Not-For-Profit Entity Liable on Forward Charge for Sponsorship | AAR

Case Details: Mining Geological and Metallargical Institute of India, In re - [2025] 181 taxmann.com 930 (AAR - WEST BENGAL)

Judiciary and Counsel Details

• Jaydip Kumar Chakarbarti & Shafeeq S., Member
• Surendra Joshi, CA & Abhisek Maroti, AR for the Applicant

Facts of the Case

The applicant, a not-for-profit company limited by guarantee incorporated under the Companies Act, 1882, sought clarification on the applicability of GST to sponsorship services provided to recipients located in the taxable territory. It was submitted that it has never declared dividends, had no beneficial shareholders, and functions solely as a not-for-profit entity. It requested guidance on whether its sponsorship services are liable to GST on a forward charge or reverse charge basis, given its non-profit status and historical interpretation of Section 9 of the CGST Act, in light of amendments to RCM notifications. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that the applicant qualifies as a ‘company’ and a ‘body corporate’ under the Companies Act, 2013. It was observed that amendments to the GST notifications specifically exclude bodies corporate from the reverse charge exemption for sponsorship services, which were earlier subject to reverse charge only when supplied by certain non-corporate entities. As a result, sponsorship services provided by the applicant to recipients located within the taxable territory are now liable to GST under the forward charge mechanism, in accordance with Section 9 of the CGST Act. Therefore, all sponsorship-related receipts are subject to GST under forward charge.

List of Cases Referred to

• Bharat Cooperative Bank v. Cooperative Bank Employees (2007) 4 SCC 685 (para 2.4)
• Queen’s Educational Society v. CIT [2015] 55 taxmann.com 255/372 ITR 699/231 Taxman 286 (SC) (para 2.5)
• Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1978] 121 ITR 1/[1979] 2 Taxman 501 (SC) (para 2.5)
• Board of Trustees, Ayurvedic & Unani Tibia College v. State of Delhi AIR 1962 SC 458 (para 2.5)
• Duli Chand v. Mahabir Pershad Trilok Chand Charitable Trust AIR 1984 Delhi 144 (para 2.5)
• Renusagar Power Co. v. General Electric Co. AIR 1988 SC 1737 (para 2.5).