‘ITI is institution providing education up to higher secondary level’
The supply of food items under government-sponsored schemes for students to institution such as Industrial Training Institute (ITI) will not attract Goods & Services Tax, an Authority for Advanced Ruling (AAR) has held.
A service provider, HV Azeez had approached Kerala AAR on whether supply of boiled milk (without sugar), fresh banana, bread and cooked egg in shell to the students of ITI as per government scheme will be taxable? Whether, GST registration is required for supply of such items? If Tax Deducted at Source is applicable on such supply? And whether refund of GST is eligible in the case of TDS deducted?
‘Equivalent to school’
He supplies these items at the rate of ₹12.40 per trainee. He argued that all items supplied under the contract are GST exempted. He also said that since the basic qualification required for taking admission in ITI is 10th pass in most cases or 10th fail in some courses and students get certificate equivalent to 12th or 10th (if they take the tests for two additional papers under National Institute of Open School). This makes ITIs eligible for exemption from GST on supply under government-sponsored schemes for pre-school/institution providing education up to higher secondary school. The AAR noted suppliers, with aggregate turnover of ₹20 lakh or more, are required to register under GST Act. However, section 23 of the Act stipulates that “any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax and wholly exempt from tax shall not be liable for registration.” Hence, applicant is not required to register.
It said the rules prescribe TDS at 2 per cent, if payment for contract exceeds ₹2.50 lakhs. As activity here is GST exempted, TDS provision will not apply. However, as the applicant is registered, amount deducted under TDS can be claimed by the applicant as refund.