AAR Rules Section 8 Company Is a “Body Corporate”: Sponsorship Services Now Taxable Under Forward Charge

The Mining Geological and Metallurgical Institute of India (MGMI), a professional association formed in 1909 as a company limited by guarantee, approached the AAR seeking clarity on how GST applies to its sponsorship receipts. Although incorporated under the 1882 Companies Act, the Institute functions as a not-for-profit entity with Section 8 restrictions: it cannot distribute profits, does not declare dividends, and applies all income solely to its educational and scientific objectives in mining, geology, and metallurgy. Its activities include national and international seminars, workshops, technical conferences, student outreach programs, and flagship events such as the Asian Mining Congress and the International Mining Exhibition.

Until 15 January 2025, sponsorship services supplied to a body corporate were taxable under reverse charge, regardless of whether the supplier itself was a company or not. After the amendment through Notification 07/2025, reverse charge applies only when the supplier is not a body corporate.

Issue Before the Authority: Whether the MGMI entity incorporated under Section 8 of the Companies Act qualifies as a “body corporate” for GST purposes, and whether its sponsorship services from 16.01.2025 are taxable under forward charge or reverse charge.

AAR Ruled: The Authority examined that the definition of “body corporate” expressly refers to Section 2(11) of the Companies Act, 2013. It held that this definition is clear and exhaustive: all companies incorporated under the present or earlier Companies Acts are “body corporates,” except cooperative societies or entities specifically notified for exclusion. MGMI, incorporated in 1909 under the Indian Companies Act, is therefore a company under the previous company law and automatically a body corporate under Section 2(11).

The Authority further held that MGMI cannot be treated as a trust under GST merely because it is treated as such under the Income Tax Act. There is no referential incorporation of the Trusts Act into GST, nor does MGMI meet the legal requirements of a trust under the Indian Trusts Act, 1882. The AAR concluded that sponsorship services supplied by MGMI to recipients in the taxable territory are not eligible for reverse charge after the 2025 amendment. MGMI itself must discharge GST under forward charge.

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