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2020 (1) TMI 975 - AAR - GSTExemption under N/N. 12/2017 - Government Authority or not - parking lot services provided by the Contractor appointed by the Market Committee - Whether the parking lot services provided by the Contractor appointed by the Market Committee, which is a Government Authority is exempt under Notification No. 12/2017 as the parking lot activity is covered under Article 243 of the Constitution? HELD THAT - The other functions of the State including welfare activity of State could not be construed as sovereign exercise of power. Hence, every governmental function need not be sovereign . State activities are multifarious. From the primal sovereign power, which exclusively inalienably could be exercised by the Sovereign alone, which is not subject to challenge in any civil court to all the welfare activities, which would be undertaken by any private person. In the present case, although the Punjab State Agricultural Marketing Board was established on 26th May, 1961 under the Punjab Agricultural Produce Markets Act; 1961, its function cannot be considered as sovereign functions and accordingly the parking fees collected by them through the applicant does not acquire the nature of statutory fee so as to be outside the scope of any tax. Thus, the parking fees collected by the applicant are not in nature of statutory fees - thus, the parking lot services provided by the Contractor appointed by the Market Committee, are not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority as per the definition provided in the clause 2(zf) of the notes appended to N/N. 12/2017. The parking services provided by the Contractor appointed by the Market Committee, not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority - Marketing committee (Mandi Board) does not qualify under the definition as provided in clause 2(zf) of the notes appended to N/N. 12/2017 - The activity / services of parking provided by the applicant falls under heading 9967 and attracts GST@ 18%.
Issues Involved:
1. Whether the Market Committee qualifies as a Government Authority. 2. Whether the parking lot services provided by the contractor are exempt under Notification No. 12/2017. 3. Classification and taxability of parking lot services under GST. Issue-wise Detailed Analysis: 1. Whether the Market Committee qualifies as a Government Authority: The applicant contended that the Market Committee is a Government Authority as per clause (zf) of Notification No. 12/2017, which defines a Governmental Authority as an authority or board set up by an Act of Parliament or State Legislature or established by any Government with 90% or more participation by way of equity or control, to carry out any function entrusted to a Municipality under Article 243W of the Constitution. The Punjab State Agricultural Marketing Board (PSAMB) was established under the Punjab Agricultural Produce Markets Act, 1961, to control and supervise the marketing network of agricultural produce. The primary object of the Punjab Mandi Board and Market Committees is to establish modern markets for efficient marketing of agricultural produce and enforce the provisions of the Act, Rules, and Bye-laws framed thereunder. However, the functions of the Mandi Board do not align with the functions entrusted to a Municipality under Article 243W of the Constitution, which include urban planning, regulation of land use, construction of buildings, and provision of urban amenities such as parks, gardens, playgrounds, and parking lots. The Mandi Board is not established by the State Government for providing parking lot services, and its functions are not considered sovereign functions. Therefore, the Mandi Board does not qualify as a Government Authority under the definition provided in clause 2(zf) of Notification No. 12/2017. 2. Whether the parking lot services provided by the contractor are exempt under Notification No. 12/2017: The applicant argued that the parking lot services provided by the contractor appointed by the Market Committee should be exempt under Notification No. 12/2017, as they are covered under Article 243W of the Constitution and the services provided by a Governmental Authority in relation to any function entrusted to a Municipality are NIL rated. However, since the Mandi Board does not qualify as a Government Authority, the parking lot services provided by the contractor are not exempt under Notification No. 12/2017. The parking fees collected by the Market Committee from the people entering their premises do not fall under the definition of sovereign functions and are not considered statutory fees. 3. Classification and taxability of parking lot services under GST: The parking lot services provided by the applicant fall under Heading 9967 (Supporting services in transport), specifically under Service Code 996743 (Parking lot services). According to Notification No. 11/2017-Central Tax (Rate), the taxable services under this heading attract GST at the rate of 18% (CGST 9% + SGST 9%). RULING: The parking services provided by the contractor appointed by the Market Committee are not exempt under Notification No. 12/2017, as the Market Committee is not a Government Authority. The activity/services of parking provided by the applicant fall under Heading 9967 and attract GST at the rate of 18% (CGST 9% + SGST 9%).
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