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TMI Blog2022 (4) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... o. GST-ARA-94/2019-20/B-84 dated 02.11.2021, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). BRIEF FACTS OF THE CASE 3.1 The Appellant is unregistered, and is engaged in providing the services of renting out of immovable property, situated at Nashik, and is in the receipt of rental income. 3.2 The Appellant is one of the co-owners of the immovable property, which are jointly owned by five individuals. All the five co-owners, including the Appellant, hold proportionate share in the property vide three separate agreements. The property is let out to Social Welfare Department ("Samaj Kalyan Vibhag"), Nashik Division of Maharashtra Government. 3.3 The service is being provided from 03.06.2019 for 36 months, and the Appellant is receiving fix rent of Rs. 1,62,073/-. The details of the properties and the co-owners along with their rental income is tabulated hereinunder: SI.No. Particulars Agreement 1 Agreement 2 Agreement 3 1 Property name and address Plot no. 4, 5 & 6. S.No. 279/1/10/2/2 Durga Nagar, Panchwati Nashik. Plot no. 3,4 & 5. SNo. 279/1/10/2/2 Durga Nagar, Panchwati Nashik. Plot no. 2 & 3. S No. 279/1/10/2/2 Durga N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d), it has been held by MAAR that question pertained to entitlement of refund which is not covered under the Advance Ruling Provisions contained under section 97 of the CGST Act, 2017, therefore, has refrained from answering this particular question. GROUNDS OF APPEAL 5. Aggrieved by the aforesaid Advance Ruling Order dated 02.11.2021 passed by the MAAR, the Appellant has filed the present appeal, inter alia, on the following grounds: 5.1 GST TDS is not applicable when payment is made to an unregistered person as stated under section 51 of the CGST Act, 2017- 5.2 The case under consideration is covered under section 51 of CGST Act, 2017, that is, Tax Deducted at Source, by the Government. Section 51(1) of the CGST Act, the expression "TDS" includes,- Notwithstanding anything to the contrary contained in this Act, the Government may mandate,- (a) a department or establishment of the Central Government or State Government; or (b) local authority; or (c) Governmental agencies; or. (d) such persons or category of persons as may be notified by the Government on the recommendations of the Council, (hereafter in this section referred to as "the deductor"), to deduct tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution. Nil Nil 5.8 It can be observed that there are three conditions to satisfy for the exemption:- a) Service provided should be a 'pure service'; b) Service should be provided, inter-alia, to State Government; c) Service provided should be by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution; 5.9 In this regard, the services provided are renting of immovable property services, and thus, it's a pure service (as no specific goods are supplied). Further, the services are given to Social Justice and Special Assistance Department, Government of Maharashtra. 5.10 The MAAR in its order has observed as under: "the Applicant has submitted that the Samaj kalyan Vibhag of the Government of Maharashtra has taken the immovable property on rent from the applicant to house the girls from the backward class communities which can be considered as a welfare measure undertaken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es upon Municipalities, subject to such conditions as may be specified therein, with respect to,- i. the preparation of plans for economic development and social justice: ii. the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule; (b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule." In this regard, Twelfth Schedule of Constitution of India provides as under: - "TWELFTH SCHEDULE (Article 243W) "1. ... 3. Planning for economic and social development ..... 9. Safeguarding the interest of weaker sections of society, including handicapped and mentally retarded 10...." 5.13 In the instant case, the State Government is taking the property on rent for welfare of under-privileged section of the society and in particular, girls. Thus, as the services are provided to 'Social Justice and Special Assistance Department' for "Magasvargiya Mulinche Shashkiya Vastigruha", the services will be covered und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating actual percentage of the owner/co-owners in the said property. However, the Appellant has submitted the Agreements of co-ownership of the said immovable property before the MAAR. Agreement provides the details of actual percentage of ownership/co-ownership in the said property. 5.20 The Appellant also submits that each of the co-owners receives the rental income proportionate to their share in the immovable property and the income tax authority assesses him separately on the income so received. Merely because several persons jointly own an immovable property, they cannot be treated as 'an association of persons' or 'a body of individuals'. It is observed that the similar view is taken in the case of M/s. SRI RABI SANKAR TAH [2019-TIOL-418-AAR-GST] Case No. 34 of 2019 wherein it has been held that "The Applicant and the other two co-owners cannot be treated as an association of persons and, therefore, as a person defined under section 2(84) of the GST Act, where their income from renting is separately ascertainable and assessed for income tax individually at the hand of each co-owner. Whether the Applicant is required to be registered under section 22(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Welfare Department, for accommodation of the girls belonging to the backward classes/Scheduled Tribes, will be covered by the entry at SI. No. 3 of the Exemption Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 as the Appellants are providing the subject services to the Maharashtra State Government and the same are in relation to the functions entrusted upon the panchayats under Article 243G of the Constitution, or upon the municipalities under Article 243W of the Constitution. It was further argued that since Eleventh Schedule mentioned under Article 243G of the Constitution and Twelfth Schedule mentioned under Article 243W of the Constitution inter alia enumerate the functions related to the "welfare of weaker sections, and of scheduled castes and the scheduled tribes", their activities of renting out of immovable property would definitely be covered under the entry at SI. No. 3 of the Exemption Notification 12/2017-C.T. (Rate) dated 28.06.2017, and thereby, were eligible for exemption from GST. Accordingly, TDS provisions of Section 51 of the CGST Act, 2017, will not be applicable to the subject transactions undertaken by them. 7.4 Shri Mahure further vowed to submit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) 1. .... ...... 25.Women and Child development 26. Social welfare, including welfare of handicapped and mentally retarded. 27. Welfare of weaker sections, and of scheduled castes and the scheduled tribes. 28 ...................." . Further, Article 243 W of the Constitution of India provides as below:- "243W. Powers, authority' and responsibilities of Municipalities, etc. Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow,- (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to,- (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule; (b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 243W of the Constitution" imparts very wide coverage to the expression "function". Thus, it can be safely interpreted that the aforesaid entry has a very w ide connotation and coverage. Since, it has been established hereinabove that the activities related to residential accommodation of the girls or women, belonging to the Backward Class/Scheduled Tribes, will definitely come under the ambit of the responsibilities/functions entrusted to panchayats and municipalities, therefore, it can be safely concluded that in the instant case, pure services, i.e., renting out of immovable properties, provided by the Appellant to the State Government, will definitely be construed as an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution, or in relation to the function entrusted to a Municipality under article 243W of the Constitution, and thereby, are rightly eligible for exemption from GST in terms of the aforesaid exemption entry at SI. No. 3 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017. 12. A similar view has also been expressed by AAR Karnataka in the case of Sri Puttahalagaiah G.H. [Advance Ruling No. KAR/ADRG/19/2021 da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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