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TMI Blog2024 (6) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex court in the UNION OF INDIA ORS. VERSUS RC. JAIN ORS. [ 1981 (2) TMI 200 - SUPREME COURT] has held that the main requirement to qualify as a 'local authority' is that the authority must be legally entitled to or entrusted by the Government with, the control and management of a Municipal or local fund. In case of UK Peyjal Nigam, there is no local fund entrusted by the Government with UK Peyjal Nigam, but the Act (supra) would reveal that no municipal or local fund has been entrusted by the Government. The fund of UK Peyjal Nigam 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 UK Peyjal Nigam 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 aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and the SGST Act are the same except for certain provisions; therefore, unless a mention is specifically made to such dissimilar provisions, a reference 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 go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, 'the applicant' is seeking advance ruling as to; 1. Whether RCM shall be applicable in this case and tax be paid by THDC on Reverse Charge Basis or this contract will fall under forward charge and tax be paid by THDC to UK Peyjal on forwards basis? 2. Whether THDC or UK Peyjal is entitled to avail ITC on the GST deposited? APPLICANT SUBMISSION AND PERSONAL HEARING: 6. From the record submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing No. 05AAALU0118MHZL. Before proceeding in the present case, we have to first go through the submissions made by the applicant which are as under:- i. They are a Local Authority constituted under Notification of Uttarakhand Government and Implementing Agency of Centre/State Government undertaking the construction/erection of Govt, schemes relating to water supply, sewerage etc. and providing these services to purely Government. ii. That in the instant case they entered into an Memorandum of Undertaking (MOU) with a Public Sector Undertaking (PSU) [Joint Venture of Govt, of India and Govt, of Uttar Pradesh) namely THDC India Limited, for construction of an overhead water tank at Rishikesh in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entered into an Memorandum of Undertaking (MOU) with THDC India Limited, a Public Sector Undertaking (PSU) [Joint Venture of Govt, of India and Govt, of Uttar Pradesh), for construction of an overhead water tank at Rishikesh in the THDC colony, meant for use by the THDC only. We have gone through the submission made by the Applicant and find that the applicant is engaged in construction / erection relating to water supply, sewerages etc. We find that although the applicant in their application has claimed that they are providing services to purely Government only, but we observe that in the instant case the receiver of services is M/s THDC India Limited, which is a Public incorporated company with CIN-U45203UR1988GOI009822 and not a Government. We note that the Applicant in their applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 371J of the Constitution; or (g) A Regional Council constituted under Article 371A of the Constitution. We have gone through the constitution of Uttarakhand Peyjal Sansadhan Vikas Evam Nirman Nigam (hereinafter referred to as the UK Peyjal Nigam). We find that originally the applicant was constituted and came into existence as Public Health Engineering Department in 1927 to provide drinking water supply and sewerage facilities in the whole of Uttar Pradesh (which has now been divided into Uttar Pradesh and Uttarakhand (originally Uttaranchal). In the year 1946, Public Health ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tar Pradesh (Exofficio), 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, 1975) Adaptation and Modification Order, 2002, the Governor is pleased to constitute the Uttaranchal Payjal Sansadhan Vikas Awam Nirman Nigam , which shall be deemed to have been constituted with effect from the date of 7th November' 2002 . Likewise at SI. No. 3(i) it has been mentioned as under: In sub-section (1) of Section 3 of the Principal Act in place of Uttar Pradesh Jal Nigam the following words shall be substituted, namely 'The Uttaranchal Pey Jal Sans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. Next they must been trusted with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Order, 2002 read with UPWSS Act, reveals that the UK Peyjal Nigam, 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 operate, run and maintain any waterworks and sewerage system, if and when directed by the State Government on such terms and conditions and for such periods as may be specified by the State Government. (iii) such other functions as may be entrusted to the Nigam by the State Government by Notification in the Gazette. (4) Further, as per the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian 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 of autonomy and same is evident from different provisions of Uttar Pradesh Water Supply and Sewerage Act (UPWSS Act) - Fund maintained by UPJN is its own fund and cannot be equated to a fund entrusted by Government - UPJN lacks control and management by way of a local fund - As no local fund is entrusted by Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng No. KAR ADRG-23/2022 dated 12.08.2022 . Having held that the UK Peyjal Nigam is not a local authority', now we proceed to examine as to whether the UK Peyjal Nigam 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 the Constitution or to a Panchayat under article 243G of the Constitution. Thus, in order to qualify as a governmental authority, such authority must be set up by an act of Parliament/State Legislature, should have 90% or more stake of government, and should carry out any function entrusted to a Municipality % Panchayat under article 243W 243G respectively of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 specified below- (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) transport of goods or passengers. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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