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TMI Blog2022 (7) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... ement and distribution of drugs, Medicines and other surgical equipment by APMSIDC, is essentially a 'supply', as per the provisions of the Act. Whether the establishment charges received from the State Government as per G.O.Rt 672 dated 20-5-1998 and G.O.Rt 1357 dated 19-10-2009 by APMSIDC is eligible for exemption as per Entry 3 or 3A of Notification 12/2017 Central Tax (Rate)? - HELD THAT:- 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. Thus, there is a clear cut involvement of both goods and serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surgical consumables. c. Equipment wing for procurement of biomedical equipment. 3.4 After bifurcation of the State, APMSIDC registered with Registrar of Societies at Vijayawada. The Corporation is completely administered and managed under the aegis of the State Government of Andhra Pradesh. The key managerial positions consist of the Chairman, who is nominated by the Government of Andhra Pradesh and the Vice-Chairman and Managing Director, who is appointed by the Government of Andhra Pradesh. 3.5 The total administration of the Corporation has been organised as follows: 1. Head Office .1. 2. Circle Offices ..5. 3. QC S Divisions .5. 4. Divisions ..13. And basing on the requirements with the prior permission of the Government, special units have been established to meet the special project works like construction of Medical Colleges and Hostels etc. Apart from the above, each district is having a Central Drugs Stores for stock and distribution of procured drugs and surgical consumables for distribution to end users like PHCs, CHCs and Teaching Hospitals etc. 3.6 Objectives of the Organisation: The aims and obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... APMSIDC procures the drugs, medicines and surgical equipment on behalf of the Health, Medical and Family Welfare Department, Government of Andhra Pradesh, and it will deliver the drugs, etc., to the respective Primary Health Centres, Government Hospital and other establishments. APMSIDC will make the supplies at cost and do not earn any profit or loss and had no commercial interest in delivering those drugs and equipment. The Government will reimburse the actual amounts incurred by APMSIDC on procurement. There is no value addition in the hands of APMSIDC nor is there any intent to undertake the business in the supplies made by it. The applicant had filed an application in form GST ARA-01 dated 09.06.2021 by paying required amount of fee for seeking Advance Ruling on the following issues, as mentioned below: 4. Questions raised before the authority: The applicant seeks advance ruling on the following: 1. Whether the procurement and distribution of drugs, medicines and other surgical equipment by APMSIDC on behalf of government without any value addition, and without any profit or loss, without even the intent to do business in the same amounts to Supply un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rural electrification, including distribution of electricity 14. Road, culverts, bridges, ferries, waterways and other means of communication 15. Education including primary and secondary schools 16. Non-conventional sources of energy 17. Technical training and vocational education 18. Adult and non-formal education 19. Public distribution system 20. Maintenance of community assets 21. The welfare of the weaker sections of the in particular of the scheduled caste and scheduled tribes 22. Social welfare, including the welfare of the handicapped and mentally retarded 23. Family welfare 24. Women and child development 25. Markets and Fairs 26. Health and sanitation including hospitals, primary health centres and dispensaries 27. Cultural activities 28. Libraries 29. Poverty Alleviation Programs 5.3 The applicant further submits that the establishment charges are received from the State Government of Andhra Pradesh out of the budgetary grants provided in the State Budget. The above receipts are provided to the Corporation only for the services rendered by the entity, but are not in relation to any goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Health, Medical and Family Welfare Department, Government of Andhra Pradesh, and delivers the drugs, etc., to the respective Primary Health Centres, Government Hospitals and other establishments. The issue at hand is to determine whether the procurement and distribution activity of the APMSIDC would amount to 'supply' under Sec.7 of CGST/APGST Act. Section 7: Scope of supply: (1) For the purposes of this Act, the expression-supply includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business ; The term supply has been inclusively defined in the Act. The following parameters should be adopted to characterise any transaction to be a supply. Supply of goods or services or both (Supply of anything other than goods or services does not attract GST). Supply should be made for a consideration. Supply should be made in the course or furtherance of business. Supply should be a taxable supply. In the instant case, the applicant procures drugs through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include any subsidy given by the Central Government or a State Government, As mentioned supra in the excerpt from the 'Tender Notice', payment is made and the invoices are raised in the name of MD, APMSIDC, Mangalagiri, Andhra Pradesh, for the supply of goods, which is an established fact as submitted by the applicant himself. Therefore, the procurement and distribution of drugs, Medicines and other surgical equipment by APMSIDC, is essentially a 'supply', as per the provisions of the Act. Now, we examine the second query, whether the establishment charges received from the State Government as per G.O.Rt 672 dated 20-5-1998 and G.O.Rt 1357 dated 19-10-2009 by APMSIDC is eligible for exemption as per Entry 3 or 3A of Notification 12/2017 Central Tax (Rate). Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 exempts 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 or a Government entity by way of any activity in relation to any function entrusted to a Panchayat under art ..... X X X X Extracts X X X X X X X X Extracts X X X X
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