NBBD providing services to State Governments for revival and promotion of dairy products not be treated as Supply under GST
Facts: In the present case, the applicant i.e. NDDB is a statutory body whose functions include promoting the dairy and other agriculture based industries, which includes providing technical, financial & managerial assistance. For this the applicant entered into an agreement with the state government of Jharkhand & Assam to support JMU & WAMUL (i.e. Unions), with an objective of reviving the Unions and developing dairying in the respective states. The applicant provides services to the government and undertakes all managerial activity involving control over Unions with the sole objective of developing Unions without receiving any consideration.
Issue: Whether services provided to state government for revival of dairy products shall be treated as Supply under GST law?
Held: The AAR observed that the agreements made by the applicant with the State governments of Jharkhand and Assam, is made with a view to revive WAMUL and JMU, for which the applicant have been managing the JMU and WAMUL as an Administrator by way of implementing the suitable business plans, marketing the milk and milk products, deploying suitable manpower . However, the services are actually received by the concerned State Governments and the Unions are simply the beneficiaries of the services performed by the applicant. For this the Unions are providing support to the applicant to fulfil the purposes of the agreements made, and in return Unions are receiving the benefits of it. In such a situation, there exists no relationship between NBBD and the Unions. Therefore, the situation specified at serial no. 5 of Section 15(5) of CGST Act is not found in existence with the transaction between NDDB and WAMUL and NDDB & JMU and accordingly such transactions are not to be considered as related party transactions in GST.
The AAR Gujarat held that the transaction between National Dairy Development Board (NDDB) and State Governments with the objective of reviving Jharkhand State Cooperative Milk Producers federation Limited (JMU) and West Assam Milk Producers Co-operative Union Limited (WAMUL) and developing dairying in the respective States can’t be considered as supply between related persons. Therefore, the activities performed by NBBD shall not be covered by Schedule I to the CGST Act, 2017, which deals with the activities to be treated as supply even if made without consideration, read with the Section 15 of the Act, thus no GST would be chargeable.
To read the complete judgment 2018 Taxo.online 603
