The Authority for Advance Ruling, Karnataka has ruled that, TDS provision are not applicable to a cooperative society registered under the Karnataka State Co-operative Society Act, 2001 under GST from the payment made to it by vendors for providing/ procuring taxable goods and services for making its supplies.
The AAR was considering the question, whether the applicant falls under any of the categories of the persons mandated to undertake TDS deduction, under Section 51(1) of the COST Act 2017, on consideration of aforesaid relevant amendments?
The applicant entity was formed and registered under the Co-operative Society Act 1959, where the District Co-operative Milk Unions are shareholders of the applicant organisation. Further applicant is a taxable person under the GST Acts and the entire shareholding is with the district milk unions and not with the State Government of any State or the Central Government or any local authority. Hence it is not a department or an establishment of Central Government/ State Government/ local authority. Therefore applicant is not covered under clauses (a) & (b) of Section 51(1) of the CGST Act, 2017.
The AAR bench comprising of Harsh Dharna and Dr. Ravi Prasad M.P observed that, “In the instant case the applicant has not been established by national, regional or local governments but is registered under Co-operative Society Act 1959, which mandates certain supervisory / participation from the relevant Department of Karnataka State Government. The applicant has not been tasked with any responsibilities by the Government of Karnataka. The Directors have been nominated only to safeguard the funds of the said society. Therefore the applicant is not covered under clause ( c) of Section 51(1.) of the COST Act 2017. In view of the above, the applicant is not covered under any of the clauses of Section 51(1) of the CGST Act 2017 and hence is not liable to get registered to undertake TDS deduction”.
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