2021 (9) TMI 1060 - AAR - GST

Governmental authority or Government Entity? - Service of construction and development of state highway roads provided by GSRDC - whether qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or 243 W respectively, of the constitution of India? - HELD THAT - With regard to the issue that activity in relation to function entrusted to Panchayat or Municipality, the applicant was informed that this question of their application is not covered under any clauses of Section 97 (2) of the CGST Act, therefore the question does not merit to be admitted and the Ruling will be pronounced with respect to other question. The applicant agreed with the same. Government Entity or not - HELD THAT - We have examined the Government of Gujarat Resolution dated 20-2-99, placed before us by the applicant, whereby GSRDC was established with objective to undertake the development of bridges and roads. We find that Government of Gujarat has established GSRDC as its wholly owned company and entrusted it with the development of roads and bridges. Thus, GSRDC satisfies the definition of Government Entity - thus, roads and bridges are activities entrusted to a municipality under Article 243W of our Constitution and to a Panchayat under Article 243G of our Constitution. Therefore in such specific cases where GSRDC constructs municipal roads/bridges or village roads/bridges, it satisfies the definition of Government Authority.

Summary

Issues:
1. Whether the service of construction and development of state highway roads provided by GSRDC qualifies as an activity in relation to functions entrusted to Panchayat or Municipality under the Indian constitution.
2. Whether the applicant falls under the definition of Governmental authority or Government Entity.

Analysis:
Issue 1:
The applicant, a wholly owned Government of Gujarat Company, sought clarification on whether the construction of state highway roads by GSRDC aligns with functions entrusted to Panchayat or Municipality under the Indian constitution. The GID Act empowers private sector participation in infrastructure projects like roads and bridges. The GSRDC, established under this Act, aims to develop roads under Public Private Partnership. The applicant argued that construction of state highways does not fall under functions of Panchayat or Municipality as per the constitution. However, the Authority noted that roads and bridges are indeed activities entrusted to these local bodies under the constitution. Therefore, in cases where GSRDC constructs municipal or village roads/bridges, it qualifies as a Government Authority.

Issue 2:
The second issue pertained to whether the applicant qualifies as a Government Entity or Governmental authority. The applicant, being a 100% Government of Gujarat undertaking, was considered a Government Entity due to its primary objective of constructing and developing state highway roads as entrusted by the government. The Authority examined the establishment of GSRDC by the Government of Gujarat and found that it satisfied the definition of a Government Entity. Moreover, since GSRDC constructs roads and bridges falling under the jurisdiction of Municipality and Panchayat, it was deemed to be a Government Authority in such specific cases.

In conclusion, the Authority ruled that GSRDC is both a Government Entity and a Government Authority when involved in the construction of municipal or village roads/bridges. The judgment clarified the status of GSRDC in relation to its functions and responsibilities in the development of infrastructure projects, particularly roads and bridges, within the State of Gujarat.