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TMI Blog2022 (10) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, Dehradun, Uttarakhand, 248001 (herein after referred to as the "applicant") and registered with GSTIN - 05AAECM1785FCZ9 under the CGST Act, 2017 read with the provisions of the UKGST Act, 2017. The applicant submitted that they are an undertaking (wherein 100% shares are owned by the Government of Uttarakhand) of the State of Uttarakhand entrusted with the task of transmitting electric power in the state of Uttarakhand which mainly involves creating and maintaining the Electric Transmission Network within the state of Uttarakhand. In the application dated 29.06.2022, the applicant submitted that:- * Uttarakhand CAMPA (hereinafter referred to as 'UK CAMPA') is a statutory body established by an act of Parliament namely Compensatory Afforestation Fund Act with primary objective of promoting afforestation and development activities in order to compensate for the felling of trees and re plantation thereof on the forest land that is intended to be diverted to non- forest use. UK CAMPA is a Fund/ entity registered under section 12AA of the Income Tax Act, 1961 (ITA) and is not for profit organisation. * The Divisional Forest Officer (DFO) is an officer belonging to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017? 3. Whether services supplied by UK CAMPA, which is a section 12AA registered entity of The Income Tax Act 1961, be covered under Serial No 1 (Chapter 99) of Notification No 12/2017-Central Tax (Rate) dated 28th June 2017 read with section 11 of the CGST Act 2017? 4. If the answer to Question No 3 above is in the negative, under which heading of the GST tariff shall the said supply of service be covered? 5. If the answer to Question No 3 above is in the negative, identify the person liable to deposit such GST with the Government authorities i.e. is such payment covered under the Reverse Charge mechanism or normal forward charge rules? 6. Whether compensation paid by PTCUL to DFO, the Government of Uttarakhand, is subject to levy of GST? 7. If the answer to Question No 6 above is in the positive, under which heading of the GST tariff shall the said supply of service be covered? 3. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act are the same except for certain provisions; therefore, unless a mention is specifically made to such dissim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory body created by an Act of Parliament with primary objective of promoting afforestation and development activities in order to compensate for the felling of trees and re-plantation thereof, on the forest land that is intended to be diverted to non-forest use. UK CAMPA, a not for profit organization, is registered under section 12AA of the Income Tax Act, 1961 (ITA). (b) Section 2(53) of the CGST Act, 2017, defines 'Government' as the Central Government and the official FAQ's on GST Sectoral Series- Government Services issued by Central Board of Indirect Taxes and Customs (CBIC) clarifies that "A statutory body, corporation or an authority created by the Parliament or a State Legislature is neither 'Government' nor a 'local authority'. Such statutory bodies, corporations or authorities are normally created by the Parliament or a State Legislature in exercise of the powers conferred under article 53(3)(b) and article 154(2)(b) of the Constitution respectively. It is a settled position of law (Agarwal Vs. Hindustan Steel AIR 1970 Supreme Court 1150) that the manpower of such statutory authorities or bodies do not become officers subordinate to the Pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity is exempted from whole of GST vide entry No. 1 of the notification, which specifies that "services by an entity registered under Section 12AA of Income-tax Act, 1961 by way of charitable activities". 4 Under the CGST Act, 2017, goods and services supplied are classified using Harmonised Commodity Description and Coding System or HSN. The HSN is further divided into Chapters, Sections, Headings and Sub headings, representing a broader class or types of goods and services. In the present case, services supplied by UK CAMPA, are charitable activities duly covered under Notification No 12/2017and therefore, consideration paid by PTCUL in the form of payments made to a section 12AA registered entity i.e. UK CAMPA are exempt from GST, nevertheless, even if it is concluded that GST is to be levied on such compensation, then the same can only be covered in Notification No 12/ 2017 under Serial No 6, Chapter 99 with NIL rate of taxation. 5. The CGST Act 2017 defines "reverse charge" under section 2(98) as "the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at GST is to be levied on such compensation, then the same can only be covered in Notification No 12/ 2017 under Serial No 6, Chapter 99 with NIL rate of taxation. 8. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which were filed by the applicant for our consideration. Now we proceed by taking up the issue: 8 .2 In the instant case there are various issues before us for decision. We take the same one by one. 8 .3 We find that under the provisions of the Compensatory Afforestation Fund Act, 2016, Compensatory Afforestation Fund Management and Planning Authority (CAMPA) was established as a National Advisory Council under the chairmanship of the Union Minister of Environment & Forests for monitoring, technical assistance and evaluation of compensatory afforestation activities, with the objectives of promoting afforestation and regeneration activities as a way of compensating for forest land diverted to non-forest uses and has been constituted under an Act passed by the Parliament. To regulate the above act, Compensatory Afforestation Fund Rules, 2018 have been introduced. We observe that Compensatory Affore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds and property, movable and immovable shall be vested in the Governing Body" and that "the Hon'ble Chief Minister, Government of Uttarakhand is the Chairperson of the Governing Body and Hon'ble Minister of Forests and Environment, Government of Uttarakhand, Chief Secretary, Government of Uttarakhand, Principal Secretaries of the Departments dealing with Environment, Finance, Planning, Rural Development, Revenue, Agriculture, Tribal Development, Panchayati Raj, Science and Technology, Principal Chief Conservator of Forests (HOFF), Principal Secretary, Forest and Environment, Government of Uttarakhand, Chief Wildlife Warden etc". (Exhaustive but not limited to) are the members of the said Governing Body. 8.3.4 From the above facts, we observe that there is no doubt that Forest (Conservation) Act, 1980 in the state of Uttarakhand is also implement and regulated by the Forest Department of State Government of Uttarakhand and the UK CAMPA is under the aegis of Forest Department of State Government of Uttarakhand, as they administer, manage and regulate the said act. 8.3.5 We also find that vide letter dated 08.08.2022, the applicant submitted sample demand letters raised o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of business; [and] (c) the activities specified in Schedule I, made or agreed to be made without a consideration; [****] (d) [*****] . [(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II] (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of [sub-sections (1), (1A) and (2)] 17, the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- [a] a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods". 8.4.2 We find that sub-section 2 of the section ibid, clearly specify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CAMPA is not only assigning a value for damages on the forest land but also charging for afforestation, regeneration etc. and also for other activities. The said assigned value is also charged and collected, from other such parties including Power Transmission Corporation of Uttaranchal Limited (PITCUL) in the instant case. The method applied for calculation i.e. for the assignment of the value and the components to be considered for the assigned value, being obligatory as per the provisions of a law, does not take away its character of being a consideration. For better perspective definition of "consideration" in relation to the supply of goods and services or both as provided in Section 2(31) of the Central Goods & Service Tax (CGST) Act, 2017 is reproduced 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; (b) the monetary v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is paid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017. 8.5 Now we take up the third issue with respect to entity registered under section 12AA of the Income-tax Act, 1961. 8.5.2 We find that in the Notification No. 12/2017-CT (Rate) dated 28.06.2017, the entry thereto states as under;- "Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities." 8.5.3 We are of the opinion that charity means generosity and helpfulness especially toward the needy or suffering that is to say aid given to those in need. The list of activities given in the above said notification are the activities which are eligible for exemption but for the exemption to come into picture the act of charity has to be fulfilled and in the instant case, the money is being charged and collected for specific purposes, which evidently does not constitute "charity' and hence services rendered through the Forest Department of State Government of Uttarakhand, is not covered under Entry No 1 (Chapter 99) of Notification No 12/2017 - Central Tax (Rate) dated 28th June 2017 read with section 11 of the CGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low the provisions of the Notification No. 13/2017-Central Tax (Rate) dated 28th June, 2017 and is liable to pay due tax under reverse charge mechanism on the total assigned value for which demand is raised by the Forest Department of State Government of Uttarakhand, as per the provisions of the CAMPA Act. 8.8 Now we take up the sixth issue for decision. 8.8.2 We find that at Para 8.3 above the issue has already been discussed and concluded that the Forest Department of State Government of Uttarakhand, through the Principal Chief Conservator of Forests, an officer belonging to the Indian Forest Services, is responsible for all work related to forest land, wildlife and its conservation, preservation and there is no doubt that Forest (Conservation) Act, 1980 in the state of Uttarakhand is also administered, implement and regulated by the Forest Department of State Government of Uttarakhand and that as per the provisions of the law the DFO, Government of Uttarakhand, is raising demands for "Premium and Annual Lease Rent" and the said lease rent is in lieu for the right to use of the said land area falling under the jurisprudence of the Forest Department, Government of Uttarakhand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department of State Government of Uttarakhand falls under the above Heading and hence not covered under Serial No 6 of the Notification No 12/ 2017 and observe that the above services under Heading 997212, does not figure in the Notification No. 12/ 2017 and hence is liable to tax. 9. In view of the discussions held above, we rule as under: RULING 1. UK CAMPA falls under the category of State Government as per the provisions of the CGST Act, 2017. 2. Services rendered through the Forest Department of State Government of Uttarakhand, for which compensation is paid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017. 3. Services rendered through the Forest Department of State Government of Uttarakhand, is not covered under Entry No 1 (Chapter 99) of Notification No 12/2017 - Central Tax (Rate) dated 28th June 2017 read with section 11 of the CGST Act 2017. 4. Services fall under the Heading 999799 - "Other services nowhere else classified" in the "Group 99979- Other miscellaneous services. 5. The applicant being a business entity is liable to follow the provisions of the Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017 an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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