9911796707
TMI Blog2022 (7) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively) by M/s. Andhra Pradesh Medical Services and Infrastructure Development Corporation (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: 3.1 The Andhra Pradesh Health & Medical Housing & Infrastructure Development Corporation (APHMHIDC), which was renamed as Andhra Pradesh Medical Services & Infrastructure Development Corporation is registered under Public Society Act 1350 in the year 1987 and established vide G.O.Ms.No.309, HM&FW (F1) Dt.22.05.1987 under the administrative control of Health Medical and Family Welfare Department. 3.2 The Government vide G.O.Rt.No.672, HM & FW (M1) Dept., Dt.20.05.1998 has notified the APHMHIDC as a nodal agency for procurement of medicines and subsequently the Government vide G.O.Ms.No.78, HM & FW (M2) Dept., Dt.24.02.2001 has entrusted the job of procurement of equipment to the Corporation. Further, the Government vide G.O.Ms.No.99, HM&FW (M2) Dept., 05.05.2010 have entrusted the sanitation services to APMSIDC with a request to select the implementing agencies for each District adopting an open and transparent tender process. 3.3 Thus, APMSIDC has been working wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odal agency to the Government of Andhra Pradesh and it has no budgetary support. * As per G.O.Rt 672 dated 20-5-1998 and G.O.Rt 1357 dated 19-10-2009, the acquisition and distribution of drugs was undertaken by the organisation and the Government had agreed to pay 2% on such works undertaken as establishment charges. * As per G.O.Rt 672 dated 20-5-1998 and other procurement procedures issued by the government on 13-01-2016, the organization started procurement of equipment and distribution of the same to Hospitals and PHCs on which government had agreed to pay 2% on such executed works. * All the receipts received from the Government were only to meet establishment expenses of the organization and the surplus left over after meeting the said expenses were not distributed to any person and they were used to meet future expenses. * The Government of Andhra Pradesh had stipulated to pay some margin on works undertaken by the organization to meet its employee cost and other establishment expenses. On these works, the organization receives 7% from the government as establishment charges. 3.8 The applicant approached the Authority for Advance Ruling to seek clarification on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to panchayat i.e., public health. 100°/o of the equity and control are held by the Government of Andhra Pradesh alone. The total management is overseen by the Board of Directors who are all nominated by the Government of Andhra Pradesh. Thus, Corporation qualifies for the definition of "Government Entity/Government authority' as provided in Notification 12/2017 Central tax (rate). 5.2 The applicant submits that all the services provided by the corporation are in relation to public health. Public health is one of the items enumerated under entry No: 26 of the Eleventh Schedule of the Constitution of India falling under the Article 243G, which is as under. The following activities are covered under Eleventh Schedule 1. Agriculture including agricultural expansion 2. Land improvement, implementation of land reforms, land consolidation and soil conservation 3. Animal Husbandry, Dairying and poultry 4. Fisheries 5. Minor irrigation, water management and watershed development 6. Social forestry and farm forestry 7. Small scale industries in which food processing industry is involved 8. Minor forest produce 9. Safe water for drinking 10. Khadi, village an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons, the establishment charges received by the Corporation are eligible for exemption under entry 3 or 3A of Notification no: 12/2017 Central tax (Rate) a. Corporation is a government entity b. Services rendered are only 'pure services' c. Services are rendered to the State Government. d. The activity is coordinating and monitoring the distribution of Drugs, surgical equipment etc., which is an activity in relation to a function entrusted under article 243G of Constitution of India. In order to get a clarification on the stand being taken by APMSIDC on the taxability of incomes received, they approached the Authority for Advance Ruling. 6. Virtual Hearing: The proceedings of Hearing were conducted through video conference on 21.10.2021, for which the authorized representative, CA. Sri Sivaprasad A attended and reiterated the submissions already made. 7. Discussion and Findings: We have examined the issues raised in the application in light of the facts and arguments submitted by the applicant. As seen from the documentation submitted by the applicant, it is clear that APMSIDC procures the drugs, medicines and surgical equipment on behalf of the Health, Med ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to undertake the business in the supplies made by it. The above attributes/features alone cannot pull the transaction out of the purview of the concept of 'business.' Business is defined as under: Section 2 (17) -business includes -- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; By the above definition it is evident that for a transaction/activity to be qualified under 'business', it need not be for a pecuniary/ monetary benefit. Similarly, the absence of profit motive will not shield any transaction from being included under "business". Furthermore, the transaction involved 'consideration', which is defined in the Act as under, "(31) -consideration in relation to the supply of goods or services or both includes (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government, " As mentioned supra in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the activity, primarily, whether as per entry 3, the services shall essentially be 'Pure Services', or not to be claimed under exemption. The applicant claims that corporation does not incur any profit or loss on any of the commodities and hence the remuneration earned by Corporation is for the pure services alone. But, as a matter of fact, the applicant undertakes the procurement of drugs, surgical equipment, etc, and raises an invoice in the name of MD, APMSIDC. In addition to the above, the charges are received from the State Government as 'establishment charges' for handling and monitoring the activity. By all means, the principal activity is the procurement of goods and the ancillary activity is the service component of handling and monitoring of the supply, for which establishment charges are received as 2% as mentioned by the applicant. In view of the observations made above, we conclude that there is a clear cut involvement of both goods and services in the instant transaction and it is not in any way, a pure service, thus not eligible for exemption. RULING (Under Section 98 of Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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