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2022 (5) TMI 1355 - AAR - GSTPure service - Benefit of exemption from GST - Governmental Entity or not - Renting of immovable Property Services - collection of utility charges (eg. Electricity charger) from PCSCL as Reimbursement - Whether PCSCL is termed as Government or Local Authority of Government Authority or Governmental Entity as per GST Law? - HELD THAT - Section 95 of the CGST Act, 2017 states that, advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - As per the submissions made, it is seen that the subject question raised is pertaining to the recipient of the impugned supply and is not 'in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant' and therefore cannot be answered in terms of the provisions of Section 95 of the CGST Act, 2017. Whether PCSCL is eligible to take claim benefits of Government or Local Authority of Governmental Authority or Governmental Entity tee. Exemption as per Notification 12/2017-Central Tax (Rate) dated 28/06/2017)? - HELD THAT - The question pertains to the recipient of the impugned supply and therefore cannot be answered in terms of the provisions of Section 95 of the CGST Act, 2017. Whether Renting of immovable Property Services provided to PCSCL exempt as per GST Law. If taxable then at what rate GST will be applicable? - HELD THAT - In the instant case, pure services (in the form of Renting of immovable Property services), are supplied by the applicant to PCSCL. Thus, the first part of the conditions mentioned at Sr. No. 3 of the aforesaid Notification is satisfied in the subject case - The second condition to be satisfied for availing exemption under the above referred Notification is that such pure services, as are being rendered in the subject case, should be supplied to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity. Thus, it is needed to discuss whether PCSCL can be considered as a Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity - PCSCL cannot be considered as a Central Government, State Government or Union territory or local authority. Whether PCSCL' would be covered under the definition of 'Government Entity'/Governmental Authority as given in Notification No. 32/2017 dated 13.10.2017? - HELD THAT - A 'Government Entity' must be either set up by an Act of Parliament or State Legislature or established by any Government, with 90 per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority - In the subject case, from the submissions made by the applicant, it is seen that, the Government of Maharashtra and the PCMC has 50 50 percent stake in PCSCL which would imply that PCSCL is controlled by the Government of Maharashtra since, PCMC is also a local authority under the Government of Maharashtra. PCSCL is constituted and established by the State Government of Maharashtra to carry out the function entrusted to it by the State Government i.e. to carry out the function of implementing Smart Cities Project of the Government of India, in the State of Maharashtra and therefore PCSCL is clearly covered under the definition of 'Government Entity' as can be seen from the definition of a Government Entity'. The Smart Cities Mission is a vision of the Government of India to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to Smart outcomes, area-based development which will transform existing areas, including slums, into better planned ones, thereby improving liveability of the whole City. In some cases, new areas to be developed around cities in order to accommodate the expanding population in urban areas - it is clearly seen that even though the pure service (renting of immovable property services) is provided to PCSCL, a Government Entity, the said service, per se, cannot be considered as an activity in relation to any function entrusted to a Municipality under Article 243W of the Constitution, or entrusted to a Panchayat under Article 243 G of the Constitution because the activity of renting of immovable property does not find mention in either Article 243 G or Article 243 W of the Constitution. Thus, Renting of immovable Property Services i.e. 'Pure Service' provided by the applicant to PCSCL, a Government Entity, are not by way of any activity in relation to functions entrusted to a Municipality under article 243W of the Constitution or entrusted to a Panchayat under Article 243 G of the constitution and therefore, the impugned service supplied by the applicant is not exempt under the relevant provisions of Notification No. 12/2017 - CTR dated 28.06.2017 as amended from time to time and therefore the applicant has to discharge GST @ 18%. Whether Utility charges recovered from PCSCL are exempt as per GST Law. If taxable then at what rate GST will be applicable? - HELD THAT - The applicant has mentioned only a couple of lines in respect of the said matter, namely it has been mentioned that, the applicant collects utility charges (eg. Electricity charges) from PCSCL as Reimbursement and the said Utility charges are reimbursement of cost of actual facility used as per bill issued payable to third party - Other than above the applicant has neither made detailed submissions nor have submitted the relevant agreements with PCSCL for collection of the said utility charges and in view of incomplete details we cannot answer the said question. Whether PCSCL liable to deduct tax at source GST TDS as per provisions of G5T Law)? - HELD THAT - GST Law mandates Tax Deduction at Source (TDS) vide Section 51 of the CGST/SGST Act 2017, Section 20 of the IGST Act, 2017 and Section 21 of the UTGST Act, 2017. GST Council in its 28th meeting held on 21.07.2018 recommended the introduction of TDS from 01.10.2018 - TDS provision are made operative with effect from 01.10.2018 for which Notification No. 50/2018-Central Tax dated 13.09.2018 has already been issued in this regard by CBIC. PCSCL is liable to deduct TDS in the subject case, in respect of payments made to the applicant against receipt of renting of immovable property services.
Issues Involved:
1. Whether PCSCL is termed as Government or Local Authority or Government Authority or Governmental Entity as per GST Law. 2. Whether PCSCL is eligible to claim benefits of Government or Local Authority or Governmental Authority or Governmental Entity (e.g., Exemption as per Notification 12/2017-Central Tax (Rate) dated 28/06/2017). 3. Whether Renting of Immovable Property Services provided to PCSCL is exempt as per GST Law. If taxable, at what rate GST will be applicable. 4. Whether Utility charges recovered from PCSCL are exempt as per GST Law. If taxable, at what rate GST will be applicable. 5. Whether PCSCL is liable to deduct tax at source (GST TDS as per provisions of GST Law). Detailed Analysis: 1. Whether PCSCL is termed as Government or Local Authority or Government Authority or Governmental Entity as per GST Law: The question pertains to the recipient of the supply and is not related to the supply of goods or services by the applicant. Therefore, it cannot be answered under Section 95 of the CGST Act, 2017. 2. Whether PCSCL is eligible to claim benefits of Government or Local Authority or Governmental Authority or Governmental Entity (e.g., Exemption as per Notification 12/2017-Central Tax (Rate) dated 28/06/2017): Similar to the first question, this also pertains to the recipient of the supply and is not related to the supply of goods or services by the applicant. Hence, it cannot be answered under Section 95 of the CGST Act, 2017. 3. Whether Renting of Immovable Property Services provided to PCSCL is exempt as per GST Law. If taxable, at what rate GST will be applicable: The applicant provides Renting of Immovable Property Services to PCSCL and claims exemption under Sr. 3, Chapter 99 of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017. The exemption applies to pure services provided to the Central Government, State Government, Union territory, local authority, Governmental authority, or Government Entity by way of any activity in relation to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. PCSCL is considered a Government Entity as it is established by the State Government of Maharashtra with 50:50 participation by the Government of Maharashtra and PCMC. However, the service of renting immovable property does not fall under the functions entrusted to a Municipality under Article 243W or a Panchayat under Article 243G. Hence, the service is not exempt and is taxable at 18% GST. 4. Whether Utility charges recovered from PCSCL are exempt as per GST Law. If taxable, at what rate GST will be applicable: The applicant did not provide sufficient details or relevant agreements regarding the utility charges. Due to incomplete details, this question cannot be answered. 5. Whether PCSCL is liable to deduct tax at source (GST TDS as per provisions of GST Law): PCSCL is liable to deduct TDS under Section 51 of the CGST/SGST Act 2017, as it is an authority established by the Government with 51% or more participation by way of equity or control. Therefore, PCSCL must deduct TDS in respect of payments made to the applicant for renting immovable property services. Order: - Question 1: Not answered. - Question 2: Not answered. - Question 3: Renting of Immovable Property Services provided to PCSCL is not exempt and is taxable at 18% GST. - Question 4: Not answered. - Question 5: PCSCL is liable to deduct TDS as per GST Law.
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