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2022 (12) TMI 120 - AAR - GSTGovernment Entity or not - Damodar Valley Corporation - applicability of Notification No. 11/2017- Central Tax (Rate), dated the 28th June, 2017 as amended by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 and Notification No. 12/2017-Central Tax (Rate), dated the 28th June, 2017 as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017 - HELD THAT - The applicant is registered under Goods and Services Pax ('GST') Act, 2017. As per their submission they are engaged in 3 major activities namely generation, transmission and distribution of electricity/ flood control and irrigation, and some connected activities like soil conservation, afforestation etc. The term Government entity as it has been defined in the aforesaid notifications evidently denotes that in order to qualify for a Government Entity, the applicant must have been set up by an Act of Parliament or by an Act of State Legislature or it must have been established by any of the Governments i.e. either by the Union Government or by the State Government with 90 percent or more participation by way of equity or control. Further, the applicant is to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. Damodar Valley Corporation fulfils the criterion laid down for Government entity as per Notification No. 31/2017 -Central Tax (Rate)/32/2017- Central Tax (Rate) both dated 13.10.2017 since it has been set up by an Act of Parliament with 100% control to carry out the function entrusted by the Government.
Issues Involved:
1. Whether "Damodar Valley Corporation" is covered under the definition of the term 'Government Entity' as per Notification No. 32/2017 - Central Tax (Rate) dated 13/10/2017 and Notification No. 31/2017 - Central Tax (Rate) dated 13/10/2017. Issue-wise Detailed Analysis: Applicability of Notifications: The primary issue is the applicability of Notification No. 11/2017- Central Tax (Rate), dated 28th June 2017 [as amended by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017] and Notification No. 12/2017- Central Tax (Rate), dated 28th June 2017 [as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017] to determine if the applicant qualifies as a 'Government Entity'. Definition of 'Government Entity': The term 'Government Entity' as defined in the notifications requires: 1. The entity must be 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. 2. The entity must carry out a function entrusted by the Central Government, State Government, Union Territory, or a local authority. Examination of Damodar Valley Corporation (DVC): 1. Establishment: - DVC was set up under the Damodar Valley Corporation Act, 1948, passed by the Central Legislature. - Section 4 of the DVC Act outlines the composition and appointment of the Corporation's members, indicating significant control by the Central Government. - Section 51 of the DVC Act empowers the Central Government to remove any member from the Corporation. 2. Equity and Control: - The participating Governments (Central Government and State Governments of Jharkhand and West Bengal) hold 100% of the equity control of DVC. - Sections 30 and 31 of the DVC Act stipulate the financial responsibilities of the participating Governments, ensuring complete control over the Corporation’s capital and financial decisions. 3. Functions Entrusted: - Section 11 of the DVC Act allows the Central Government, after consultation with the State Governments, to direct the Corporation to carry out specific functions in the area of operation. - Section 12 of the DVC Act enumerates the functions entrusted to DVC, including irrigation, water supply, flood control, navigation, afforestation, and public health, all of which are functions typically entrusted by the Government. Conclusion: Based on the above analysis, it is evident that Damodar Valley Corporation fulfills the criteria laid down for a "Government entity" as per the relevant notifications. It has been set up by an Act of Parliament, is under 100% control of the participating Governments, and carries out functions entrusted by the Government. Order: The Authority of Advance Ruling concludes that Damodar Valley Corporation is covered under the definition of 'Government Entity' in terms of Notification No. 11/2017- Central Tax (Rate), dated 28th June 2017 [as amended by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017] and Notification No. 12/2017- Central Tax (Rate), dated 28th June 2017 [as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017]. This ruling is valid subject to the provisions under Section 103(2) until and unless declared void under Section 104(1) of the GST Act.
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