- Mahalakshmi Mahila Sangha(Applicant) is an association of persons engaged in provision of catering services (HSN-9992) to educational institutes sponsored by State Govt/ Center Govt/ Union Territory.
- Above service is exempted service under S.no 66 of Notification 12/2017-Central Tax Rate.
- As per Circular 65/39/2018, TDS under GST is applicable only for taxable supply contracts and they are providing exempt services and hence TDS is not applicable to them.
Issue before the AAR
- Whether TDS under Secon 51 of CGST Act,2017 applicable on provision of exempted supply
Discussion and Finding of AAR
- As per S.no 66 of Notification 12/2017- Central Tax Rate, Services provided to an educational institute by way of catering including any mid-day meal meals sponsored by Central Govt/ State Govt or Union Territory.
- Catering Service is provided to educational institute which is a Primary School and hence covered under S.No 66 and is exempted from GST.
- As per Section 51(1) of CGST Act,2017, there is an requirement to deduct at 1%, of taxable goods or services or both, where total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees.
- From the above it is clear that TDS provision is applicable on payment made to supplier of taxable supply.
- Since, applicant is supplying exempt services, TDS provisions are not applicable to payments made to them by educational institutes.