Circular No. 115/34/2019
Concept of Pure Agent : Explained
• PSF and UDF being charges levied by airport operator for services provided to passengers,
are collected by the airlines as pure agent and is not a consideration for any service
provided by the airlines and thus, airlines would not be liable to pay GST on same.
• The airline shall not take ITC of GST payable or paid on PSF and UDF.
• The registered passengers, who are the ultimate recipient of the airport services, may take ITC of
GST paid on PSF and UDF on the basis of pure agent’s invoice issued by the airline to them
Our Comments
• The explanation leads to a situation of double taxation whereby the airline who is reflecting ITC as
pure agent would not include it in its tax payable, and without this, the Tax invoice would not form a
valid document for availment of ITC, nor such ITC shall be reflected in GSTR 2A of the recipient.
• If the airline are not availing ITC charged by the licensee, they cannot even pass such tax to the
recipient.
• In case of pure agent, the recipient avails ITC on the basis of Tax invoice of the supplier and not
pure agent.
Circular No. 116/35/2019
Concept of Donation : Explained
• Certain charitable bodies (involved in advancement of religion, spirituality or yoga) take donations or
gifts from individual donors which is acknowledged by them by placing name plates in the name of
the individual donor.
• Where three conditions are satisfied namely the gift or donation is made to a charitable
organization, the payment has the character of gift or donation and the purpose is
philanthropic (i.e. it leads to no commercial gain) and not advertisement, GST is not
leviable.
Our Comments
• The above clarification shall apply to all kinds of donation including those by educational institution,
charitable hospitals, etc.
• Placing name shall not be service when it is expression of gratitude and public recognition of
donor’s act of philanthropy and is not aimed at giving publicity.
• This clarification shall serve as a respite to many charitable institutions who take donations against
specific performance of work and where the grantor has merely humanitarian interest.
• Refer also, Circular No. 127/9/2010-S.T., dated 16-8-2010
Course recognised by law: Explained
• Merchant Shipping Act, 1958 (44 of 1958) provides for the certificates of competency to be
held by the officers of ships.
• Merchant Shipping (standards of training, certification and watch-keeping for Seafarers)
Rules, 2014 empowers Director General of Shipping (“DGS”) to approve training program,
institutes, designate assessment centres etc.
• Maritime Institutes approved by DGS are educational institutions under GST Law and the
courses conducted by them are courses recognised by law and are exempt from levy of GST.
Our Comments
• The above clarification shall apply to other similar kinds of courses which are approved by bodies
empowered to monitor and approve under any Act of parliament or state government.
• The scope of recognised courses as exempt from GST has been expanded by this clarification.
Circular No. 121/40/2019-GST
GST on license fee charged by the States for grant of Liquor licences
• GST Council in its 26th meeting held on 10.03.2018, recommended that GST was not leviable
on license fee and application fee, by whatever name it is called, payable for alcoholic liquor for
human consumption and that this would apply mutatis mutandis to the demand raised by Service
Tax/Excise authorities on license fee for alcoholic liquor for human consumption in the preGST era, i.e. for the period from 01-04-2016 to 30-06-2017.
• Clause No. 117 of Finance (No. 2) Act, 2019 was inserted to provide exemption from service tax.
• By Notification No. 25/2019-CT(R), such supply has been notified as neither supply of goods nor
supply of services in GST.
• This exemption / exclusion is specific and it is clarified that it has no applicability or precedence
value in relation to grant of other licenses and privileges for a fee in other situations.
Our Comments
• Doubts shall still remain for the remaining period in GST from 1.7.2017 to 30.09.2019 when
notification was issued.
