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2019 (11) TMI 1710 - AAR - GSTLevy of GST - collection of Sopo from vendors for occupation of space (both open and covered) in the Municipal Market area - Renting of immovable property or not - whether making available a space, both open and covered within the area of the Municipal Market to vendors, hawkers and small merchants is covered in Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution or to a Municipality under article 243W of the Constitution? - HELD THAT - The Eleventh Schedule of Constitution of India includes entry of markets and fairs at Si. No. 22. However, no such entry is available in Twelfth Schedule. The applicant here is Municipality and as such cannot be said to be providing services by way of an activity in relation to a function entrusted to a Municipality under Article 243 W of the Constitution. Moreover, such fees for occupation of open space are collected even by private parties in arears where there are business activities, as such it is not the function which is entrusted to local authority in which it is engaged as public authority. GST is payable on collection of Sopo from 1 July, 2017.
Issues:
1. Whether GST is payable on the collection of Sopo. Analysis: The application was filed seeking an Advance Ruling on whether GST is applicable on the collection of "Sopo" by a Municipal Council in Goa. The "Sopo" is a nominal fee collected from vendors for occupying space in the Municipal Market area. The Council argued that this fee does not amount to renting of immovable property as vendors are not allocated fixed spaces or provided with amenities. The collected amount is primarily used for market area maintenance, which is an obligatory duty of the Council under the Goa Municipalities Act. The Commissioner (Appeals) had previously set aside the liability of service tax on "Sopo." However, the Authority for Advance Ruling analyzed the GST Act's provisions. Section 9(1) of the CGST Act, 2017 levies GST on all intra-state supplies of goods or services. The expression "supply" includes various transactions for a consideration in the course of business. Schedule II of the Act specifies activities to be treated as supply of goods or services, including the transfer of business assets and land-related transactions. The Authority noted that as per Schedule II of the CGST Act, a license to occupy land is considered a supply of services. Considering the nature of "Sopo" as a fee for occupying space in the market area, it falls within the definition of "supply" under GST. Additionally, a notification by the Central Government exempting certain activities by local authorities from GST did not apply to the case at hand. The ruling delved into the functions entrusted to a Municipality under Article 243W of the Constitution and those entrusted to a Panchayat under Article 243G. The functions related to markets and fairs are listed under the Panchayat's responsibilities, not the Municipality's. Therefore, the Municipal Council's collection of fees for space occupation does not fall under the functions entrusted to a Municipality. Hence, the ruling concluded that GST is payable on the collection of "Sopo" from July 1, 2017, based on the provisions of the CGST Act, 2017.
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