GST TDS on Institutions of National Importance: AAR Mandates TDS Liability for IIM Ahmedabad As Specified Person [Read Order]

The Authority for Advance Ruling (AAR) Gujarat held that the Indian Institute of Management, Ahmedabad (IIMA), being an institution of national importance clearly falls into the category of "specified persons" as defined in Section 51 of the CGST Act.

This decision is of greater importance as it requires the Indian Institute of Management, Ahmedabad, to comply with the provisions for deducting Tax Deducted at Source for all taxable contracts exceeding ₹2.5 lakhs.

The applicant M/s Indian Institute of Management Ahmedabad is a body incorporated for the purpose of being a premier educational institution that was later declared an "institution of national importance" by the Indian Institute of Management Act, 2017.

However, there was a dispute regarding the liability for deducting GST TDS under Notification No. 50/2018-Central Tax. The Indian Institute of Management Ahmedabad was unsure if it was a deductor or not since the Central Government does not have 51% or more equity or control over the Board of Governors.

The applicant's stated that it was on the CBIC Circular No. 76/50/2018-GST which indicated that the 51% or more control test was applicable to all bodies established under an Act of Parliament. The applicant further stated that as the Government holds a minority of the seats on the Board of the IIMA the institute should be exempt.

The Authority examined the structure of the notification which contains the words "set up by an Act of Parliament," followed by the word "or." The Bench noted that the semicolon creates a unique independent category. Therefore, the 51% control criterion of sub-clause (ii) does not apply to sub-clause (i).

The AAR comprising Sushma Vora (Member SGST) and Vishal Malani ( Member CGST) held that since IIMA was set up by an Act of Parliament therefore it is a notified entity that is liable to deduct TDS.

Accordingly,the Bench explained that the condition of deduction at a sum of Rs. 2,50,000 applies to the aggregate value of a single contract excluding GST even if multiple small invoices are issued.

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