Clarification regarding applicability of GST on supply of food in Anganwadis and Schools

Circular Number 149/05/2021-GST dated 17th June 2021

1. Representations have been received seeking clarification regarding
   applicability of GST on the issues as to whether serving of food in schools under
   Mid-Day Meals Scheme would be exempt if such supplies are funded by
   government grants and/or corporate donations. The issue was examined by GST
   Council in its 43rd meeting held on 28th May, 2021.
2. Entry 66 clause (b)(ii) of notification No. 12/2017-Central Tax (Rate) dated
   28th June, 2017, exempts Services provided to an educational institution, by way of
   catering, including any mid-day meals scheme sponsored by the Central Government, State
   Government or Union territory. This entry applies to pre-school and schools.
3. Accordingly, as per said entry 66, any catering service provided to an
   educational institution is exempt from GST. The entry further mention that such
   exempt service includes mid- day meal service as specified in the entry. The scope of
   this entry is thus wide enough to cover any serving of any food to a school,
   including pre-school. Further, an Anganwadi interalia provides pre-school non formal education. Hence, aganwadi is covered by the definition of educational.
   institution (as pre-school_.
4. Accordingly, as per recommendation of the GST Council, it is clarified that
   services provided to an educational institution by way of serving of food ( catering
   including mid- day meals) is exempt from levy of GST irrespective of its funding
   from government grants or corporate donations [under said entry 66 (b)(ii)].
   Educational institutions as defined in the notification include aganwadi. Hence,
   serving of food to anganwadi shall also be covered by said exemption, whether
   sponsored by government or through donation from corporates

Clarification regarding GST on supply of various services by Central and State Board (such as National Board of Examination)

Circular Number 151/07/2021-GST dated 17th June 2021

1.Certain representations have been received seeking clarification in respect of
taxability of various services supplied by Centre and State Boards such as National
Board of Examination (NBE). These services include entrance examination ( on
charging a fee) for admission to educational institution, input services for
conducting such entrance examination for students, accreditation of educational
institutions or professional so as to authorise them to provide their respective
services. The issue was examined by GST Council in its 43rd meeting held on 28th
May, 2021.

2. Illustratively, NBE provides services of conducting entrance examinations for
   admission to courses including Diplomat National Board (DNB) and Fellow of
   National Board (FNB), prescribes courses and curricula for PG medical studies,
   holds examinations and grant degrees, diplomas and other academic distinctions. It
   carries out all functions as are normally carried out by central or state educational
   boards and is thus a central educational board.
3. According to explanation 3(iv) of the notification No. 12/ 2017 CTR, “Central and
   State Educational Boards” are treated as Educational Institution for the limited
   purpose of providing services by way of conduct of examination to the students.
   Therefore, NBE is an ‘Educational Institution’ in so far as it provides services by way
   of conduct of examination, including any entrance examination, to the students.
   3.1 Following services supplied by an educational institution are exempt from
   GST vide sl. No. 66 of the notification No. 12/ 2017- Central Tax (Rate) dated
   28.06.2017,
   Services provided –
   (a) by an educational institution to its students, faculty and staff;
   (aa) by an educational institution by way of conduct of entrance
   examination against consideration in the form of entrance fee;
   3.2 Similarly, services provided to an educational institution, relating to
   admission to, or conduct of examination is also exempt from GST [sl. No. 66 (b)(iv)-
   12/2017-CT(r)].
   3.3 Educational institutions are defined at 2(y) of the said notification as follows-
   “(y) educational institution” means an institution providing services by way of, –
   (i) pre-school education and education up to higher secondary school or
   equivalent;
   (ii) education as a part of a curriculum for obtaining a qualification recognized by
   any law for the time being in force;
   (iii) education as a part of an approved vocational education course;”;
   Further, clause (iv) of Explanation of said notification reads as below:
   “(iv) For removal of doubts, it is clarified that the Central and State Educational Boards
   shall be treated as Educational Institution for the limited purpose of providing services
   by way of conduct of examination to the students”
4. Taking into account the above, the GST Council has recommended, to clarify
   as below:
   (i) GST is exempt on services provided by Central or State Boards ( including
   the boards such as NBE) by way of conduct of examination for the
   students, including conduct of entrance examination for admission to
   educational institution [under S. No. 66 (aa) of notif No. 12/2017-CT(R)].
   Therefore, GST shall not apply to any fee or any amount charged by such
   Boards for conduct of such examinations including entrance examinations.
   (ii) GST is also exempt on input services relating to admission to, or conduct
   of examination, such as online testing service, result publication, printing
   of notification for examination, admit card and questions papers etc, when
   provided to such Boards [under S. No. 66 (b) (iv) of notif No. 12/2017-
   CT(R)].
   (iii) GST at the rate of 18% applies to other services provided by such Boards,
   namely of providing accreditation to an institution or to a professional (
   accreditation fee or registration fee such as fee for FMGE screening test ) so
   as to authorise them to provide their respective services.

Clarification regarding rate of tax applicable on construction services provided to a Government Entity, in relation to construction such as of a Ropeway on turnkey basis-

Circular Number 152/08/2021-GS dated 17th June 2021

1. Reference has been received by the Board for a clarification whether services
   supplied to a Government Entity by way of construction such as of “a ropeway” are
   eligible for concessional rate of 12% GST under entry No. 3 (vi) of Notification No.
   11/2017- CT (R) dt. 28.06.2017. On the recommendation of the GST Council, this issue
   is clarified as below.

2. According to entry No. 3(vi) of notification No. 11/2017-CT (R) dated
   28.06.2017, GST rate of 12% is applicable, inter alia, on-
   “(vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central
   Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id),
   (ie) and (if) above) provided to the Central Government, State Government, Union Territory,
   a local authority a Governmental Authority or a Government Entity, by way of construction,
   erection, commissioning, installation, completion, fitting out, repair, maintenance,
   renovation, or alteration of –
   (a) a civil structure or any other original works meant predominantly for use other
   than for commerce, industry, or any other business or profession; “

3. Thus, said entry No 3 (vi) does not apply to any works contract that is meant
for the purposes of commerce, industry, business of profession, even if such service
is provided to the Central Government, State Government, Union Territory, a local
authority a Governmental Authority or a Government Entity. The doubt seems to
have arisen in the instant cases as Explanation to the said entry states, the term
‘business’ shall not include any activity or transaction undertaken by the Central
Government, a State Government or any local authority in which they are engaged
as public authorities. However, this explanation does not apply to Governmental
Authority or Government Entity, as defined in clause (ix) and (x) of the explanation
to said notification. Further, civil constructions, such as rope way for tourism
development shall not be covered by said entry 3(vi) not being a structure that is
meant predominantly for purposes other than business. While road, bridge,
terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification,
structures like ropeway are not covered by these entries too. Therefore, works
contract service provided by way of construction such as of rope way shall fall under
entry at sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%.

GST on milling of wheat into flour or paddy into rice for distribution by State Governments under PDS –reg

Circular Number 153/09/2021-GST dated 17th June 2021

1. Certain representations have been received seeking clarification whether
   composite supply of service by way of milling of wheat into wheat flour, alongwith
   fortification, by any person to a State Government for distribution of such wheat flour
   under Public Distribution System is eligible for exemption under entry No. 3A of
   Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and also as regards the
   rate of GST on such milling, if it does not fall in said entry No. 3A. The issue has been
   examined by GST Council in its 43rd meeting held on 28th May, 2021.

2. Entry at Sl. No. 3A of Notification No. 12/2017-Central Tax (Rate) dated
   28.06.2017 exempts “composite supply of goods and services in which the value of supply of
   goods constitutes not more than 25 per cent of the value of the said composite supply provided
   to the Central Government, State Government or Union territory or local authority or a
   Governmental authority or a Government Entity by way of any activity in relation to any
   function entrusted to a Panchayat under article 243G of the Constitution or in relation to any
   function entrusted to a Municipality under article 243W of the Constitution”.

3. As per the recommendation of the GST Council the issue is clarified as below.

3.1 Public Distribution specifically figures at entry 28 of the 11th Schedule to the
constitution, which lists the activities that may be entrusted to a Panchayat under
Article 243G of the Constitution. Hence, said entry No. 3A would apply to composite
supply of milling of wheat and fortification thereof by miller, or of paddy into rice,
provided that value of goods supplied in such composite supply (goods used for
fortification, packing material etc) does not exceed 25% of the value of composite
supply. It is a matter of fact as to whether the value of goods in such composite supply
is up to 25% and requires ascertainment on case-to-case basis.

3.2 In case the supply of service by way of milling of wheat into flour or of paddy
into rice, is not eligible for exemption under Sl. No. 3 A of Notification No. 12/2017-
Central Tax (Rate) dated 28.06.2017 for the reason that value of goods supply in such
a composite supply exceeds 25%, then the applicable GST rate would be 5% if such
composite supply is provided to a registered person, being a job work service (entry
No. 26 of notification No. 11/2017- Central Tax (Rate) dated 28.06.2017). Combined
reading of the definition of job-work [section 2(68), 2(94), 22, 24, 25 and section 51]
makes it clear that a person registered only for the purpose of deduction of tax under
section 51 of the CGST Act is also a registered person for the purposes of the said entry
No. 26, and thus said supply to such person is also entitled for 5% rate.

GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans taken by them

Circular No.154/10/2021-GST dated 17th June 2021

1. Certain representations have been received requesting for clarification
   regarding applicability of GST on supply of service by State Govt. to their
   undertakings or PSUs by way of guaranteeing loans. The issue was examined by
   GST Council in its 43rd meeting held on 28th May, 2021.

2. Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017
   exempts “Services supplied by Central Government, State Government, Union territory to
   their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans
   taken by such undertakings or PSUs from the banking companies and financial institutions.”
3. Accordingly, as recommended by the Council, it is re-iterated that
   guaranteeing of loans by Central or State Government for their undertaking or PSU
   is specifically exempt under said entry No. 34A

38th GST Council’s decisions On Rate Changes

The 38^th meeting of the GST Council met under the Chairmanship of the Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman here today. The meeting was also attended by the Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur  besides Finance Ministers of States & UTs and senior officers of Ministry of Finance.  The GSTCouncil recommended the following relating to changes in GST rates, exemptions.

1. To exempt upfront amount payable for long term lease of industrial/ financial infrastructure plots by an entity having 20% or more ownership of Central or State Government. Presently, the exemption is available to an entity having 50% or more ownership of Central or State Government. This change shall become effective from 1^st January, 2020.
2. To levy a single rate of GST @ 28% on both State run and State authorized lottery. This change shall become effective from 1^st March, 2020.
3. The Council also considered the rate of GST rate on Woven and Non-Woven Bags and sacks  of polyethylene or polypropylene strips or the like , whether or not laminated, of a kind used for packing of goods ( HS code 3923/6305)in view of the requests received post the changes recommended on such goods in last meeting and recommended to raise the GST to a uniform rate of 18%(from 12%) on all such bags falling under HS 3923/6305 including Flexible Intermediate Bulk Containers (FIBC). This change shall become effective from 1^st January, 2020.

[This note presents the decision of the GST Council in simple language for easy understanding which would be given effect to through Gazette notifications/ circulars which shall have force of law.]

 

RM/KMN

GST Tip – 375

As per Notification No. 39/2017-Central Tax (Rate), items falling under Chapter No 19 to 21 can be supplied at a concessional rate 2.5% for food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under a programme duly approved by the Central Government or any State Government.

GST Tip – 286

Notification No. 14/2017-Central Tax (Rate), activities or transactions undertaken by the Central Government or State Government or any local authority in which they are engaged as public authority, shall be treated neither as a supply of goods nor a supply of service, namely:- “Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution.”