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2021 (9) TMI 1291 - AAAR - GSTClassification of services - pure services or not - solid waste management service provided by the applicant to Notified Area Authority Vapi - exemption under N/N. 12/2017- Central Tax (Rate) dated 28.06.2017 - HELD THAT - The NAA Vapi is neither a Municipality nor a Municipal Committee nor a Zilla Parishad nor a District Board. The appellant has also not submitted any evidence so that the NAA Vapi can be termed as any other authority legally entitled to or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund . The submission of the appellant that the NAA Vapi is a wing of municipal corporation which is basically a local body established by the State Government to function as a self-government under Part-IX of the Constitution of India is without any basis and not supported by any evidence - The NAA Vapi also does not fall under any of the sub-clauses (d) to (g) of clause (69) of section 2 of the GST Acts. There are no merit in the submission of the appellant that the NAA Vapi like any other local body provides municipal services in the industrial area of GIDC Vapi therefore the NAA Vapi is a local authority for the simple reason that the definition of the local authority under section 2(69) of the GST Acts do not provide so. The said definition do not provide that any authority providing municipal services can be termed as local authority . The definition of local authority under section 2(69) of the GST Acts is an exhaustive definition inasmuch as it uses the word means and not includes . Therefore the scope of the definition cannot be expanded. As the NAA Vapi do not fall under any of the sub-clauses of the definition of local authority as defined in clause (69) of section 2 of the GST Acts the same cannot be considered as local authority . It is apparent from the composition of the Board of Management prescribed under Rule 3 of Gujarat Industrial Development (Notified Area) Rules 2007 that the Government does not have 90 per cent or more participation by way of control on the NAA Vapi. Further neither the aforesaid Rules provide anything regarding Government s participation by way of equity in the Notified Area Authority nor the appellant has submitted anything to this effect - the NAA Vapi cannot be considered as Governmental Authority . The activities being carried out by the appellant viz. solid waste management service provided to the NAA Vapi under the agreement is not covered under Sr. No. 3 of Notification No. 12/2017- Central Tax (Rate) as amended and Notification No. 12/2017-State Tax (Rate) as amended.
Issues Involved:
1. Whether the solid waste management service provided by the appellant to the Notified Area Authority, Vapi (NAA, Vapi) is exempted under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 2. Whether the NAA, Vapi qualifies as a "local authority" or "Governmental Authority" under the GST Acts. Issue-wise Detailed Analysis: 1. Exemption under Notification No. 12/2017-Central Tax (Rate): - The appellant contended that the services provided to NAA, Vapi fall under "Pure Services" as defined in Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate), which exempts services provided to governmental bodies in relation to functions entrusted to a Panchayat or Municipality under Articles 243G and 243W of the Constitution. - The GAAR observed that the services provided by the appellant included the cost of collection vehicles, tools, and other equipment, which implied the supply of goods along with services. Hence, it was not considered "Pure Services." - The appellant argued that these costs were operational expenses and did not constitute the supply of goods to NAA, Vapi. - The appellate authority examined the agreement and concluded that the use of goods and equipment by the appellant in providing the service did not change the nature of the service from "pure service" to "service with goods." 2. Qualification of NAA, Vapi as a "local authority" or "Governmental Authority": - The appellant claimed that NAA, Vapi is a local authority providing municipal services similar to a municipality under Article 243W of the Constitution. - The definition of "local authority" under Section 2(69) of the GST Acts was scrutinized. It includes entities like Panchayats, Municipalities, Zilla Parishads, and other authorities legally entitled to manage municipal funds. - The appellate authority found that NAA, Vapi did not fall under any of these categories as it was not constituted as a Municipality or any other specified local authority. - The appellant also argued that NAA, Vapi should be considered a "Governmental Authority" under clause (zf) of Paragraph 2 of Notification No. 12/2017-Central Tax (Rate), which requires the authority to be set up by an Act of Parliament or State Legislature with 90% or more government control. - The appellate authority noted that NAA, Vapi was established by a government notification and not by an Act of Parliament or State Legislature, and did not meet the criteria for government control as defined. Conclusion: - The appellate authority held that the services provided by the appellant to NAA, Vapi did not qualify for exemption under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) because NAA, Vapi was neither a "local authority" nor a "Governmental Authority." - The appeal was dismissed, and the ruling of the GAAR was upheld, concluding that the solid waste management services provided by the appellant to NAA, Vapi were not exempt from GST.
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