Central Tax Circulars

CGST Circular 83/2019

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /The Principal Director
Generals/ Director Generals(All)

Madam/Sir,

Subject: Applicability of GST on Asian Development Bank (ADB) and
International Finance Corporation (IFC) – reg

1) Representations have been received seeking clarification regarding
applicability of GST on Asian Development Bank (ADB) and International
Finance Corporation (IFC). The matter has been examined

2) The ADB Act, 1966 provides that notwithstanding anything to the
contrary
contained in any other law, the Bank, its assets, properties, income and its
operations and transactions shall be exempt from all the taxation and from
all customs duties. The Bank shall also be exempt from any obligation for payment, withholding or collection of any tax or duty [Section 5 (1) of the
ADB Act, 1966 read with Article 56 (1) of the schedule thereto refers]. DEA
has already conveyed vide letter No. 1/28/2002-ADB dated 22-01-2004
addressed to ADB that taxable services provided by ADB are exempted from
service tax.

2.1) Similarly, IFC Act, 1958 also provides that notwithstanding anything
to
the contrary contained in any other law, the Corporation, its assets,
properties, income and its operations and transactions authorised by the
Agreement, shall be immune from all taxation and from all customs duties.
The Corporation shall also be immune from liability for the collection or
payment of any tax or duty [Section 3 (1) of IFC Act, 1958 read with Article
VI, Section 9 (a) of the Schedule thereto refers]

3) CESTAT Mumbai vide final order dated 17-10-2016 in the case of M/s
Coastal
Gujarat Power Ltd. has held that when the enactments that honour
international agreements specifically immunize the operations of the service
provider from taxability, a law contrary to that in the form of Section 66A
of Finance Act, 1994 will not prevail. With the provider being not only
immune from taxation but also absolved of any obligation to collect and
deposit any tax, there is no scope for subjecting the recipient to tax.
There is no need for a separate exemption and existing laws enacted by the
sovereign legislature of the Union suffice for the purpose of giving effect
to Agreements.

4) Accordingly, it is clarified that the services provided by IFC and ADB
are
exempt from GST in terms of provisions of IFC Act, 1958 and ADB Act. The
exemption will be available only to the services provided by ADB and IFC and
not to any entity appointed by or working on behalf of ADB or IFC.

5) Difficulty if any, in the implementation of this Circular may be
brought to
the notice of the Board.