Authority for Advance Rulings mandates GST registration and collection on recruitment-related services
The Authority for Advance Rulings (AAR) in Kerala has delivered a significant judgment regarding the applicability of Goods and Services Tax (GST) on the services provided by the Kerala Devaswom Recruitment Board. This ruling has clarified that the recruitment board, tasked with conducting examinations for various posts in the Devaswom Boards, is required to register for GST and collect tax on the examination fees collected from candidates.
The Kerala Devaswom Recruitment Board, established under the Kerala Devaswom Recruitment Board Act, 2015, approached the AAR seeking clarity on whether it was required to obtain GST registration and the applicability of GST on the fees collected for recruitment examinations. The Board argued that it conducts examinations as a statutory function and operates with grants from the State Government, raising questions about its tax obligations.
The ruling by the AAR, presided over by Shri Jomy Jacob IRS, Additional Commissioner of Central Tax Member, and Shri Mansur M.I., Joint Commissioner of State Tax Member, analyzed the Board's functions and the nature of services provided. The AAR concluded that the examination services constitute a "supply" as defined under Section 7 of the CGST Act, 2017. Consequently, the Board is identified as a taxable service provider.
The ruling also examined whether the Kerala Devaswom Recruitment Board qualifies as a "governmental authority" under Notification No. 12/2017-Central Tax (Rate). While the Board satisfies the definition of a governmental authority, the services it provides do not fall within the exempted functions entrusted to Panchayats or Municipalities under Articles 243G and 243W of the Constitution. Therefore, the services are deemed taxable under the CGST Act.
Furthermore, the AAR emphasized the reciprocal nature of the examination fees collected by the Board. The fees are considered a quid pro quo for the services rendered, including conducting examinations, evaluations, and result publication, thus forming part of the taxable value under Section 15 of the CGST Act.
In its ruling, the AAR affirmed that the Kerala Devaswom Recruitment Board is required to obtain GST registration if its aggregate turnover exceeds the threshold specified under Section 22 of the CGST Act. Moreover, the Board must collect GST on the examination fees charged to candidates, as these fees represent consideration for taxable services.
This ruling underscores the tax obligations of statutory bodies providing recruitment services and clarifies the interpretation of "governmental authority" in the context of GST exemptions.
Bottom Line:
GST applicability on services provided by a statutory recruitment board for conducting examinations and related processes for recruitment purposes.
Statutory provision(s): Central Goods and Services Tax Act, 2017 Sections 7, 22, 24, 15; Notification No. 12/2017-Central Tax (Rate).
Kerala Devaswom Recruitment Board, (AAR)(Kerala) : Law Finder Doc Id # 2835252
