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TMI Blog2022 (1) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) On the applicant who had sought it in respect of any matter referred to in subsection (2) of Section 97 for advance ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in some months Three years lease A. Exempted vide SI No 7 of Notfn. No 12/2017 (or) payment of tax under reverse charge under sl no 5 of Notfn. No 13/2017-Central Tax (Rate) dated the 28th June, 2017 (B) locker rent provided in bus-stand B. Notfn No 14/2017 dt28-06-2017or sl no 4 of 12/2017 dt 28-06-2017. (C) flower shop in bus stand in open space C. Notfn/-14/2017 dt28-06-2017(or) sl no 4 of 12/2017 dt 28-06-2017(or) Sl no 24 of the table to Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 D) cycle stand, scooter, auto, four wheeler stand in bus stand and other places D. Notfn 14/2017 dt28-06 2017(or) sl no 4 of 12/2017 dt 28-06-2017 (E) collection of room rent for temporary stay E. Notfn 14/2017 dt28-06-2017(or) sl no 4 of 12/2017 dt 28-06-2017 or Sl no 14 of 12/2017 dated 28-06-2017 6 Slaughter house fees Some times in some months Three years lease Notfn No 14/2017 dt28-06-2017or sl no 56 of Notfn. No 12/2017 dt 28-06-2017. 7 Bunk stalls Three years lease SI No 7 of Notfn No 12/2017 subject to the satisfaction of condition since it is not covered under renting of immovable property. 8 Rent -Travelers' bungalows & rest house (municipal lodg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted vide the Notfn. no. mentioned against each SI No. Q.3. In respect of SI No 14 they are collecting charges for laying of cables alongside roads and collecting road cutting charges as well as annual rent. They require advance ruling whether composite supply can be applied for classifying the said service as renting of immovable property service and reverse charge can be applied for collecting GST as per entry SI No 5A of the table to Notfn No 13/2017 (CE rate) dated 29-06-2017 as amended from the telephone operators who are GSTIN holders Q.4. In respect of SI No 15 w.e.f. 25-01-2018, instead of reverse charge they collected tax under direct charge from the service availers who are registered with GSTIN and whether it can be regularised, (to be treated as technical lapse and condoned since the service rendered by us had suffered tax and Govt, revenue is not affected) Q.5. In respect of SI No 16 the renting of immovable property service rendered by them as a local authority to,- (i) Pure state Govt, offices (viz) Asst. Director Of L F Accounts, Project Officer, ICDS, ICDS Centre: Deputy Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CT(R)- dated 28.06.2017 for the reason that their room rent/day/person is not exceeded rupees 1000/-. 9 Providing Toilet facilities Not a Supply of Service as per Notification. No 14/2017 - CT(R) & dt 28-06-2017 as amended vide Notfn. No. 16/2018 dated 26.07.2018 13 Entry of vehicle in the market Not a Supply of Service as per Notification. No. 14/2017 - CT(R) & dt 28-06-2017 Q2. In respect of services rendered by us from SI No 1 to 13 through tender contractors whether they are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted vide the Notfn. no. mentioned against each SI No.as follows. The applicant supplies the 'Right to collect the fees/right to certain amenities' to the contractors and the supply undertaken by the contractors are as per the tender conditions which is an independent supply. The applicability of the Notification to the supplies of the contractors is not answered as per S.95(a) readwith S. 103(1) of the GST Act. Q.3. In respect of SI No 14 we are collecting charges for laying of cables alongside roads and collecting road cutting charges as well as annual rent. We require advance ruling whether composite supply can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under SI. No. 8 of the table to Notification No. 12/2017- C.T. (Rate) dated 28.06.2017. 5. Based on the above decision, the Appellant has filed the present appeal. The grounds of appeal are paraphrased as follows: 5. GROUNDS OF APPEAL (i) Sl No 6- Slaughter house fees- In the application to the ARA it was pleaded that Services by way of slaughtering of animals is exempted vide entry SI No 56 of the Notfn No 12/2017 dated 29-06- 2017 as amended which reads as follows. 56 Heading 9988 Services by way of slaughtering of animals. Nil NIL Even though AAR in the order has given a ruling that services by way of slaughtering of animals is not a service as per Notfn. No 14/2017 dt. 28.06.2017 it is requested that exemption under SI No 56 of the Notfn No 12/2017 dated 29-06-2017 may also be considered and extended. As per SI No 56 of the table to Notfn No 12/2017 dated 29-06-2017 exemption is granted to the service rendered by way, "Services by way of slaughtering of animals". It is applicable to the service and not to the person.(ie) whether it is done by X or Y or by the appellant it is exempted unconditionally. it may be considered in appeal by appellate authority and ordered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing services rendered by the appellant direct lo the public it was declared by the ARA as not a supply of service . It may please be noted that it is not an exemption Notfn/- but a Notfn issued under Section 7 (2) to treat whether the activity undertaken by the local authority is a service or not since it is a function entrusted to a Municipality under article 243 W of the Constitution. When it is not a service it is outside the scope of supply (ie) levy and collection of tax under Section 7. It was already declared /ordered by the ARA that the activity done by the appellant under 243 W is not a service in respect of SI. No. 1 Fee from parks SI. No. 2- Market fee daily SI. No. 3- Market fee -weekly SI. No. 4- Fees for bays in bus stand SI. No. 5D - cycle stand, scooter, auto, four wheeler stand in bus stand and other places. SI. No. 6- Slaughter house fees. SI. No.9- Fees on pay &.use toilets. SI. No. 13 For entry vehicle in the market. III. When the above activities were declared as ' not a service' under Notfn No 14/2017 then there is no necessity to go into the details of the service recipient, consideration paid for the activity etc. In view of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices by way of any activity in relation to a function entrusted to a Municipality under article 243 W of the Constitution is not a service. Hence both the services are not chargeable to tax. The same ruling will apply to tender contractors also . It is submitted that exclusion from service was granted to the activity and not to the person (ie) whether it is done by X or Y or by the appellant it is outside the scope of service . When the activity is out the scope of service there is no need examine the details of the activity receiver (tender contractors) and the consideration towards the activity (tender money). Hence the above activities may be declared as not a service but an activity in relation to a function of Municipality under article 243W of the Constitution and covered under Notfn No 14/2017CT (rate) dt 28 06 2017 as well as the relevant GO of TNGST Act, 2017. It is a fact that the contractors of municipal corporation are public servants and the activities rendered by the municipal corporation to the contractors (public servants) could not be termed as service and the contractors could not be termed as business entities but they are agents of the municipality as per par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared as not a service but an activity in relation to a function of Municipality under article 243W of the Constitution and covered under Notfn No 14/2017CT (Rate) dt 28 06 2017 as well as the relevant GO of TNGST Act, 2017.lt is submitted that it is not a taxable service due to the following reasons. As per the Tamil Nadu District MunicipaliIes Act, 1920 as detailed in para C above it is a fact that the contractors of municipal corporation are public servants and the services rendered by the municipal corporation to the contractors (public servants) could not be termed as service and the contractors could not be termed as business entities but they are agents of the municipality Hence the collection and maintenance work entrusted by the municipality to the contractors could not be termed as service since it is arrangement between principal and agent (ie) in the case Govt. and public servant and amount paid by the contractor to Govt. towards rendering of work entrusted under Section 374 and other provisions of the Tamil Nadu District Municipalities Act, 1920 and the functions entrusted to a municipality under the twelfth schedule to article 243W of the constitution could not be term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public; C) flower shop in the bus stand 4x4 in open space in various places of bus stand and in RC buildings flower shop is covered under (i) of Twelfth Schedule to Twelfth Schedule to Article 243 W of the Constitution which read as follows : (i) Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. It is also covered under the functions entrusted to a Panchayat under the Eleventh Schedule to Article 243G of the Constitution are as under : (I) Agriculture, including agricultural extension. There is no restrictions for the municipality to perform functions of a Panchayat. (iii) As per Notification No. 14/2017-Central Tax (Rate) New Delhi, the 28th June, 2017 ''Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution or to a Municipality under article 243W of the Constitution." is not a service. Hence it is not chargeable to tax. D. cycle stand, scooter, auto and four wheeler stand in bus stand As per Notification No. 14/2017-Central Tax (Rate) New Delhi, the 28th June, 2017 "Services by way of any activity in relation to a function entrusted to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance work entrusted by the municipality to the contractors could not be termed as service since it. is arrangement between principal and agent (ie) in this case Govt, and public servant and amount paid by the contractor to Govt. towards rendering of work entrusted under Section 374 and other provisions of the Tamil Nadu District Municipalities Act, 1920 and the functions entrusted to a municipality under the twelfth schedule to article 243W of the constitution could not be termed as service. As there is no service the question of payment of GST will not arise on all those lease contracts since the rate fixed by Govt. was adopted and the activity is rendered by the contractor to the public in the name of the local authority and receipt has been issued in the name of the local authority to the public. (i) Reserving our right to claim the benefit of Notfn/ No. 14/2017 the following submissions are made. In the application to the ARA it was pleaded that Services by way of slaughtering of animals is exempted vide entry SI No 5b of the Notfn No 12/2017 dated 29-06-2017 as amended which reads as follows. 56 Heading 9988 Services by way of Slaughtering of animals Nil Nil Even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Municipality under article 243W of the Constitution. When it is not a service it is outside the scope of supply (ie) levy and collection of tax under Section 7. It was already declared /ordered by the ARA that the activity done by the appellant under 243 W is not a service in respect, 'Fees on pay & use toilets'. When the above activities were declared ' not a service' under Notfn No 14/2017 then there is no necessity to go into the details of the service recipient, consideration paid for the activity etc. In view of the decision of the ARA that the above activities are not a service for direct activity rendered by the appellant it is prayed that the above activities done by the appellant through tender contractors may also lie declared as not a service since a function of a Municipality under article 243W of the Constitution and covered under Notfn No 14/2017. When it is not a service the same contention of the Notfn. is applicable to tender contractors also due to the following reasons. As per the Tamil Nadu District Municipalites Act, 1920 as detailed in para C above it is a fact, that the contractors of municipal corporation are public servants and the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l extension. (ii) Land improvement, implementation of land reforms, land consolidation and soil conservation. (iii) Minor irrigation, water management and watershed development. (iv) Animal husbandry, dairying and poultry. (v) Fisheries. (vi) Social forestry and farm forestry. (vii) Minor forest produce. (viii) Small scale industries, including food processing industries. (ix) Khadi, village and cottage industries. (x) Rural housing. (xi) Drinking water. (xii) Fuel and fodder. (xiii) Roads, culverts, bridges, ferries, waterways and other means of communication. (xiv) Rural electrification, including distribution of electricity. (xv) Non-conventional energy sources. (xvi) Poverty alleviation programme. (xvii) Education, including primary and secondary schools. (xviii) Technical training and vocational education. (xix) Adult and non formal education. (xx) Libraries. (xxi) Cultural activities (xxii) Markets and fairs. (xxiii) Health and sanitation, including hospitals, primary health centres and dispensaries. (xxiv) Family welfare. (xxv) Women and child development, (xxvi) Social welfare, including welfare of the handicapped and menta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hatever may be the consideration it is fully exempted unconditionally and hence exemption has to be granted to the appellant in respect of the tender contractors 12. Running a fish market, -right to sell fish in a particular shop in a specified area. (i) Three years tender contracts by tender notice for the purpose of selling fish from a particular shop of a particular area. . (a) service provider is the municipal corporation. (b) Service availer is the tender contractor who succeeded in the tender process (c) Service is enjoyments of fishing in a particular bond as per the prescribed conditions of tender. (d) consideration is the amount, determined and confirmed in the tender process, (ii) The functions entrusted to a Panchayat under the Eleventh Schedule to Article 243G of the Constitution. (V} Fisheries (xxii) Markets and fairs. It may please be noted that exemption is granted to the service and not to the person, (ic) whether it is done by the Municipality to the tender contractors or by any other person to any body and whatever may be the consideration it is fully exempted unconditionally and hence exemption has to be granted to the appellant in respect of the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal authority to the public. Question No 3. 14. Annual track rent -Cable operator laying fee (optical fibre laying fee) Charges towards cutting and repairing and rectification of roads and payment of annual rent for the optical cable laid alongside roads based on Contract. (a) service provider is the municipal corporation (b) Service availer is the operator of phone;/mobile services. (c) service is renting of immovable property service. (d) consideration is rent paid for optical cable laid alongside roads. Whether the whole service can be treated as renting of immovable property service as composite supply and reverse charge can be applied since the service availers are registered with GSTN and the service provider is a local authority. There are two charges collected (i) road cutting charges towards laying of cable and (ii) renting of road for the optical cables laid. Kind attention is invited to Section 2(30) "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, Commissioner discussed various provisions of THE TAMIL NADU DISTRICT MUNICIPALITIES ACT, 1920 and CBEC Circular No.96/7/2007-ST F.No.354/28/2007-TRU New Delhi, the 23rd August, 2007 and concluded in the show cause notice itself that Parking fee, Market fees ((annual lease), Market fee-weekly (Annual lease), slaughter house fee, fees on pay & use toilets annual lease) and Garden/park receipts etc. were not chargeable to service tax. There is no major difference between concept of levy of service Lax for the period prior to 01-07-2017 and the levy of GST w.e.f 01-07.2017. Previously during service Tax period the activities were covered under negative list / full exemption under Notfn No 25/2012 dated 20-06-2012. During GST period w.e.f 01-07-2012 as per Notification No. 11/2017-Cenlral Tax (Rate) New Delhi, the 28th June, 2017 issued under Sub section (2) of section 7 the following activities or transactions undertaken by the Central Government or State Government or Union territory or any local authority in which they are engaged as public authority, shall be treated neither as a supply of goods nor a supply of service, namely: - "Services by way of any activity in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to GST as Municipal Corporation is also Municipality under Articles 243P and 243Q of Constitution of India and covered by exemption in respect of all functions under Article 243W ibid - Department directed not to take coercive action for recovery of GST for Municipal Parking lots - Section 73 of Central Goods and Services Tax Act, 2017/West Bengal Goods and Services Tax Act. 2017.[paras 2. 3./4] (ii) 2019 (20) G.S.T.L. 288 (Tri. - Mumbai) IN THE CESTAT, WEST ZONAL BENCH, MUMBAI S/Shri Ramesh Nair, Member (j) and Raju, Member (T) KARAD NAGAR PARISHAD Versus COMMISSIONER OF C. EX. & S.T., KOLHAPUR Final Order Nos, A/85 150 85 157/2018 WZB, dated 29-1-2018 in Appeal Nos. ST/85050 & 86031/2014-ST(DB) wherein it was decided that Renting of Immovable Property Levy of Service Tax on slaughter house fees collected by Municipal Corporation - As per Twelfth Schedule of Constitution of India, Regulation of slaughter houses is sovereign function of Municipal Corporation - Demand of Service Tax on slaughter house fees collected, set aside - Section 65(90a) of Finance Act, 1994. [para 4] (iv) Hon'ble Madurai HC in the decision W.P.(MD)NO. 12879 OF 2019 dated 22-02 .2021 in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation being the applicant, having been given a ruling based on its activities as a Municipality under Article 243 W of the constitution, cannot seek another ruling in the guise of appeal for the activity in general, whether the same be covered by another entry in another notification or otherwise. In such a scenario, the ruling sought by the applicant is not for the activities undertaken by him but sought for the activity in general which is not permitted under S.95, especially when for the same service done by the tender contractors of the appellant, the same question has been raised by the appellant vide Q2. It appears only to be a ploy and an extravagant claim without supported by any legal fiction or rule nor even equity but only done to lure the AAAR into a trap of self-contradiction while answering further questions later and is therefore, highly condemnable. In view of the above, in respect of the question sought, in Q 1 (SI.No. 6 and 9), the appeal is not entertained. 8.2 In respect of Sl. No. 5B (Rent for locker provided in bus stand), we find that the activities in relation to function entrusted to a municipality under 243W of the constitution are multitudinous and u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions, one between the Corporation and the contractor, and the other between the contractor and the public. The present application is restricted to, seeking ruling on the tax applicable for the transaction between the corporation and the contractor. The nature of activities under si. No. 1 to 9 and 13 (except SI.No. 5A Charges for TV advt. in Bus Stand; 5C Flower shop in bus stand in open space & SI.No. 7 Bunk Stall) answered in affirmative by the AAR for direct services but not answered for the same set of activities if done by the contractors, has with all its variations and connotations indicate proximity with the main transaction indicated, i.e., functions under 243W of the constitution. It cannot, be said to indicate any activities. not concerned with the functions indicated. The relationship is specific and tangible and has nexus and direct, correlation with the functions under article 243G. The nature and constitution of performer is not distinct from the essential characteristics of the functions, envisaged under Art. 243W. The criteria to determine that the activity is directly in relation to the functions entrusted under Article 243W viz., whether such activities a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the appellant, since the same are earmarked to be kept at a particular location and at the same time ensuring prominence of location to attract buyers and further since a rent is fixed under contractual agreements, the same would fall under 'renting of immoveable property' services as defined under definitions 2(zz) under the notfn. No. 12/2017 and the exemption under sl.no. 7 of notfn no. 12/2017-CT (Rate) is available as well as charging of tax on RCM basis under sl. No. 5 of notfn. 13/2017-CT(R) subject to fulfilment, of the conditions spelt out therein. 10.1 In respect of the question pertaining to whether the charges obtained for the service of road cutting for the purpose of laying cables by telephone companies alongside roads on contract basis is a composite supply, the question is answered in affirmative. Though two charges are collected by the appellant for road cutting and annual rent for cables running across the road, it can be seen that unless road is cut, cables cannot bo laid and mere road cutting without laying of cables is useless. Therefore, both the services have to run in tandem with respect to the telephone companies and the methodology of collect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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