9911796707
TMI Blog2024 (6) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority must be legally entitled to or entrusted by the Government with, the control and management of a Municipal or local fund. In case of UKPSVEN, there is no local fund entrusted by the Government with UKPSVEN, but the Act would reveal that no municipal or local fund has been entrusted by the Government. The fund of UKPSVEN is its own fund and cannot be equated with a fund entrusted by the Government. Thus, the important requirement in order to qualify as a local authority viz. control and management of a municipal/local fund is absent in the present case. The UKPSVEN is a body corporate formed by the State legislature under UPWSS Act enacted by the UP State Legislature. Further, as per section 3 of the Uttaranchal (The Uttar Pradesh Water Supply and Sewerages Act, 1975) Adaptation and Modification Order, 2002 read with UPWSS Act, UK Peyjal Nigam is a body corporate established by the Government of Uttarakhand, as such, the requirement of governmental authority has been fulfilled in the present case - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case applicant has sought advance ruling on the determination of the liability to pay tax on services, therefore, in terms of said Section 97(2) (e) of CGST/SGST Act, 2017, the present application is hereby admitted. BRIEF FACTS OF THE CASE 5. In the application dated 27.12.2023, the applicant submitted that: a. That the Applicant i.e. THDCIL (service receiver in the instant case) is a Public Sector Enterprise and registered as a Public Limited Company under the Companies Act, 1956 and has been conferred 1 Mini Ratana-Category-I Status' and up-graded to Schedule 'A' PSU by the Government of India. b. That on 11.09.2023 the THDCIL inked a Memorandum of Understanding (MOU) with Uttarakhand Peyj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. 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 per GST Application C Private Limited Company; C Public Limited Company; A or B or K or T Society/ Club/ Trust/ AOP C Public Sector Undertaking, C Unlimited Company; F Limited Liability Partnership, C Foreign Company F Foreign Limited Liability Partnership This means, for example, if you wish to change an entity's constitution from a Society to Club or Association of Persons or Trust, it is possible to do so using the Amendment form since PAN does not need to change. ii. Further with respect to the applicability of GST under Forward Charge or under RCM following Section/ Provision/ Notification of the CGST Act, 2017 need to be looked into. iii. Works Contract as per Section 2(119) of CGST Act, 2017 states that a contract for building, const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 are not deciding any wider question but restricting our conclusion to the facts and circumstances which were filed by the applicant for our consideration. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by applicant and his authorized representatives during the hearing. We have also considered the issue involved on which advance ruling is sought by the applicant, relevant facts and the applicant's interpretation of law. Now we proceed by taking up the issue. 8. We have carefully considered all the submissions made by the Applicant. In the instant case the applicant i.e. M/s THDC India Limited, [a Public incorporated company with CIN - U45203UR1988GOI009822] as a receiver of services, entered into an Memorandum of Undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 find that Section 2(69) of Goods and Service Tax Act, defines 'Local Authority' as under:- (a) A Panchayat as defined in clause (d) of article 243 of the constitution; (b) a municipality as defined in clause (e) of article 243P of the Constitution; (c) a Municipal Committee, a Zila Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (e) A Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under Article 371 and article 371D of the Constitution; or (g) A Regional Council constituted under Article 371A of the Constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SS 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 (Ex-officio), Secretary to the State Government in the Local Self Government Department (Ex-officio), the Director of Local Bodies, Uttar Pradesh (Ex-officio), the Director of Medical and Health Services U.P. (Ex-officio) and three elected Heads of Local Bodies in the state to be nominated by the State Government. (iii) Section 40 (1) of the UPWSS Act provides that the corporation shall have its own fund to be called the Nigam Fund which shall be deemed to be a local fund and to which shall be credited all moneys received otherwise than by way of loans by or on behalf of the corporation. We find that in the Notification No. 2878/Nine-2(12-Adhi.)/2001 dated 22.11.2002, it has been provided as under: In exercise of powers conferred under the provisions of sub-section (1) of section 3 of the Uttaranchal (The Uttar Pradesh Water Supply and Sewerage Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of Port Commissioners, but, possessing one essential feature, namely, that it is legally entitled to or entrusted by the Government with, the control and management of a municipal or local fund. What then are the distinctive attributes and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority? First, the authorities must have separate legal existence as Corporate bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 Pradesh Water Supply And Sewerages Act, 1975) Adaptation and Modification Order, 2002 read with UPWSS Act, reveals that the UKPSVEN is not enjoying appreciable nature of autonomy as discussed below. (1) As per provisions of the Act (supra), the Chairman shall be appointed by the State Government. (2) As per Section 6(3) of the Uttaranchal (The Uttar Pradesh Water Supply And Sewerages Act, 1975) Adaptation and Modification Order, 2002 read with UPWSS Act, the Managing Director and finance director shall hold office on such terms and conditions as the State Government may by order specify. (3) As per Section 14 of the Uttaranchal (The Uttar Pradesh Water Supply and Sewerages Act, 1975) Adaptation And Modification Order, 2002 read with UPWSS Act, the UK Peyjal Nigam is entrusted (i) to prepare State plans for water supply, sewerage and drainage on the directions of the State Government (ii) to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities'. 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 10.03.2023, while deciding the appeal of M/s The Indian Hume Pipes Company Ltd., Karai Jhansi, Uttar Pradesh, against Advance Ruling No. UP ADRG-12/2022 dated 23.09.2022 and also by the Authority for Advance Ruling, Tamil Nadu in the Advance Ruling No. 13/AAR/2023, decided on 6-6-2023 [(2023) 11 Centax 219 (A.A.R. - GST -T.N.). In the Advance Ruling No. UP ADRG 12/2022, dated 23-9-2022 the Authority for Advance Ruling, Uttar Pradesh in the case of Indian Hume Pipe Company Ltd. {(2023) 2 Centax 223 (A.A.R. - GST - U.P.)], held as under: State water corporation - Local Authority - Whether Uttar Pradesh Jal Nigam (UPJN) qualifies as a 'local authority' - HELD : In view of decision of Supreme Court in R.C. Jain [1981] 2 SCC 308, as Chairman and Members of UPJN are elected by State Government and not inhabitants of local area, said entity does not qualify as local authority - UPJN is not enjoying appreciable nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 No. KAR/AAAR/01/2023 dated 07.02.2023 while deciding the appeal against Advance Ruling No. KAR ADRG-23/2022 dated 12.08.2022. Having held that the service provider in the instant case i.e. UKPSVEN is not a 'local authority', let us now examine as to whether the UKPSVEN is a 'Governmental Authority' or not? It is relevant to note that the term Governmental Authority is not defined in the CGST Act. However, Notification No. 31/2017-Central Tax (Rate), dated October 13, 2017, which amended the Notification No 11/2017-Central Tax (Rate), dated June 28, 2017, defined Governmental Authority as follows: ix. 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 243W of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied 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. For better perspective, the relevant portion of the said notification is reproduced as under: GSR...(E)- In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government on the recommendations of the Council hereby notifies that on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services as specified in column (4) of the said Table:- Table SI. No. Category of Supply of Services Supplier of service Recipient of Service (1) (2) (3) (4) 1 5 Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, - (1) renting of immovable property, and (2) services specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is an activity in relation to a function entrusted to a Municipality Panchayat under article 243W 243G respectively of the Constitution of India the said service is exempted from payment of tax. In view of the above, we hold that the provider of services 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 falls under the category of a Governmental Authority and in view of the provisions of the Notification No. 12/2017-Central Tax (Rate), dated 28.6.2017, as amended, the instant work as per the refereed MOU i.e. Design, engineering and construction of 500 KL RCC Over Head Tank at THDC1L Campus, Rishikesh on Deposit / Cost plus basis , 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 and is exempted from payment of tax. 9. In view of the discussions held above, we rule as under: RULING 1. Whether the Applicant i.e. the THDCIL needs to pay GST under Forward charge or unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
