GST on Govt. Tenders – Maharashtra AAR By CS Lalit Rajput


Government tenders to attract GST, deemed a service

Maharashtra Authority for Advance Ruling (AAR): any tendering should attract GST on the processing fee and that 18% GST should apply wherever such forms are bought online or offline. Both online and offline tendering would be considered as “supply of service.

Case Details:

Case Name: Maharashtra State Dental Council (GST AAR Maharashtra)

Appeal No.: Order No. GST-ARA-125/2019-20/B-30

♦  Key Highlights

  • The only difference between online and offline tendering is that in the case of the former, tender forms are sold online and in the case of the latter, the tender forms are sold as printed matter.
  • The government’s tendering process is all set to come under the goods and services tax (GST) umbrella after a tax ruling has said it constitutes supply of services.
  • In both the cases, forms are sold, collected from the applicant, processed and finally after the entire process of documentation and verification of the applicant's position to perform the contract, tenders are allotted to a particular person to the exclusion of others.
  • The AAR ruled that Online and Offline tendering are covered under services heading 9997.
  • Online tendering will be considered as Supply of Services.
  • Tendering will be considered as ‘miscellaneous services including services nowhere else specified.
  • Offline tendering in its entirety involving sale of form, payment of tender fees and submission of bids etc. will be considered as Supply of Services.

Previous AAR (Maharashtra):

Case regarding Navi Mumbai Municipal Corporation on online/ offline tendering and has rightly concluded the activities as supply of services.  

Interpretation by tax Experts:

  1. One view is that the tendering process should be exempt,

  2. the second one holds that tender processing fees do not specifically find mention in the exemption notification, hence should be taxable.

Conclusion:

With reference to the this Ruling, from now on any tendering process, which means buying of tenders or forms to apply for any government contract, will come under GST.

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