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2019 (3) TMI 1740 - AAR - GSTExemptions available to a local authority under the various entries of the Exemption Notification - Applicant is a statutory authority constituted under the New Town Kolkata Development Authority Act, 2007 (NKDA Act) for providing various civic services and amenities within the local area of New Town, Kolkata - whether the services it supplies are exempt under Notification No 12/2017 Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017) as amended time to time? - whether it is liable to be registered? HELD THAT - NKDA is a statutory authority established to carry out the functions entrusted to a Municipality under Art 243W of the Constitution. It is a body discharging municipal functions, although not a municipality as required to be constituted under Art 243Q of the Constitution and is fit to be included as other authority under section 2(69)(c) of the GST Act. It will also be a local authority within the meaning of the above section of the GST Act if the Applicant is legally entitled to or entrusted by the State Government with the control or management of a municipal or local fund - NKDA is not a Municipality. It cannot, therefore, be entrusted with the control or management of a municipal fund, as described under section 67 of Chapter VII of Part III of the West Bengal Municipal Act, 1993. Section 3 of the NKDA Act provides that the members of NKDA, including the Chairman, shall be appointed by the State Government. It sanctions and creates or reduces posts of officers under NKDA and, if it thinks necessary, may appoint its officers on deputation to NKDA on such terms and conditions as it may determine (section 10 and 11 of the NKDA Act). The State Government may decide the pay and allowances of the officers and other employees of NKDA and may provide grant towards payment of such salary (section 12 of the NKDA Act). It shall prescribe the manner in which the accounts of NKDA are to be kept and audit such accounts on regular basis (sections 24 and 25 of the NKDA Act) - Section 19 of the NKDA Act provides for constitution of a Development Fund for the purpose of the Act and all amounts received by NKDA, including the charges levied under section 35, grants received from the State Government, shall be credited to the said fund. Correspondence mentioned in para 2.2 above also establishes that NKDA has come under the control of the State Government which would bear its liabilities for salary and other grants and that the Principal AG (A E), Kolkata, approves NKDA to operate a local fund. NKDA, a statutory authority discharging municipal functions (although not a municipality as required to be constituted under Art 243Q of the Constitution) within the territorial jurisdiction of New Town, Kolkata, is legally entitled to and entrusted by the State Government with the control or management of a local fund as defined in TR 6.29 of WBTR - It is, therefore, a local authority under section 2(69) (c) of the GST Act and entitled to the exemptions available under the Exemption Notification on the services it supplies.
Issues:
Admissibility of the Application; Submission of the Applicant; Submissions of the Revenue; Observations & Findings of the Authority. Admissibility of the Application: The Applicant, a statutory authority, sought a ruling on the exemption of services under the Exemption Notification and its liability for registration. The concerned officer from the Revenue did not object to the admissibility of the application, and it was admitted. Submission of the Applicant: The Applicant, New Town Kolkata Development Authority (NKDA), provides civic services within its local area and claimed to be a local authority under the GST Act. NKDA argued that it is legally entitled to and entrusted by the State Government with the control and management of a local fund, making it eligible for exemptions under the Exemption Notification. The Applicant's functions align with those assigned to a Municipality under the Constitution of India. Submissions of the Revenue: The Revenue officer questioned NKDA's status as a local authority, citing judicial precedents to argue that NKDA's functions may not meet the criteria under the GST Act. The officer expressed skepticism regarding the interpretation of the local fund in the context of the GST Act for regulatory bodies and autonomous entities. Observations & Findings of the Authority: The Authority analyzed the definition of a local authority under the GST Act and compared it to relevant legal provisions and court judgments. The Authority determined that NKDA, although not a Municipality, qualifies as a local authority under section 2(69)(c) of the GST Act as it is legally entitled to and entrusted by the State Government with the control or management of a local fund. NKDA's functions align with those of a Municipality under the Constitution, making it eligible for exemptions under the Exemption Notification. Ruling: The Authority ruled that NKDA is a local authority under the GST Act and is entitled to exemptions on the services it provides as per the Exemption Notification. The question of liability for registration was not addressed as the Applicant did not pursue it during the proceedings. The ruling is valid unless declared void under the provisions of the GST Act. This comprehensive analysis of the judgment highlights the key issues, arguments presented by the Applicant and Revenue, the legal interpretation by the Authority, and the final ruling provided in the case.
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