2026-VIL-191-AAR
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SGST Advance Ruling Authority

GST - Chhattisgarh AAR - Taxability of amounts received by an incubator agency from a State society for technical support services - Availability of exemption under Sr. Nos. 3, 3A and 72 of Notification No. 12/2017-Central Tax (Rate) - The Applicant was appointed under a service contract by an apex society of the Department of Rural Development of the State Government, funded by the Central Government under a livelihoods mission, as a Technical Support Services Agency to establish and execute an incubator programme across the State - Whether the amounts received are liable to GST and whether the services are exempt under Sr. Nos. 3, 3A and 72 - HELD - The Applicant was engaged as a consultant to render consultancy services and was not rendering services mandated under Article 243G of the Constitution, and the view that its service targeted at rural poverty alleviation should be wholly exempt is misplaced - The exemptions under Sr. Nos. 3, 3A and 72 require the services to be provided to the Central Government, State Government or Union territory administration or local authority themselves, whereas the recipient is a society which is a government entity and not the Government, so the entries are inapplicable. The consideration for the composite supply is taxable at the rate applicable to the principal supply of incubation and enterprise development services - The amounts received for the consultancy services attract GST at the standard rate and the exemption under Sr. No. 72 is not available for the training and capacity-building services or for the incubation support, mentoring and related services – Ordered accordingly - Taxability of amounts received towards dedicated project human resources, salary and personnel costs as part of the consideration for a composite supply of consultancy services - The Applicant sought a ruling on whether amounts received towards dedicated project personnel under the incubator cost component are liable to GST, without furnishing specific details - Whether such amounts are liable to GST - HELD - In the absence of specific details furnished by the Applicant, a conclusive decision is difficult. Amounts received strictly towards salary and direct personnel costs for dedicated project human resources generally do not attract GST, since services by an employee to the employer in relation to employment are outside the scope of supply under Schedule III. However, the salaries of the project staff of the Applicant form part of the supplier's own cost and are not separately excludable from the consideration for a composite supply. The pure agent exclusion under Rule 33 is unavailable where the supplier is the employer, so reimbursement of employee costs is taxable consideration - No conclusive ruling is possible for want of details - Inclusion of challenge fund grants, soft loans and other enterprise-support funds passed on under a project in the taxable value of services, and exclusion as pure agent expenditure under Rule 33 of the CGST Rules, 2017 - Applicant administered a challenge fund of grants and soft loans, and equity investments, which were transferred to selected rural enterprises, and contended that it acted as a pure agent and that the sums were pass-through grants not forming part of the value under Section 15 - Whether the challenge fund and other enterprise-support funds form part of the taxable value of the services supplied - HELD - On the basis of the contract, the Applicant functions as a technical consultant, and the services are a composite supply of goods and services. The grants, soft loans and other enterprise-support funds administered, facilitated or passed on under the project form part of the taxable value of the services supplied by the Applicant - The exclusion of challenge fund disbursements under Rule 33 is possible only if the Applicant acts strictly as a pure agent of the recipient, with written authorisation, recovery at actual cost, separate invoicing and no ownership or benefit, and without proper documentation the entire receipt may be treated as consideration - The funds form part of the taxable value of the services - Exemption under Sr. No. 48 of Notification No. 12/2017-Central Tax (Rate) for taxable services by a Technology Business Incubator recognised by the National Science and Technology Entrepreneurship Development Board - Whether, upon its recognition as a Technology Business Incubator by the Board, the taxable services under the project would be exempt from the date of recognition - HELD - Sr. No. 48 provides nil rate for taxable services under Heading 9983 or any other Heading of Chapter 99 only if provided by a Technology Business Incubator or a Science and Technology Entrepreneurship Park recognised by the Board, or a bio-incubator recognised by the Biotechnology Industry Research Assistance Council. There is nothing on record to hold that the Applicant is a recognised incubator as on date. Upon such recognition the taxable services rendered under the project would qualify for nil rate from the date of recognition, subject to adherence to the conditions. The exemption operates only prospectively from the effective date of recognition and supplies before recognition remain unaffected - The taxable services rendered after recognition qualify for nil rate under Sr. No. 48, subject to the conditions
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