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TMI Blog2024 (6) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the CGST Act would also mean a reference to the same provisions under the SGST Act. 3. The Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. 4. As per the said sub-section (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of:- (a) Classification of any goods or services or both (b) Applicability of a notification issued under the provisions of this Act, (c) Determination of time and value of supply of goods or services or both, (d) Admissibility of input tax credit of tax paid or deemed to have been paid (e) Determination of the liability to pay tax on any goods or services or both (f) Whether the applicant is required to be registered (g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term. 4.2 In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 69/43/2018-GST, Dt. 26/10/2018, if there is the change in constitution of business leading to change in PAN then taxpayer can apply for cancellation of registration. Meaning thereby, without changing the PAN it may not be possible to change the Constitution of Business and as UKPSVEN being the Local Authority, as it possess the PAN No. as AAALU0118M, wherein "L" denotes the Local Authority, it may remain the Local Authority and work as such in the course of its Business and may not change its constitution of Business at its own discretion. That as per Query at Point No. 3.4 of the GST System Project: "FAQs: Registration issued by GSTN which, say that "Can I file an Amendment Application for change in constitution of business?" The Ans. is No, Amendment application form can't be filled for change in constitution of business as it results in change of PAN. You may, however, file an amendment application in case your PAN will not change as a result of the change in constitution of business. This can happen only when you belong to the following categories and if the new entity also belongs to one of the following categories: Constitution Code as per PAN Constitution as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irport; (iii) transport of goods or passengers. vii. Herein, THDCIL is receiving the Works contract service from UKPSVEN and as per PAN & GST Registration of UKPSVEN, it is a Local Authority and hence THDCIL may need to pay GST under RCM but UKPSVEN claimed that though they are Local Authority, but for this particular work (Design, engineering and construction of 500 KL RCC Over Head Tank at THDCIL Campus, Rishikesh on "Deposit / Cost plus basis"), UKPSVEN is not to be treated as Local Authority and GST will be charged on Forward basis instead of RCM. So, THDCIL may need to pay GST under Forward charge basis instead of RCM by treating UKPSVEN is not as Local Authority. Accordingly opportunity of personal hearing was granted to the applicant on 25.01.2024. Sh. Rajat Varshney, Advocate, on behalf of the applicant appeared for personal hearing on the said date and re-iterated the submission already made in their application. Smt. Maneesha Saini, Deputy Commissioner, Concerned Officer from the State was also present during the hearing proceedings. She presented the facts and requested the authority to decide the case on merits. DISCUSSION AND FINDINGS: 7. In the present case we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government, Union territory or Local authority and the supplier of services being a "LOCAL AUTHORITY", the applicable tax is payable in their hand under the provisions of RCM. In the aforesaid back drop the Applicant sought for advance ruling whether the Applicant i.e. the THDCIL needs to pay GST under Forward charge or under RCM and whether UKPSVEN can have Dual Status i.e. for some purposes it may be deemed to be Local Authority while for others it may not? We note that the service provider in the instant case i.e. UKPSVEN has opined that since in the instant case only they does not qualify to be a "LOCAL AUTHORITY" and hence the supply of services in the instant case does not fall under the provisions of RCM in the hand of the service receiver i.e. M/s THDC India Limited [the Applicant], In view of the above submissions and different view taken by the applicant the service receiver and the service provider i.e. UKPSVEN, firstly and foremost we have to decide variant whether the service provider i.e. UKPSVEN (M/s Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam) is covered under Local Authority as defined under Section 2 (69) of Goods and Services Tax Act, 2017. We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas of Uttarakhand State. Besides this, the department has been also authorized by State Govt, to works as construction agency for building and other works in Uttarakhand and in other States. It is a body corporate having perpetual succession and a common seal and capable of suing and being sued in its name. It has power to acquire, hold and dispose of the property. The relevant provisions of UPWSS Act are as under: (i) The preamble of the UPWSS Act indicates that U. P. Jal Nigam was brought into existence to provide for establishment of a corporation, authorities and organization for the development and regulation of water supply and sewerage services and for matters connected therewith. (ii) The Section 3(3) of the UPWSS Act provides that the assessee corporation shall for all purposes be deemed to be a local authority and Section 4 of the UPWSS Act relates to its constitution, according to which it shall consist of a Chairman, to be appointed by the State Government. It also provides that the Members other than the Chairman shall be a Managing Director, a Finance Director, both to be appointed by the Government and secretary to the State Government in the Finance Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also which is as under- "local authority" shall mean a municipal committee, district board, body of port Commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund. Thus, it is seen that the term 'local authority' has been similarly worded in CGST Act, 2017 as well as General Clauses Act, 1897. The Apex Court in the landmark decision of Union of India Vs. R.C. Jain (1981) 2 SCC 308 while deciding whether the Delhi Development Authority is a 'local authority' or not, explained the scope of the term local authority under the General Clauses Act as follows: Let us, therefore, concentrate and confine our attention and enquiry to the definition of 'Local Authority' in Sec. 3 (31) of the General Clauses Act. A proper and careful scrutiny of the language of Sec. 3 (31) suggests that an authority in order to be a local Authority, must be of like nature and character as a Municipal Committee, District Board or Body of Port Commissioners, possessing, therefore, many, if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board, or Body o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a defined area and ordinarily, wholly or partly, directly or indirectly be elected by the inhabitants of the area. iii. The authority must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. iv. The authority must be entrusted by Statute with such Governmental functions and duties as are usually entrusted to municipal bodies. v. The authority must have the power to raise funds for the furtherance of their activities and the fulfillment of their projects by levying taxes, rates, charges, or fees. vi. Essentially, control or management of the funds must vest in such authority. We observe that the UKPSVEN, is not satisfying some of the above conditions for qualifying as a "local authority" as discussed below: The Apex court in the RC Jain case (supra) has held that the authority must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably and an appreciable measure of autonomy there must be. Perusal of the Uttaranchal (The Uttar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s similar constitution) is not a "LOCAL AUTHORITY", although, the aforesaid order denying UP Jal Nigam, the status of local authority is in respect of dispute of Income Tax, the same is applicable to instant case as the order of the Hon'ble High Court has been passed after analyzing the definition of 'local authority' contained in General Clauses Act. Since, it has already been discussed that the term local authority' has been similarly worded in CGST/SGST Act, 2017 as well as General Clause Act, 1975. Further, the relevant clarification contained in Service Tax Educational Guide published in the erstwhile tax regime is reproduced as under: "2.4.9 Are all local bodies constituted by a State or Central Law local authorities? No. The definition of 'local authority' is very specific as explained in point no 2.4.8 and only those bodies which fall within the definition comprise 'local authorities'. It would not include other bodies which are merely described as a local body by virtue of a local law. " We find that similar view has been taken by the Appellate Authority for Advance Ruling; Uttar Pradesh in the Appeal Order No. 05/AAAR/10/03/2023 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that that the UKPSVEN has been registered with the Income Tax Department and the PAN card allotted by them clearly outlines that they are a "LOCAL AUTHORITY". We observe that on the basis of the said PAN card, the UKPSVEN applied and got registered with the GST Department. We are of the opinion the PAN card issued to UKPSVEN as a 'local authority' are as per the provisions of the Income Tax Act and that the GST registration are granted based on the information furnished by them and it appears that in the application for registration UKPSVEN declared their constitution of business as a 'local authority'. However, when it comes to determining the rate of tax applicable on the supplies made by them, it is necessary to examine in detail whether the UKPSVEN qualifies to be termed as a local authority in terms of the definition of 'local authority' as given in Section 2(69) of the CGST Act, 2017. In so examining, we find that UKPSVEN does not qualify as a 'local authority' as defined in Section 2(69) of the CGST Act, 2017. We further find that similar view has been taken by the Karnataka Appellate Authority for Advance Ruling, in the Appeal Order N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes and public health, sanitation conservancy and solid waste management is a function of municipality. Further, as per the Uttaranchal (The Uttar Pradesh Water Supply and Sewerages Act, 1975) Adaptation and Modification Order, 2002 read with UPWSS Act, the State Government of Uttarakhand, have full control over the "UKPSVEN", hence the condition as mandated in the definition of Governmental Authority gets fulfilled in the instant case. Thus, from the facts and circumstances of the instant case, as discussed above, we hold that the service provider in the instant case i.e. UKPSVEN (M/s Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam) is not a 'local authority', within the meaning and ambit of the provisions of the CGST/SGST Act, 2017, but is a "governmental authority" Further, as per SI. No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, tax leviable, shall be paid on reverse charge basis by the recipient in case of "services supplied by the Central Government, State Government, union Territory or local authorities to a business entity" and hence the applicant has asked for ruling in this regard whether the provisions are applicable on them. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 'local authority', vid thin the meaning and ambit of the provisions of the CGST/SGST Act, 2017, but is a "governmental authority" and held that the applicability of the provisions of the Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, does not arise in the instant case. It has also been held by this Authority that by virtue of provisions of SI. No. 4 & 5 of the Notification No. 12/2017-Central Tax (Rate), dated 28.6.2017, as amended, services by governmental authority under service code of Chapter 99 will be taxed as 'NIL' rate under the category of "Services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the Constitution and Services by a Governmental Authority] by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution. " And since the construction of an overhead water tank at Rishikesh in the THDC colony is a construction service and pertains to supply of water which is an activity in relation to a function entrusted to a Municipality & Panchayat under article 243W & 243G respectively of the Constitution of India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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