 1960, conducts cooperative education and training through its cooperative training centres and provides education to members of co-operative societies in the state Of Maharashtra and training to office-bearers : committee members/officers and employees of the co-operative societies. For providing such education and training they charge annual fees/contribution from their members as provided under the provisions of the Maharashtra Co-op. Societies Act. Thus in view of the above discussions it is seen that the applicant is a person (as defined under Section 2(84) of the GST Act, Who is supplying services (as defined under Section 7(1) of the GST Act) in the nature of educational, coaching and training to its members only (and not non members), for a consideration (as defi
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