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2024 (5) TMI 265 - HC - GSTExemption from GST - pure services or supply of goods to the Notified Area Authority, Vapi - Notified Area Authority, Vapi is a local authority or governmental authority ? - N/N. 12/2017-Central Tax (Rate) dated 28th June 2017 and the N/N. 12/2017-State Tax (Rate) dated 30th June 2017 - HELD THAT - The contention of the petitioner that the Notified Area Authority, Vapi is discharging the function that like of the municipality, is not acceptable in view of the decision of the Hon ble Apex Court in the case of NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY VERSUS CHIEF COMMISSIONER OF INCOME TAX ORS. 2018 (7) TMI 137 - SUPREME COURT where it was held that 'the appellant is not covered by the definition of local authority as contained in Explanation to Section 10(20)'. In view of the conspectus of law, the Hon ble Supreme Court held that the Area Development Authority is not akin to the municipality constituted under Article 243Q(1) of the Constitution of India. The Hon ble Apex Court, in the case of SAIJ GRAM PANCHAYAT VERSUS STATE OF GUJARAT AND OTHERS. 1999 (1) TMI 531 - SUPREME COURT , held that the Gujarat Industrial Development Act operates in a totally different sphere from Parts IX and IXA of the Constitution and the Gujarat Panchayats Act, 1961. Considering the conspectus of law laid down by the Hon ble Apex Court in the case of New Okhla Industrial Development Authority, the Notified Area Authority, Vapi cannot be considered as local authority or Governmental Authority . Therefore, the Notified Area Authority, Vapi is neither a local authority nor a Governmental Authority carrying out any activity in relation to any function entrusted to Panchayat under Article 243G of the Constitution or in relation to any function entrusted to Municipality under Article 243W of the Constitution. Petition dismissed.
Issues Involved:
1. Whether the Notified Area Authority, Vapi is a "local authority" or "governmental authority." 2. Whether the petitioners are entitled to exemption from GST under Notification No. 12/2017. Summary of Judgment: Issue 1: Notified Area Authority, Vapi as a "local authority" or "governmental authority" [5] The Notified Area Authority, Vapi is constituted by the State of Gujarat under Section 16 of the Gujarat Industrial Development Act, 1962 (GIDA). [6] The authority has functions similar to a municipality but is not established under Article 243Q of the Constitution. [12] The Appellate Authority rejected the petitioner's appeal, holding that the Notified Area Authority, Vapi is neither a "local authority" nor a "governmental authority." [29] The Appellate Authority analyzed Section 2(69) of the GST Act and determined that the Notified Area Authority, Vapi does not fall within its definition of "local authority." [36] The contention that the Notified Area Authority, Vapi is "any other authority" legally entitled to manage a municipal or local fund was rejected as "any other authority" is not included in Serial No. 3 of Notification No. 12/2017. [37] The authority also does not qualify as a "governmental authority" under Clause (zf) of Notification No. 12/2017. [38] The Hon'ble Supreme Court's decision in New Okhla Industrial Development Authority vs. Chief Commissioner of Income Tax was referenced, confirming that such development authorities are not "local authorities." [40] The Gujarat Industrial Development Act operates in a different sphere from Parts IX and IXA of the Constitution, which deal with local self-government. [44] The court concluded that the Notified Area Authority, Vapi is neither a "local authority" nor a "governmental authority" as defined in the GST Act. Issue 2: Entitlement to GST Exemption[3] The petitioners challenged the order denying them exemption under Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017. [8] The petitioners argued that their services fall under Service Accounting Code (SAC) 9994 and should be exempt from GST. [11] The Advance Ruling Authority held that the services provided by the petitioners are not exempt because they include the supply of goods. [28] The Appellate Authority accepted that the services provided are pure services but examined the remaining conditions for exemption. [26] To qualify for exemption under Serial No. 3 of Notification No. 12/2017, the petitioners must provide pure services to the Central Government, State Government, Union Territory, or local authority or governmental authority, related to functions entrusted to a Municipality under Article 243W of the Constitution. [43] The court found no breach of natural justice in the Appellate Authority's decision. [44] The petition was dismissed as the Notified Area Authority, Vapi is neither a "local authority" nor a "governmental authority," and thus, the petitioners are not entitled to GST exemption.
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