Case Of: Indus Motor Company Pvt. Ltd.
Issued By: Kerala Infrastructure and Technology For Education
Order No: WP(C) NO. 12864 OF 2024
Date: 22nd November 2024
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Financial Grants for Operational Expenses Are Not Considered as Payment for Services and Exempt from GST
The applicant, 99.99% owned by the Kerala Government, supports schools by procuring and supplying IT hardware, funded through the Kerala Infrastructure Investment Fund Board (KIIFB).
The Additional/Joint Commissioner imposed a GST liability of ₹99 Crores claiming the taxpayer was engaged in a composite supply of goods and services.
The taxpayer argued that transactions with the government and schools do not constitute “supply” under Section 7 of the CGST/SGST Acts, with no evidence of applicability under Schedule I.
Ownership of goods was contested; the taxpayer asserted that ownership rests with the General Education Department, not with them.
The court observed that grants received for operational expenses like salaries and allowances cannot be deemed “consideration” for any supply of goods or
services.
It was noted that the revenue failed to demonstrate that the taxpayer’s activities fall under Schedule I, which allows taxation without consideration.
Ownership of goods was incorrectly attributed to the taxpayer; the court clarified it lies with the General Education Department.
The court held that the financial grants are not subject to GST and set aside the order demanding GST liability.