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2022 (1) TMI 798 - AAAR - GSTExemption form GST - Slaughter house fees - Fees on pay use toilets - services rendered directly are covered under Twelfth Schedule to Article 243W of the Constitution and /or exempted under the Notfn. No mentioned against each SI No.? - HELD THAT - The AAR has given a ruling that services by way of slaughtering of animals / fees on pay use toilets is neither a supply of goods nor a supply of service as per notfn. No. 14/2017-CT(R) as amended by notfn. No. 16/2018-CT(R) being an activity in relation to a function entrusted to a Municipality under Article 243W of the constitution, in which they are engaged as public authority. However, the appellant is not satisfied and has sought to appeal seeking another ruling from the appellate authorities that the activity is also covered under Sl no. 56 /76 of the table in notfn. No. 12/2017-CT(R) - the ruling sought by the applicant is not for the activities undertaken by him but sought for the activity in general which is not permitted under S.95, especially when for the same service done by the tender contractors of the appellant. It appears only to be a ploy and an extravagant claim without supported by any legal fiction or rule nor even equity but only done to lure the AAAR into a trap of self-contradiction while answering further questions later and is therefore, highly condemnable. In view of the above, in respect of the question sought, the appeal is not entertained. Rent for locker provided in bus stand - HELD THAT - The activities in relation to function entrusted to a municipality under 243W of the constitution are multitudinous and unless the provisions of respective state municipality acts are also read in conjoint with the functions entrusted under the constitution, it is not easy to fathom the activities undertaken by the municipalities in a state - Providing locker facility in a bus stand for the common man for which a fee is charged is only an activity ancillary to constructing a bus stand and therefore, there is no room for doubt in our minds that locker facility for common public in bus stand is an activity undertaken by the municipality as a function entrusted under 243W of the constitution and the services of rent or fee collection for such a facility is neither a supply of goods nor a supply of service as per notfn. No.14/2017-CT(R) and hence exempt. If all services not done directly by the municipal corporation but by the tender contractors - the appellant is aggrieved of the fact that the AAR had answered in negative for exemption and hence the appeal - HELD THAT - In the present case, there are three parties, namely the corporation, the contractor and the public/consumer. The corporation enters into a contract, with the contractor, requiring the contractor to provide to the public, a service which constitutes an activity covered under the above notification. This arrangement results in two sets of transactions, one between the Corporation and the contractor, and the other between the contractor and the public. The present application is restricted to, seeking ruling on the tax applicable for the transaction between the corporation and the contractor. The transaction between the corporation and the contractor is an activity/transaction undertaken by the local authority, engaged as public authority. The requirement explicitly stated in section 7(2)(b) are met. Further, in as much as this transaction/activity undertaken by the corporation is an activity covered under the above notification, this transaction/activity under sl. No. 1 to 9 and 13 ('except. SI.No. 5A Charges for TV advt. in Bus Stand; 5C- Flower shop in bus stand in open space SI.No. 7-Bunk Stall') listed by the AAR as neither a supply of goods nor a supply of service are available to contractors also provided the same are rendered as hack to back services to the appellant. Operation of flower shops by contractors - Bunk Stalls by contractors as well as advertisement rent through TVs installed in the bus stand - HELD THAT - Since the same are earmarked to be kept at a particular location and at the same time ensuring prominence of location to attract buyers and further since a rent is fixed under contractual agreements, the same would fall under 'renting of immoveable property' services as defined under definitions 2(zz) under the notfn. No. 12/2017 and the exemption under sl.no. 7 of notfn no. 12/2017-CT (Rate) is available as well as charging of tax on RCM basis under sl. No. 5 of notfn. 13/2017-CT(R) subject to fulfilment, of the conditions spelt out therein. Whether the charges obtained for the service of road cutting for the purpose of laying cables by telephone companies alongside roads on contract basis is a composite supply? - Composite supply or not - HELD THAT - The question is answered in affirmative. Though two charges are collected by the appellant for road cutting and annual rent for cables running across the road, it can be seen that unless road is cut, cables cannot bo laid and mere road cutting without laying of cables is useless. Therefore, both the services have to run in tandem with respect to the telephone companies and the methodology of collection of money is immaterial to the fact of the activities of road cutting and laying of cables, which is indeed a composite supply, it must also be noted that this is a factual question and is restricted to the particular activity of road cutting followed by laying of cables by telephone companies and therefore, the same is not to be extended to all the types of road cutting activities.
Issues Involved:
1. Whether the services rendered directly by the appellant are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted under the specified notifications. 2. Whether services rendered through tender contractors are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted under the specified notifications. 3. Classification of charges for laying cables and road cutting as composite supply. 4. Regularization of tax collected under direct charge instead of reverse charge. 5. Exemption status of renting of immovable property to various entities. Issue-Wise Detailed Analysis: Issue 1: Direct Services Coverage and Exemption The Appellant sought advance ruling on whether services rendered directly (SI No. 1 to 6, 8, 9, and 13) are covered under Twelfth Schedule to Article 243W and/or exempted under specific notifications. The AAR ruled: - Maintenance of Park, Market facilities (daily and weekly), Bays in bus stand, Slaughter house facilities, and Toilet facilities are not a supply of service as per Notification No. 14/2017-CT(R) as amended. - Locker rent facilities are taxable as they do not fall under Notification No. 14/2017. - Room rent for temporary stay is exempted if it does not exceed Rs. 1000/day/person. - Entry of vehicles in the market is not a supply of service as per Notification No. 14/2017-CT(R). Issue 2: Services Rendered Through Contractors The AAR ruled that the supply of 'Right to collect fees/right to certain amenities' to contractors is an independent supply and did not answer the applicability of the notification to supplies by contractors. The Appellate Authority held that: - Activities under SI No. 1 to 9 and 13 (except SI No. 5A, 5C, and 7) by contractors are covered under Notification No. 14/2017-CT(R) if rendered as back-to-back services to the appellant. - Services such as TV advertisement charges, flower shops in bus stands, and bunk stalls are covered under SI No. 7 of Notification No. 12/2017-CT(R) and subject to reverse charge mechanism under SI No. 5 of Notification No. 13/2017-CT(R). Issue 3: Composite Supply of Cable Laying and Road Cutting The AAR ruled that road cutting and annual rent for cables are not a composite supply. The Appellate Authority disagreed, concluding that road cutting followed by cable laying constitutes a composite supply, as both activities are interdependent and run in tandem. Issue 4: Regularization of Tax Collection Method The AAR did not admit the question on regularizing tax collected under direct charge instead of reverse charge, stating it is beyond their purview as per Section 97(2). The Appellate Authority upheld this decision. Issue 5: Exemption Status of Renting of Immovable Property The AAR ruled that renting of immovable property services to another Central/State Government/Union territory or Local authority is exempt under SI No. 8 of Notification No. 12/2017-CT(R). Services to other entities, such as cooperative societies and nationalized banks, are not exempt. Ruling: - The appeal on SI No. 6 and 9 is not entertained. - Locker rent in bus stands is an activity under 243W and exempt from GST. - Transactions between the corporation and contractors for SI No. 1 to 9 and 13 (except SI No. 5A, 5C, and 7) are covered under Notification No. 14/2017-CT(R). - Services like TV advertisement charges, flower shops, and bunk stalls are covered under SI No. 7 of Notification No. 12/2017-CT(R) and subject to reverse charge mechanism. - Road cutting and cable laying by telephone companies are composite supplies. The appeal is disposed of accordingly.
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