Ruling by Odisha AAR – No GST exemption on creating school infrastructure for State Government promoted entity

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Authority of Advance Ruling rules out entitlement to GST exemption under Notification No. 12/2017-Central Tax in respect of services provided to Odisha Knowledge Corp. Ltd. (OKCL) in as much as they do not qualify as ‘services provided to Central Government ,State Government, Union Territory administration under any training programme for which total expenditure is borne by such Government or administration.

Notes that Odisha Madyamik Shiksha Mission, Government of Odisha had mandated OKCL to implement ICT project in 4000 Govt. and Govt. aided higher secondary schools across the State, which inter alia involved supply, installation, maintenance and commissioning of projection system, interactive white board, computer hardware, and connected accessories, for which the applicant had been awarded the tender upon successful bidding; Remarks, OKCL is a registered entity under the Companies Act, 1956 and though it is a body corporate promoted by Govt., it “is neither the State Government nor a part of the State Government of Odisha”.

Therefore, commercial supplies by applicant to OKCL does not constitute supply to Govt. but a distinct entity created by Government of Odisha; Moreover, intention of parties is not confined to rendition of service under any training programme but to create necessary infrastructure in schools for implementation of ICT project.

Hence, supply is just not supply of service but “rather a composite supply of goods and services, not naturally but artificially bundled having distinctly separate components with distinct value attributable to each of the components”; Further observes that payment is made by OKCL and not State Govt. though source of funding of expenditure is by State Government.

Citation: TS-293-AAR-2018-NT