2019 (3) TMI 1119 - AAR - GST

Governmental Authority or not - body set up by an Act of Parliament - condition of holding ninety percent control and to carry out function mentioned under Article 243W - Whether renting of immovable property service provided by NDDB to an educational institute would be exempted under Sl. No. 4 of Notification No. 12/2017-Central Tax (Rate)? Held that - The exemption shall be available to the applicant if the applicant fulfils the common condition namely with ninety per cent or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution . As it is not submitted by the applicant as to whether it fulfills the said condition, if in the case of the applicant, this condition is fulfilled, then it attract the benefit of the exemption, otherwise not. Renting of immovable property service provided by National Dairy Development Board (24AADCN2029C1Z5) to an educational institute would be exempted under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate) and corresponding State Tax Notification, if it qualifies as governmental authority .

Summary

Issues:
1. Qualification of NDDB as a 'Governmental Authority' under GST perspective.
2. Exemption of renting of immovable property service provided by NDDB to an educational institute under Notification No. 12/2017-Central Tax (Rate).

Qualification of NDDB as a 'Governmental Authority':
The applicant, NDDB, sought an advance ruling on whether it qualifies as a 'Governmental Authority' under the GST regime. The applicant argued that as a body established by an Act of Parliament, it should be considered a 'Governmental Authority' and be exempt from GST liability. The applicant referred to the definition of 'Governmental Authority' under the IGST Act, emphasizing the lack of a requirement for 90% control or equity participation for bodies set up by Acts of Parliament. The applicant cited a judgment from the Patna High Court to support their interpretation that the 90% condition is only relevant for government-established boards. The AAR noted that the phrase 'governmental authority' is not defined in the CGST Act but referred to the definition in Notification No. 12/2017-Central Tax (Rate), which aligns with the IGST Act definition. The AAR acknowledged the Patna High Court's judgment as having referential value but emphasized that it is not binding. The AAR ruled that NDDB would qualify as a 'government authority' under GST if it meets the condition of 90% or more participation by way of equity or control to carry out functions entrusted to a municipality under Article 243W of the Constitution.

Exemption of Renting of Immovable Property Service:
The second issue raised by NDDB was whether the renting of immovable property service provided to an educational institute would be exempted under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate). The AAR considered the submissions made by the applicant and the department, noting that the judgment relied upon by the applicant was under challenge before the Supreme Court. The AAR highlighted that the exemption would be available to NDDB if it fulfills the common condition of 90% or more participation by way of equity or control to carry out functions entrusted to a municipality under Article 243W of the Constitution. The AAR ruled that if NDDB meets this condition, the renting of immovable property service provided to the educational institute would be exempted under the specified notification.

In conclusion, the Authority for Advance Ruling, Gujarat ruled that NDDB would qualify as a 'government authority' under GST if it fulfills the specified condition of 90% or more participation by way of equity or control to carry out functions entrusted to a municipality under Article 243W of the Constitution. Additionally, the renting of immovable property service provided by NDDB to an educational institute would be exempted under the relevant notification if NDDB meets the criteria of being a 'governmental authority'.