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2021 (6) TMI 562 - AAR - GSTExemption from GST - Municipality - Local Authority - Fee from parks - Market fee-daily - Market fee -weekly - Fish Market weekly - Fee for bays in bus stand - Bus Stand Others-Charges for TV Advt in bus-stand - Bus Stand Others-Locker rent provided in bus stand - Slaughter House fees - Fees for pay and use toilets bus stand and other common places - Fee for entry vehicle bus stand-two wheeler stand - Direct charge or Reverse charge - scope of Advance Ruling - services through tender contractors - services rendered and contractors are not agents - Annual track rent-Cable Operator laying fee (optical fiber laying fee) - Renting of building-Residential purpose - Whether the renting of immovable property service rendered by them as a local authority to Pure state Govt. offices, Co-operative society and Nationalised Banks are exempt or not? - HELD THAT - In the case at hand, the applicant is a Municipality, which is a local authority and is not a Governmental Authority. Therefore, this entry does not have any application to the applicant. Advance Ruling is applicable to the supplies currently being made or proposed to be made as per S.95 of the GST Act. In that count also, the application in hand being filed after 26.07.2018, the date effective which, the words, Local Authority stands omitted, sl.No. 4 of the notification No. 12/2017-C.T.(Rate) dated 28.06.2017 do not have any application and this claim is rejected. Fee from Park - HELD THAT - It is stated that the fee is collected for allowing the public, entry to the park maintained by the applicant. As per entry (1) of the Twelfth Schedule above, Provision of Urban amenities such as Parks is a function bestowed with the Municipality under Article 243 W of the Constitution. The applicant being a local authority is to provide such urban amenities as a public authority - The said activity when provided by the applicant, as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended with effective from 26.07.2018, is neither a supply of goods nor supply of service and not taxable to GST. Market fees - Daily - weekly - HELD THAT - The considerations collected based on the infrastructure extended to the farmers/merchants and the entities brought for sale are to convenient the public, wherein the applicant acts as a Public authority , in relation to the function Markets Fairs listed in the Eleventh Schedule. The said activity when provided by the applicant, as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017, is neither a supply of goods nor supply of service and not taxable to GST. Fees for bays in bus-stand - HELD THAT - The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended effective from 26.07.2018. Bus-stand others - HELD THAT - This activity need not be considered. Locker rent - HELD THAT - Entry at (1) states Provision of urban amenities and facilities such as parks, gardens, playgrounds. Here, the activity is providing Lockers in the Bus-stand which is not in the genre stated in the said entry. Therefore, providing lockers in the Bus-stand is not an activity in relation to the function at (1) of the Twelfth Schedule and hence, Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended is not applicable to this activity. Slaughter house fees - HELD THAT - The applicant has stated that the same is in relation to the function at (r) Regulation of slaughter houses and tanneries of the Twelfth Schedule of the Constitution. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/ 201 7-C.T. (Rate) dated 28.06.2017 as amended effective from 26.07.2018. Fees on Pay 85 use Toilets - HELD THAT - Providing toilets for use of Public in public places is a public amenity of Public conveniences and therefore, allowing use of toilet is an activity in relation to function at (q) of the Twelfth schedule entrusted to a Municipality under Article 243 W. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended effective from 26.07.2018. Cycle Stand, Scooter, Auto/ scooter two wheeler stand in Bus-stand - HELD THAT - Public amenities including street lighting, parking lots, bus stops and public conveniences is listed at (q) of the said Schedule. The applicant provides parking lots which is an activity specified in the said entry. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended effective from 26.07.2018. Whether services through tender contractors, they are covered under Twelfth Schedule to Article 243W of the Constitution? - HELD THAT - In the case at hand, from the terms of the tender documents and the contract agreements furnished before us, we find that the contractors are vested with the right to collect the fees fixed by the applicant for various activities through a tender process - The contractor then enters into an agreement with the applicant. On entering into the agreement and paying the bid amount to the applicant, the contractor holds the actual possession of the situation in respect of the activity covered in the said contract and is a public servant only for the purposes of Tamilnadu District Municipalities Act , through which the contractor is legally enabled to collect the fees fixed for various activities, for which he had successful won the tender. This being the situation, the claim of the applicant that the service provided by them to such contractors could not be termed as Service is without any merit and is not accepted. Supply of Rights held by the applicant to the contractors through the tender process is a supply made by the applicant to the contractors, who are business entities for furtherance of their business and is not an activity in relation to the functions entrusted under Article 243 G/243W and therefore the considerations received from the successful contractors are liable to tax. Whether in respect of the services rendered by them from Sl.No. 1 to 13 through tender contractors are covered under Twelfth schedule to Article 243 W of the Constitution and /or exempted, it has been brought out clearly that the contractors are not agents? - HELD THAT - The contractors being not agents of the applicant and the applicant supplying the Right to undertake certain activities to the contractors, who are independent entities, the Question raised by the applicant with regard to supply undertaken by their contractors is not answered as per S.95(a) readwith S.103(1) of the GST Act. Annual track rent-Cable Operator laying fee (optical fiber laying fee) - HELD THAT - On perusal of the document C1/2715/2017 dated 02.04.2018 issued to M/s. JIO digital, it is seen that permission is granted to lay OFC cable alongside the length of road, on payment of Road Cutting Charges and annual track rent charges. It is further stated that the Track rent is accounted under Accounting head 1110 and the Road cutting charges (Road restoration) is accounted under Accounting head 1041. From the above, it is evident that while Annual Track rent is a recurring charge to be paid by the service recipient, the Road cutting charges (Road restoration) is a onetime charge collected while laying the OFC initially - the supply of allowing the road cut for laying the OFC and allowing the space alongside the road for the OFC lines are not composite supply in as much as these two supplies are not made in conjunction with each other in the ordinary course of business. Renting of building-Residential purpose - HELD THAT - Sl.No. 12 of Notification 12/2017 dated 28.06.2017, Heading 9963 or Heading 9972 exempts services by way of renting of residential dwelling for use as residence without imposing any conditions. In the case at hand, the exemption provided in the said entry will be applicable to the applicant, in case of the applicant providing the residential dwellings owned by them for use as residence. Whether the renting of immovable property service rendered by them as a local authority to Pure state Govt. offices, Co-operative society and Nationalised Banks are exempt or not? - HELD THAT - Any service provided by Central Government, State Government, Union territory or a local authority to another Central Government, State Government, Union territory or local authority, which is not included in the Proviso therein, is exempted under SI.No. 8 of the Notification 12/2017 dated 28.06.2017. In the case at hand, the applicant is a Local Authority and therefore, the service of Renting of Immovable Property service, supplied to Central Government, State Government are exempted vide this entry - thus, renting of immovable property service provided by the applicant to another central/state government, union territory or local authority is exempted from tax as per Si. No. 8 of Notification 12/2017 dated 28.06.2017. The said exemption is not available in respect of Co-Operative Societies and Nationalised banks.
Issues Involved:
1. Whether the services rendered by the applicant directly are exempted under the relevant GST notifications. 2. Whether the services rendered by the applicant through tender contractors are exempted under the relevant GST notifications. 3. Whether the tax collected under direct charge instead of reverse charge can be regularized. 4. Whether the charges for laying cables alongside roads and road cutting charges can be classified as a composite supply and subject to reverse charge. 5. Whether full exemption is applicable for renting of residential buildings. 6. Whether renting of immovable property to various entities is fully exempted under the relevant GST notifications. Issue-wise Detailed Analysis: 1. Direct Services Exemption: - Fee from Parks: The activity of collecting fees for park maintenance is considered a public authority function under the Twelfth Schedule of the Constitution. As per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017, this is neither a supply of goods nor services and is not taxable under GST. - Market Fees (Daily and Weekly): The collection of market fees for providing market facilities is a function listed under the Eleventh Schedule of the Constitution. These activities are also exempt from GST under Notification No. 14/2017-C.T.(Rate) dated 28th June 2017. - Fees for Bays in Bus Stand: The collection of fees for parking buses in bus stands is related to public amenities. This activity is exempt from GST as it is a public authority function under Notification No. 14/2017-C.T.(Rate) dated 28th June 2017. - Locker Rent in Bus Stand: The activity of providing lockers for rent in bus stands does not fall under the functions listed in the Twelfth Schedule of the Constitution. Therefore, it is taxable under GST. - Slaughter House Fees: The collection of fees for using slaughterhouse facilities is related to the regulation of slaughterhouses, a function listed in the Twelfth Schedule. This activity is exempt from GST under Notification No. 14/2017-C.T.(Rate) dated 28th June 2017. - Fees on Pay & Use Toilets: The collection of fees for using public toilets is related to public conveniences. This activity is exempt from GST under Notification No. 14/2017-C.T.(Rate) dated 28th June 2017. - Vehicle Parking Fees in Bus Stand: The collection of fees for parking vehicles in bus stands is related to public amenities. This activity is exempt from GST under Notification No. 14/2017-C.T.(Rate) dated 28th June 2017. 2. Services Rendered Through Tender Contractors: - The contractors are not considered agents of the municipality but independent business entities who have been supplied with the right to collect fees. Therefore, the services provided by the contractors are not exempt under the relevant notifications. The supply of rights to collect fees by the municipality to the contractors is taxable under GST. 3. Regularization of Tax Collected Under Direct Charge: - The question of regularizing the tax collected under direct charge instead of reverse charge is not within the purview of the Advance Ruling Authority as per Section 97(2) of the CGST Act. Therefore, this question is not admitted for consideration. 4. Composite Supply and Reverse Charge for Cable Laying Charges: - The charges for road cutting and annual track rent are not considered a composite supply as they are not supplied in conjunction with each other in the ordinary course of business. Therefore, composite supply cannot be applied for classifying these services as renting of immovable property service. 5. Exemption for Renting of Residential Buildings: - The exemption provided under entry no. 12 of Notification 12/2017 dated 28.06.2017 is applicable to the applicant for providing residential dwellings for use as residence. 6. Exemption for Renting of Immovable Property to Various Entities: - State and Central Government Offices: Renting of immovable property service to another central/state government, union territory, or local authority is exempt from tax as per entry no. 8 of Notification 12/2017 dated 28.06.2017. - Co-operative Societies and Nationalized Banks: The exemption is not available for services rendered to co-operative societies and nationalized banks. Therefore, these services are taxable under GST. Ruling: 1. Direct Services Exemption: - Maintenance of Park: Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate). - Providing Market Facilities (Daily and Weekly): Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate). - Providing Bays in Bus Stand: Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate). - Locker Rent Facilities: Taxable under GST. - Providing Slaughter House Facilities: Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate). - Providing Toilet Facilities: Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate). - Providing Stand for Vehicles in Bus Stand: Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate). 2. Services Rendered Through Tender Contractors: - The applicability of the Notification to the supplies of the contractors is not answered as per S.95(a) readwith S.103(1) of the GST Act. 3. Regularization of Tax Collected Under Direct Charge: - The question is not admitted under Section 98(2) of the Act. 4. Composite Supply and Reverse Charge for Cable Laying Charges: - Composite supply cannot be applied for classifying the said service as renting of immovable property service. 5. Exemption for Renting of Residential Buildings: - The exemption under entry no. 12 of Notification 12/2017 dated 28.06.2017 is applicable for providing residential dwellings for use as residence. 6. Exemption for Renting of Immovable Property to Various Entities: - Renting of immovable property service to another central/state government, union territory, or local authority is exempt from tax. Services to co-operative societies and nationalized banks are not exempt and are taxable under GST.
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