2020 (1) TMI 1429 - AAR - GST

Government Entity or not - Uttar Pradesh Power Transmission Corporation Limited - applicability of Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017 - whether the applicant is either set up by an act of Parliament or state legislature, or, established by any Government - HELD THAT - In terms of provisions of the Electricity Act, 2003 (which provides for the establishment of State Transmission Utility by State Government) the applicant was formed by virtue of a transfer scheme introduced through Notification Number dated 3rd November, 2015 - M/S UPPTCL was established by the Government of Uttar Pradesh. Holding of 90 percent or more equity or control - HELD THAT - Out of the total share of M/s. UPPTCL, 83.72% shares are held by the Government of Uttar Pradesh and remaining 16.28 % are held by M/s. UPPCL (a company in which 100% shares are held by the Government of Uttar Pradesh). The Notification No. 11/2017- Central Tax (Rate) dated 28th June 2017 (as amended) envisages an entity as Government Entity wherein 90 per cent or more participation by way of equity or control is held by the Government - In the instant case, direct equity held by the Government in M/s. UPPTCL is 83.72% and remaining 16.28 % is held indirectly by the Government through a company in which 100% equity is held by the Government. Another situation envisaged by the Notification No. 11/2017- Central Tax (Rate) dated 28th June 2017 (as amended) is the control held by the Government - the applicant fulfills the condition established by any Government with 90 percent or more participation by way of equity or control as given in the Notification No. 11/2017 - Central Tax (Rate) dated 28th June 2017 (as amended). The applicant is covered under the definition of the term 'Government Entity' in terms of Notification No. 11/2017- Central Tax (Rate) dated 28th June 2017, as amended by Notification No. 31/2017- Central Tax (Rate) dated 13 th October 2017.

Issues Involved:
1. Whether Uttar Pradesh Power Transmission Corporation Limited (UPPTCL) qualifies as a 'Government Entity' under Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017.

Issue-wise Detailed Analysis:

I. Definition of 'Government Entity':
The applicant, UPPTCL, sought clarification on whether it is covered under the definition of 'Government Entity' as per Notification No. 31/2017 - Central Tax (Rate) dated 13 October 2017. The relevant definition from Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017, as amended by Notification No. 31/2017-Central Tax (Rate) dated 13th October 2017, is as follows:

“Government Entity” means an authority or a board or any other body including a society, trust, corporation,
i. set up by an Act of Parliament or State Legislature; or
ii. established by any Government,
With 90 percent, or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.

II. Establishment by Government:
The Authority examined whether UPPTCL was established by the Government. The term 'Government' under Section 2(53) of the UPGST Act, 2017, means the Government of Uttar Pradesh. Section 39 of the Electricity Act, 2003, allows the State Government to notify a company as the State Transmission Utility. UPPTCL was formed by virtue of a transfer scheme introduced through Notification Number dated 3rd November 2015, thus establishing it by the Government of Uttar Pradesh.

III. Equity or Control by Government:
The Authority considered whether UPPTCL has 90 percent or more participation by way of equity or control by the Government. The Government of Uttar Pradesh holds 83.72% shares directly, and the remaining 16.28% shares are held by UPPCL, a company wholly owned by the Government of Uttar Pradesh. Additionally, the Board of Directors and Chairman of UPPTCL are appointed by the Government of Uttar Pradesh, indicating control by the Government. Therefore, UPPTCL fulfills the condition of having 90 percent or more participation by way of equity or control.

IV. Functions Entrusted by Government:
The Authority reviewed whether UPPTCL carries out functions entrusted by the Government. The main objects of UPPTCL, as per its Memorandum of Association, include acquiring, establishing, constructing, operating, and managing electrical transmission lines and networks, executing agreements for power transmission, undertaking the functioning of the State Load Dispatch Centre, and coordinating power system planning and operations. These functions are in line with the responsibilities entrusted by the State Government.

Conclusion:
The Authority concluded that UPPTCL meets the criteria for being a 'Government Entity' as per Notification No. 11/2017- Central Tax (Rate) dated 28th June 2017, as amended by Notification No. 31/2017- Central Tax (Rate) dated 13th October 2017. The applicant is established by the Government of Uttar Pradesh, has more than 90 percent participation by way of equity or control by the Government, and carries out functions entrusted by the Government.

Ruling:
The applicant, Uttar Pradesh Power Transmission Corporation Limited, is covered under the definition of the term 'Government Entity' in terms of Notification No. 11/2017- Central Tax (Rate) dated 28th June 2017, as amended by Notification No. 31/2017- Central Tax (Rate) dated 13th October 2017.

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