The Himachal Pradesh Authority of Advance Ruling (AAR) in its recent ruling on the application filed by M/s HP Tourism Development Board has held that no GST applicable on the amount credited to H.P. Tourism Development Board by Govt. of H.P., as grants in aid or financial assistance.
Facts of the Case:
- The applicant, M/s HP Tourism Development Board has been constituted under section 4 of The Himachal Pradesh Tourism Development Board & Registration Act, 2002.
- The main objective of the board is to promote and regulate the Tourism Activities in the State of Himachal Pradesh.
- The applicant submitted that the Government of Himachal Pradesh, Department of Tourism agreed to credit the amounts to Tourism Development Board (in lieu of Grant) for smooth functioning of the board.
- The amount was credited on account of receipts of amount from the sale of Publicity material/ Literature books; Fee from parking lots and public places of convenience built by the Tourism Department, Adventure sports fee including heli skiing and paragliding fee, etc; 25% to be contributed by the Tourism Development Council from their resources; donation/grants received especially for tourism promotion/development and annual license fee and success fee received to the department from BOOT/BOT basic project.
Issue on which ruling was sought:
The applicant sought the advance ruling on the issue of Whether the amount credited in favor of H.P Tourism Development Board by Department of Tourism, Govt. of H.P, as grant in aid or financial assistance is taxable or not.
Order of Himachal Pradesh AAR: Deliberation and Ruling
The following entry was added to the list of exempted supply of services vide Notification No 32/2017- Central Tax (Rate) dated 13th October, 2017.
| (1) | (2) | (3) | (4) | (5) |
| “9C | Chapter 99 | Supply of service by a Government Entity to Central Government, State Government, Union territory, local authority or any person specified by Central Government, State Government, Union territory or local authority against consideration received from Central Government, State Government, Union territory or local authority, in the form of grants. | Nil | Nil |
The said notification defines “Government Entity” as an authority or a board or any other body including a society, trust, corporation,
(i) set up by an Act of Parliament or State Legislature; or
(ii) established by any Government,
with 90 percent or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.”.
Therefore, in the view of above, the HP Tourism Development Board fulfils the criterion laid down for the “Government entity” as per Notification No 32/2017- Central Tax (Rate) because it has been established by the Government with 100% control to carry out the function of promotion and regulation of tourism activities in the state.
In view of above deliberations the AAR consisting of Abhay Gupta and Rakesh Sharma ruled that the amount credited in favour of H.P Tourism Development Board by Department of Tourism, Govt. of H.P, as grant in aid or financial assistance is exempt under GST as per Serial No 9C of Notification No 32/2017- Central Tax (Rate) dated 13th October, 2017.
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