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TMI Blog2023 (1) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... CT (Rate) Dated 28.06.2017 and thereby GST 'Rate chargeable' to the said service is 'Nil'. The service rendered by the APMSIDC is in relation to a function entrusted to a Panchayat under Article 243G of the Constitution of India. (the appellant is providing Pure Service (supply / distribution of drugs, consumables and equipment for Hospitals) to State Government by way of an activity in relation to a function entrusted to a Panchayat under Article 243G (Sl.No.23 of Eleventh Schedule of Article 243G of Constitution is - Health and sanitation, including hospitals, primary health centres and dispensaries) - it is rightly eligible for exemption under Entry 3 or 3A of Notification No. 12/2017 - Central Tax (Rate) dt:28.06.2017. - AAAR/AP/09(GST)/2022 - - - Dated:- 20-12-2022 - SRI SANJAY PANT AND SRI M. GIRIJA SHANKAR, MEMBER Authorized Representative : Sri Siva Prasad, Authorised Representative (Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act). At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods from various vendors, which is no doubt a supply. Proper tax has been affected by the vendors and full taxes have been paid. The refence made of the tender documents etc., are in this regard only. However, the question in the Advance ruling is not about the procurement made by APMSIDC, which are any way, no doubt a supply. The question is whether the distribution effected by APMSIDC as per the instructions of Government are amounting to supply. 2) Making reference to the tender conditions of procurements made by APMSIDC and concluding there from that the transaction under question is supply, amply makes it clear that the AAR is referring to a different transaction which is not at all questioned. Full GST had already been made on those procurement. Post such procurement APMSIDC distributes drugs and surgical equipment's as per the instructions of the DHO (district Health officers) and other government officials. 3) Important point that needs to be considered as per the pleading of the appellant before AAR area. APMSIDC gives drugs to PHCs and Hospitals as per the instructions of the DHO. The indents are finalized by the DHO based on the need. No charges are made fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination of the nature of transaction under first question. Besides that, if the concept of concept supply shall be applied there shall be one of more taxable supplies, which are naturally bundied in the ordinary course of business. The AAR had not discussed any of these ingredients and had concluded on the taxability without having regard to the fact that Primary health is one of the constitutional functions under 243G of constitution and is eligible for exemption. 3. Virtual Hearing The proceedings of hearing were conducted through video conference on 04.11. 2022. The authorized representative Sri. Siva Prasad attended and reiterated the submissions already made, 4. Discussion and Findings: We have gone through the submission made by the appellant in light of the ruling pronounced by the Authority for Advance Ruling. On perusal of the elaborate submissions made by the appellant at the time of hearing and taking into consideration of the facts of the case, the issues to be decided are as follows: a. Whether the procurement and distribution of drugs, medicines and other surgical equipment by APMSIDC on behalf of government without any value addition wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ables and equipment for Hospitals. The procedure for procurement is enunciated at para (6) of G.O.Rt 1357 dated 19-10-2009.As per the procedure mentioned in the above said order, the APMSIDC procures medicines by adopting e-procurement process using the common platform already established by the Government of Andhra Pradesh. An excerpt of a sample tender issued by the APMSIDC for procurement of medicines is as follows: TENDER NO 129 (2021/22) PROCUREMENT OF SURGICAL CONSUMABLES APMSIDC : : DRUGS mms. Purchaser/Tender Inviting Authority - Managing Director, APMSIDC, Mangalagiri 522503, Guntur District, Andhra Pradesh (Hereinafter referred to as Tender Inviting Authority unless the context otherwise requires), (page 5). All bills/lnvoices should be raised in duplicate and the bills should be drawn as Per GST Rules in the name of MD, APMSIDC , Mangalagiri, Andhra Pradesh. (Page 18) On examination of all the factc and procedures detailed above, it can be concluded that the process of procurement by the APMSIDC is GST compliant where there is a purchaser, supplier and consideration and GST is discharged on the consideration. The second transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply, unless the supplier applies such deposit as consideration for the said supply; In the instant case, payment is being made, in money i.e. on the cost of procurement and distribution of drugs, consumables and equipment for Hospitals', in respect of, supply of service i.e. 'Warehousing and Distribution of Medicines and surgical equipment to the PHCs and Government Hospitals as per directions of DHOs' by the recipient i.e. by the State Government. Supply should be made in the course or furtherance of business - No. This parameter is not available in the instant case. Supply should be a taxable supply - Yes. This is a taxable supply. Now let us examine the process of distribution of medicines taken up by APMSIDC. The process of distribution of medicines by the APMSIDC is discussed at para (5) of G.O.Rt 1357 dated 19-10-2009 which is as follows: 5. Availability of medicines 5.1 The principal objective of the procurement policy is to ensure timely availability of required medicines at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment, State Government or Union territory or local authority or a Governmental authority 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 243W of the Constitution'. Here in the instant case, the appellant is providing Pure Service (supply / distribution of drugs, consumables and equipment for Hospitals) to State Government by way of an activity in relation to a function entrusted to a Panchayat under Article 243G (Sl.No.23 of Eleventh Schedule of Article 243G of Constitution is - Health and sanitation, including hospitals, primary health centres and dispensaries). Therefore, the service provided by the appellant in the instant case is qualifying all the conditions stipulated at Sl.No.3 of Notification No. 12/2017CT (Rate) Dated 28.06.2017 and thereby GST 'Rate chargeable' to the said service is 'Nil'. a. The second issue to be decided is whether the establishment charges received from State Government as per G.O.RT 672 dated 20-05-1998 and G.O.RT 1357 dated 19-10-2009 by APMSIDC is eligible for exemption as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / Government entity - Yes. The APMSIDC is providing service to Andhra Pradesh State Government. 3) The service rendered should be in lieu of an activity in relation to functions entrusted to Panchayat/ Municipality under 243G or 243W of the constitution - Yes. As discussed above, the service rendered by the APMSIDC is in relation to a function entrusted to a Panchayat under Article 243G of the Constitution of India. (the appellant is providing Pure Service (supply / distribution of drugs, consumables and equipment for Hospitals) to State Government by way of an activity in relation to a function entrusted to a Panchayat under Article 243G (Sl.No.23 of Eleventh Schedule of Article 243G of Constitution is - Health and sanitation, including hospitals, primary health centres and dispensaries). Therefore it is rightly eligible for exemption under Entry 3 or 3A of Notification No. 12/2017 - Central Tax (Rate) dt:28.06.2017. The Ruling passed by AAR vide AAR No.10/AP/GST/2022 Dtd.30.05.2022 does not appear to be Legal and Proper and accordingly modify the order as given below. ORDER Question: 1. Whether the procurement and distribution of drugs, medicines and o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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