IIM Raipur Foundation's Consultancy Under Rural Livelihood Project Attracts 18% GST: Chhattisgarh AAR

The Chhattisgarh Authority for Advance Ruling (AAR) has held that consultancy services provided by IIM Raipur Foundation for Entrepreneurship Development under a rural livelihood incubation project attract GST at 18%.

A Bench comprising Joint Commissioners Yachana Tambey and Arvind Kumar considered the Foundation's application seeking a ruling on the GST treatment of its services and funds administered under the Chhattisgarh State Rural Livelihoods Mission (CGSRLM) Incubation Project. It observed:

“In this context, we find that the said 'Contract for Services', under CGSRLM/DDU-GKY/STSA/2025-26/01 dated March 7, 2026 enables the applicant IIM Raipur to function as a consultant to render consultancy services as discussed herein above. Further, the same also appears to indicate that the said consultancy services are composite supply of goods and services.”

The Foundation had entered into a contract with CGSRLM, an apex community-driven livelihoods promotion society under the Department of Rural Development, Government of Chhattisgarh, to provide technical support for establishing and operating incubators across the State.

The project was funded under the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM) scheme of the Ministry of Rural Development, Government of India.

Under the contract, the Foundation was required to map rural enterprises, conduct pitch training, administer a challenge fund, establish incubator centres, provide business baseline training and facilitate market linkages. The contract was valued at Rs. 10.70 crore for a period of 36 months.

The Foundation contended that its activities furthered the State's constitutional obligations under Article 243G of the Constitution and qualified for exemption as services provided to the Government.

It also argued that challenge fund grants, soft loans and equity investments were merely pass-through amounts and should be excluded from the taxable value under Rule 33 of the Central Goods and Services Tax (CGST) Rules, 2017.

Rejecting the exemption claim, the Authority observed that the Foundation had been engaged as a consultant to provide technical and professional services under the contract. It held that the arrangement constituted a composite supply of goods and services and that government funding of the underlying rural livelihood programme did not, by itself, make the consultancy services exempt from GST.

On the exclusion of challenge fund grants, soft loans and other enterprise-support funds from the taxable value, it held that the Foundation was responsible for administering, facilitating or passing on these amounts as part of its contractual obligations. It said:

“The Applicant is functional as a Technical Consultant for providing Technical Support Service Agency (TSA) for establishment of Incubators under Chhattisgarh Grameen Aajeevika Samvardhan Samiti (CGSRLM - Bihan), and accordingly on the basis of evidences available before us, we hold that the said challenge fund grants, soft loan amounts and enterprise-support funds administered, facilitated, or passed on under the CGSRLM Incubation Project will form part of the taxable value of services supplied by IIM Raipur Foundation for Entrepreneurship Development.”

Further, the Bench held that the Foundation had failed to establish the conditions prescribed under Rule 33 for excluding amounts incurred as a pure agent. It noted that the Foundation had not demonstrated that it acted as a pure agent, obtained authorisation from the recipient, separately indicated the relevant amounts in its invoices or held no title to or beneficial interest in the supplies.

It also examined the exemption under Entry 48 for services supplied to recognised incubators. It noted that the exemption covered Technology Business Incubators and Science and Technology Entrepreneurship Parks recognised by the National Science and Technology Entrepreneurship Development Board (NSTEDB), as well as specified bio-incubators.

Since the Foundation had not obtained the requisite recognition from NSTEDB, the Authority held that it could not claim the exemption. It clarified that the benefit could become available from the date of recognition, subject to fulfilment of the prescribed conditions.

Accordingly, the AAR ruled that the consultancy services provided by the Foundation under the CGSRLM Incubation Project attracted GST at 18%, comprising 9% Central GST (CGST) and 9% Chhattisgarh GST (CGGST). It clarified that the challenge fund grants, soft loans and other enterprise-support funds administered or passed on under the project formed part of the taxable value.