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TMI Blog2019 (7) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... ary of the Nagpur Municipal Corporation, Nagpur) for providing services for the management of Non-Network Tanker with the help of GPRS system at Nagpur would be exempt from GST - answered in affirmative. - GST-ARA-131/2018-19/B-70 - - - Dated:- 13-6-2019 - SHRI B. TIMOTHY, AND SHRI B.V. BORHADE, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by VIDARBHA INFOTECH PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the following question. 1. Whether the contract from Nagpur Environmental Services Ltd (NESL) Nagpur (a 100% subsidiary of the Nagpur Municipal Corporation, Nagpur) for providing services for the management of Non-Network Tanker with the help of GPRS system at Nagpur would be exempt from GST since it falls under the various exempt services in the article 243 W of the constitution of India as well as servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means. (a) a Panchayat as defined in clause (d) of article 243 of the Constitution; (b) a Municipality as defined in clause (e) of article 243P of the Constitution; (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or. management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under article 371 (and article 37131$1 of the Constitution; or (g) a Regional Council constituted under article 37 IA of the Constitution; As it is pure service rendered /provided to a local authority (excluding works contract since or other composite supplies involving supply of any goods) by way of any activity in or in relation to any function entrusted to a municipality under article 243 W of the Constitution of India: 6. For ready reference entry no. 3. of exemption notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function to a municipality under article 243W of constitution Nil Nil 7. That the requisite for exempt services are : a) It is a pure service, no supply of goods are involved there b) The recipient is a local authority. That in our case - Nagpur Environmental Services Ltd. NESL a 100% subsidiary of Nagpur Municipal Corporation-NMC and that NESL, which was Set up specially for such type of activities had awarded the contract to the contractor for rendering the services implying thereby that it is just an arrangement between the NESL and Nagpur Municipal Corporation. However the control and the management of NESL, being 100% subsidiary of Nagpur Municipal Corporation rests with the Nagpur Municipal Corporation and in view of this it can be very well be concluded that it is the company with the same management rather it was registered as a SPV of NMC. On account of this, the benefit of this service rests with NMC. c) Provided that the service is by way of activity in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding those in relation to the matters listed in the twelfth schedule as under; 1. Regulation of land use and construction of land buildings, 2. Urban planning including the town planning: 3. Planning for economic and social development 4. Urban poverty alleviation 5. Water supply for domestic, industrial and commercial purposes 6. Fire services 7. Public health sanitation, conservancy and solid waste management 8. Slum improvement and up-gradation 9. Safeguarding the interests of the weaker sections of society, including the physically handicapped and mentally unsound 10. Urban forestry, protection of environment and promotion of ecological aspects 11. Construction of roads and bridges 12. Provision of urban amenities and facilities such as parks, gardens and playgrounds 13. Promotion of cultural, educational and aesthetic aspects 14. Burials and burials grounds, cremation and cremation grounds and electric crematoriums 15. Cattle ponds, prevention of cruelty to animals 16. Regulation of slaughte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plier shall be liable to be registered under CGST Act in the State or Union Territory, from where he makes taxable supply of goods or services or both; b) If the aggregate turnover in the financial year exceeds rupees twenty lakh.. e) The Applicant submits that as on date, it is registered in Maharashtra and also making taxable supplies of goods from the sanie to its customers located in State of Maharashtra. Further, the turnover of applicant exceeds rupees twenty lakhs in the financial year. Given this, it is submitted that Applicant clearly satisfies to be applicant in terms of sub-section (c) of Section 95 of CGST Act. f) That sub-section (1) of the section 95 of CGST Act defines the terms advance ruling as under: (a) advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified iii sub-Section (2) of Section 97 or sub-section (1) of Section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant, . Emphasis Supplied 8) Perusal of the above clarifies that the advance ruling can only be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rliament or a State Legislature; or (ii) established by any Government, with 90per 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 or to a Panchayat under article 243 G of the Constitution. Government Entity means an authority or a board or any other body including a society, trust, corporation (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government with 90per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority, , From the plain reading of notification, exemption of taxes available only on supply of pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243 G of the constitution or in relation to any function entrusted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peared and requested for admission of their application. Jurisdictional Officer Sh. V. B. Totade, Dy, Commissioner of S.T. (NAG-VAT-E-008) NAGPUR appeared and made written submissions. The application was admitted and called for final hearing on 06.06.2019. Sh. Mayur Mahajan, C.A. appeared and made oral and written submissions. Jurisdictional Officer was not present. We heard both the parties. 06. OBSERVATIONS We have gone through the facts of the case. The issue put before us is in respect of applicability of notification and whether the supply of transaction IS covered under pure services or not which would be on the lines thus - The applicant is a company registered under GST Act and is carrying on the business of supply of goods and services under GST Act. In the subject matter, Applicant is a contractor and was awarded a contract by the Nagpur Environmental Services Ltd (NESL) Nagpur, a 100% subsidiary of the Nagpur Municipal Corporation, Nagpur. The contract envisages providing services for the management of Non-Network Tanker with the help of GPRS system at Nagpur. Applicant is currently providing the same. Further, we find that NESL i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is no transfer of any goods to the recipient of service i.e. NECL. In short, applicant submits that the GPRS system is installed for tracking water carrying Tanker and to see that the said Tanker reaches at the designated location and thus, water is supplied to the identified customers. Having due regard to the argument of the applicant and the work order issued by NESL, the recipient we are of the clear view that impugned services qualify as pure service within the description of services at Entry No. 3 of Notification No. 12/2017 dated 28 June, 2017. As a corollary of this finding, the next issue for our consideration in this proceeding is to decide whether the recipient of service is a Central Government/State Government, Local authority or Government authority or a Government entity. Admittedly NESL is not a Central Government/State Government and hence we now proceed to understand other expressions as defined under the said Notification and under the GST Act. Notification No. 12/2017; Section 2: [(zf) Governmental Authority means an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion as under: Government s Resolution As per Nagpur city Municipal Corporation Act, 1948, Section 58B thereof, the corporation can implement its duties allotted by the Government, upon these terms/conditions through any body. The approval of the Government is being given as under to establish one independent company to be owned by Nagpur Municipal Corporation, completely, for shouldering the responsibility of Nagpur Water supply Schemes Development, water accumulation, supervision and administration. Accordingly, the Nagpur City Municipal Corporation Act, 1948, has established company in the name of NESL. NMC, Nagpur has entered into a MOU with NESL on 7.09.2009 and allotted the responsibilities for the said works. As per the MOU, the authorized share capital of the company is fixed by the Government. The relevant para pertaining to the setup of the company is as follows: V. a) The authorized Share Capital of the Company is ₹ 5,00,000.- (Rupees five lakh only) divided into 50,000 (Fifty thousand only) Equity Shares of ₹ 10/- each (Rupees Ten only) b). The minimum paid up capital of company Shall be Rs. Five Lakh only) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Equity Share (One Equity Share Only) 49998 Equity Share 6. Sanjay Gaikwad S/o: Shankar Gaikwad R/o: Plot No. 12 Narkesary Layout, Wardha Road, Somalwada,Nagpur - 440015 Occ: Service (As a Nominee of Nagpur Municipal Commissioner). Sd/- 1 Equity Share (One Equity Share Only) 7. Shashikant Hastak S/o: Shankar Hastak R/o : 55, Ushakkal Ramkrishna Nagar, Khamla, Nagpur 440025. Occ. Service (As a Nominee of Nagpur Municipal Commissioner Sd/- 1 Equity Share (One Equity Share Only) 50000 Equity Share Thus, in the present case we find that NESL is established as per Nagpur Municipal Corporation Act, 1948 Section 58(B) and thereby permitting corporation to implement their duty allotted by the Government through this body i.e. NESL, Thus, from the perusal of Government Resolution and various definition i.e. Government authority, Government Entity and Local authority and MOU, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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