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TMI Blog2023 (12) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ruling No. GUJ/GAAR/R/27/2021 dated 19.07.2021. 3. Briefly, the facts are enumerated below for ease of reference: 4. The appellant, a Public Limited Company, is registered with the department & their GST registration no. is 24AAGCA6478P1ZM. 5. Ahmedabad Municipal Corporation [AMC], launched the Bus Rapid Transport System [BRTS] to ease the traffic situation in Ahmedabad city. To run and operate buses under the BRTS, AMC incorporated a Special Purpose Vehicle [SPV] called Ahmedabad Janmarg Limited [appellant]. It received funding under the Jawaharlal Nehru National Urban Renewal Mission [JnNURM], a programme launched in 2005 by the Government of India, to improve the quality of life and infrastructure in the cities. 6. On the grounds viz * that AMC is a 100% shareholder of the appellant; * that appellant is a mere offshoot of AMC & its inseparable part &. extended arm; * that it does the activities as per the functions entrusted to Municipal Corporation; that it is established and managed by AMC * that majority of its employees at top management are sent on deputation by AMC; * that appellant is part of centrally funded scheme & the lead planning & implementing agenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant sought a ruling from the Gujarat Authority for Advance Ruling [GAAR] on the following questions viz 1. Whether AJL would be qualified as Local Authority' under the Central Goods and Services Tax Act, 2017? 2. Whether AJL is liable to pay GST on procurement of security services received from any person other than body corporate under reverse charge mechanism, considering the exemption granted in sl. no. 3 of Notification No. 12/2017 Central Tax (Rate) or sl. no. 3 of Notification No. 09/2017 IGST (Rate)? 3. Whether AJL is required to pay GST on advertisement services or the service recipient of AJL is required pay GST under reverse charge mechanism considering Notification no. 13/2017-Central tax (Rate) dated 28-06-2017? 4. Whether AJL is required to be registered as a deductor under GST as per the provision of Section 24 of the CGST Act? 5. If AJL does not qualify to be local authority under Central Goods and Services Tax Act, 2017 in Part A, can be it construed to be a government entity or a governmental authority? 8. The GAAR vide its order No. GUJ/GAAR/R/27/2021 dated 19.07.2021, gave the following ruling to the aforementioned questions: 1. Ahmedabad Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR/R/2020/181 * Shri Jayesh Dalal [Ruling No. GUJ/GAAR/R/08/2019] * M/s. PDCOR Ltd [Ruling No. RAJ/AAR/18-19/13 dtd 25.8.18]; * Sewage & Infrastructural Development Corporation of Goa [Ruling No. GOA/GAAR/10/18-19 dtd 30.9.19]; * Shri Sumitabha Ray [Ruling No. 27/WBAAR/19-20 dtd 23.9.19]; * M/s. PDCOR Ltd [Ruling No. RAJ/AAR/18-19/13 dtd 25.8.18]; * Shri Roopesh Kumar [Ruling No. KAR/AAR/101/19-20 dtd 27.9.191; * M/s. Arihant Dredging Developers Ltd [Ruling No. 49/WBAAR/19-20 dtd 10.6.19]; * that in respect of the advertising services for which they recover certain amount they are not required to pay GST under RCM; that they are required to deduct TDS in terms of section 51 of the CGST Act. 2017 read with notification No. 50/2018-CT dtd 13.9.18; * that for the averment that they qualify as Government entity/Government authority they would like to rely on the ruling of * Zigma Global Environ Solutions P Ltd [Ruling 10/AP/GST/2020 dtd 5.5.2020]; * Shapoorji Pallonjui & Co P Ltd [Ruling No. 10/AP/GST/2021 dtd. 25.02.2021]. 10, During the course of personal hearing held on 26.07.2023, Shri Hardik Shah, CA, Shri Pranav Barot and Ms Shweta Jain appeared on behalf o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to clause (16) of section 2 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017); O Notification No. 32/2017-CT (Rate) dated 13.10.2017 (ii) in paragraph 2, for clause (zf), the following shall be substituted, namely "(zf) "Governmental Authority " means an authority or a board or any other body. - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90 per cent, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243G of the Constitution. (zfa) "Government Entity " means an authority or a board or any other body including a society, trust, corporation. (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90 per cent, or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority ". O Notification No. 2/2018-CT (Rate) dated 25.01.2018 Exemption from CGST on intra-State supply of specific services (Nil Rated) Amendment to Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nctioning of their budgets, sanction to the creation or filling up of particular appointments, the encashment of leave, pension or similar rules, (ii) The revenues of anybody which may be specially notified by Government as such." 14. A conjoint of the above clearly depicts that in terms of 2(69)(c) ibid, for the appellant to fall within the ambit of the term 'local authority it has to satisfy the following viz o be a Municipal Committee; o be a Zilla Parishad, o be a District Board, o be any other authority which is legally entitled to/entrusted by the Central/State Government with the control/management of a municipal or local fund. 15. To substantiate their case, the appellants averment is that since it receives funds from AMC, who in turn receives grants from various sources for operations/capital needs and deploys it for BRTS operations as a loan, it would be construed that appellant controls /manages local or municipal fund. 16. On the face of it, the argument is neither legally tenable nor factually correct. The appellant is a legal person, formed as a Special Purpose Vehicle and incorporated under the Companies Act. The averment that since they are funded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby enacted as follows:- CHAPTER I. Preliminary Short title and commencement 1. (1) This Act may be called the 2[Gujarat] Provincial Municipal Corporations Act, 1949. 3[(2) It extends to the whole of the State of Gujarat.] (3) This section shall come into operation at once. The remaining provisions of the Act shall come into operation in the City of Ahmedabad and 4[such other cities] on such dates as the State Government may by notification in the Official Gazette, specify in respect of each city. On the respective dates the said provisions shall apply to places outside the said cities in the manner, to the extent and for the purposes expressly provided therein. 1. The words "Gujarat" shall be and shall be exceed to have been substituted on 1st May, 1960 by Guj.15 of 2011. 2. These words were substituted for the words "the cities of Ahmedabad and Poona" by the Gujarat Adaptation of Laws (State and Concurrent Subjects) Order, 1960. 3. Sub-section (2) was substituted for the original by Guj. 3 of 1973, s. 2. 4. These words were substituted for the words and brackets "the City of Poona and such other cities (outside Greater Bombay)" by the Gujarat Adaptation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions determined by the State Government for such agency arrangement. It was in the aforementioned context that the Advance Ruling Authority held that Nagpur Environmental Services Ltd [a 100% subsidiary of Nagpur Municipal Corporation, Nagpur] is a local authority. We do not agree with the contention of the appellant in relying on the aforementioned ruling more so since the appellant has failed to point out any section under the GPMC Act, which permits the Municipal Corporation to entrust performance of its functions by agencies other than the Ahmedabad Municipal Corporation. Thus, there is a clear cut distinction as far as Nagpur Environmental Services Ltd is concerned, which was entrusted the municipal function in terms of Section 58B of the Nagpur City Municipal Corporation Act, 1948, which is not the case with the appellant in the present dispute In view of the foregoing, the reliance on the aforementioned ruling is not legally tenable, the facts being different. 19. Even otherwise, as far as reliance on rulings of various other AARs is concerned, we find that same are not binding on us in terms of section 103 of the CGST Act, 2017. 20. With respect to security services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 24 of the CGST Act, 2017. 23. Before moving forward, it would be prudent to reproduce the relevant provisions for the ease of reference viz o Section 24. Compulsory registration in certain cases.- Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,- (i) to (v) ..................; (vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act: o Section 51. Tax deduction at source.- (1) 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 at the rate of one per cent from the payment made or credited to the supplier (hereafter in this section referred to as "the deductee") of taxable goods or services or both, where the total value of such supply, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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