GST Sponsorship Services: Section 8 Companies Classified as ‘Body Corporate’, Forward Charge Applies from January 2025: AAR

The West Bengal Authority for Advance Ruling (WBAAR) has held that a Section 8 not-for-profit company qualifies as a “body corporate” under GST law and must discharge GST on sponsorship services under the forward charge mechanism, following amendments notified in January 2025. The bench of Shafeeq S. and Jaydip Kumar Chakrabarti has observed that the applicant being treated as a public charitable trust under the Income Tax Act cannot be an argument for claiming the status of trust under the GST Act. The two acts are different and there is no referential legislation, whatsoever, in the GST Act in this respect. The ruling was delivered in the case of The Mining, Geological and Metallurgical Institute of India (MGMI), a century-old professional body incorporated in 1909 under the Indian Companies Act, 1882 and presently governed by Section 8 of the Companies Act, 2013. MGMI approached the Authority seeking clarity on whether, despite its charitable and non-profit character, it would be treated as a “body corporate” for GST purposes while providing sponsorship services MGMI is a professional, non-profit association engaged in promoting mining, geology and metallurgy through conferences, exhibitions, seminars, technical lectures and publications. It organises large-scale events such as the Asian Mining Congress and the International Mining Exhibition, for which it receives sponsorship fees, delegate fees and related receipts. These receipts are used entirely to meet event costs and further its professional objectives, without any profit distribution to members Under the GST regime, sponsorship services are taxable. Until 15 January 2025, GST on sponsorship services provided to body corporates or partnership firms was payable by the recipient under the reverse charge mechanism (RCM), irrespective of the nature of the supplier. However, Notification No. 07/2025 amended the relevant GST rate notifications to restrict RCM only to cases where the supplier is “any person other than a body corporate.” This amendment shifted GST liability to the supplier where the supplier itself is a body corporate MGMI sought advance rulings on three core issues. Firstly, whether a Section 8 company incorporated under earlier company law qualifies as a “body corporate” under GST laws. Secondly, whether it should be regarded as a body corporate while rendering sponsorship services after the January 2025 amendments. Lastly, whether GST on such sponsorship services is payable by MGMI under forward charge or continues to be payable by the recipient under reverse chargeMining Geological And Metallar. The applicant contended that although it is incorporated under company law, its substantive character is that of a non-profit professional institution. It argued that Section 8 companies are fundamentally distinct from commercial corporates, as they are barred from distributing profits and must apply all income towards charitable or professional objects. Relying on judicial precedents relating to societies and trusts, MGMI claimed that definitions borrowed from other statutes should be interpreted contextually and that non-profit entities should not be equated with profit-oriented body corporates for GST purposes. MGMI also submitted that treating Section 8 companies as body corporates would lead to discrimination, since similarly placed trusts and societies would continue to enjoy RCM treatment, while charitable companies would be burdened with forward charge compliance Rejecting the applicant’s contentions, the WBAAR observed that the GST notifications themselves clearly define “body corporate” by reference to Section 2(11) of the Companies Act, 2013. Under this definition, all companies incorporated under the Companies Act or previous company law qualify as body corporates, except cooperative societies and entities specifically notified by the Central Government. The Authority emphasised that Section 8 companies, despite their non-profit orientation, continue to be “companies” and “body corporates” under company law. The GST law, it noted, does not distinguish between profit-making and non-profit entities while defining business or determining tax liability. In fact, the definition of “business” under GST expressly covers activities carried out “whether or not for a pecuniary benefit,” making profit motive irrelevant. The argument that MGMI should be treated as a trust was also rejected, as it is neither registered under the Indian Trusts Act nor structured as a trust in law. Its recognition as a charitable institution under income-tax law was held to be irrelevant for GST classification. Ruling Details Applicant’s Name: Mining Geological And Metallargical Institute of India Ruling Date: 10/12/2025 Click Here To Read Ruling Read More: 5% GST Payable On Homoeopathic Medicaments: AAR

GST Sponsorship Services: Section 8 Companies Classified as ‘Body Corporate’, Forward Charge Applies from January 2025: AAR

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GST Sponsorship Services: Section 8 Companies Classified as ‘Body Corporate’, Forward Charge Applies from January 2025: AAR

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