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TMI Blog2018 (7) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in section 25, when made in the course or furtherance of business. In the present case, pursuant to the agreements made by the applicant with the state government of Jharkhand and Assam, the applicant provides services to Unions. It is also seen that the actual services are received by the concerned State Governments and the Unions are simply beneficiaries of the services performed by the applicant. Thus, there is no question of exercise of control by the applicant over the Unions. Unions are in fact provide support to the applicant to fulfill the purposes as per the agreements made with the state governments and the applicant and in return they receive the benefits of it - The Unions are only beneficiaries of agreement entered into by the state governments with the applicant. The Unions are required only to provide adequate support to the applicant. In such a situation, there is no kind of relationship between NDDB and the Unions. Hence situation specified at sl no. 5 of Section 15(5) of CGST Act is not found in existence in the transaction between NDDB and WAMUL and NDDB & JMU and accordingly such transactions are not to be considered as related party transactions in GST. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and applicant with an objective of reviving the JMU WAMUL (hereinafter jointly referred to as Unions ) and developing dairying in the respective states; that the state governments have entrusted NDDB to run the management, appoint key managerial persons and provide end to end services which ultimately would help the Unions in developing. 1.3 It is further stated that as per the agreements made by them with these state governments on the matter, the applicant undertake following end to end activities as if they are owning and running Unions- (i) Taking over management of Unions and deputation of key managerial persons including managing director (ii) Preparation of business plans and implementation of the same (iii) Decide on procurement and distribution channels and preparation of policies thereof (iv) Determine the pricing policies for sale of products and usage of brands owned by Unions (v) Borrowing of funds as and when required (vi) Taking relevant decisions in order to achieve sustainable growth for Unions. 1.4 They further submitted that the applicant provides services to government or undertakes all managerial activity involving control over Unio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho can be considered as service recipient in any transaction referred the decisions of Delhi Tribunal in the case of Paul Merchants Limited Vs. Commissioner of C.Excise, Chandigarh (2013 (29) STR 257 (Tr-Del.) and GAP International Sourcing (India) Pvt.Limited Vs. Commissioner of S.Tax , Delhi (2015(37) STR. 757 (tri-Del.). 1.10 It is also submitted by the applicant that the relationship between parties is identified from the perspective of who is service recipient; that it is logical and legal that the relationship can never be established between the service provider and the beneficiaries. The applicant then submitted that, in absence of any kind of relationship between NDDB and Unions in the given contract, the question of valuation of services at open market value does not arise at all and the zero value would be treated as sole consideration for supply, subject to tax. 1.11 The applicant further submitted that irrespective of their above submissions, even if it is assumed that there exist relationship between the applicant and Unions as a reason of control of the applicant over Unions, the price for services is not influenced because of relationship; that it is at the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, for the appellant on 30.11.2017. We gone through the submissions made by the applicant in their initially filed application and the corrigendum to earlier application for advance ruling and made at the time of personal hearing. We have also gone through the comments offered by the department vide FNo. IV/16-29/GST/AAR-NDDB/T/17 dated 18.01.2018. 3. Firstly, we would like to see the provisions for the Schedule I of the CGST Act, 2017. Schedule- 1 deals with the activities to be treated as supply even if made without consideration. Section 7 of CGST Act defines supply . Some of the scope of supply, as per Section 7 of the Act, are the activities specified in Schedule I, made or agreed to be made without a consideration. One of the activities to be treated as a supply even if made without consideration, as per clause 2 of Schedule I, is the supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business. 4. Provisions of Section 15 of CGST Act, 2017 provides for valuation of taxable supply of goods or services or both. Section 15 of the CGST Act lays down the valuation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions therein. As per these terms and conditions, it is seen that NDDB would take over the management of the JMU along with all the assets and manage it as Administrator; that NDDB would prepare planning for developing the JMU and implement it; that NDDB would deploy suitable personnel to key management of JMU; NDDB would work out and implement business plans for SMU; NDDB would decide production and plant operations and marketing of the products of SMU etc. One of the terms of the agreement is that NDDB would not charge any management fee from the Government of Jharkhand . 8 It would be evident from above that the Unions are only beneficiaries of agreement entered into by the state governments with the applicant. The Unions are required only to provide adequate support to the applicant. In such a situation, we do not find any kind of relationship between NDDB and the Unions. Hence situation specified at sl no. 5 of Section 15(5) of CGST Act is not found in existence in the transaction between NDDB and WAMUL and NDDB JMU and accordingly such transactions are not to be considered as related party transactions in GST. 9. Since the answer to the first part of the points ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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