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TMI Blog2024 (8) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... an agency to implement water supply schemes - delegation of sovereign function enumerated in Sch. XI XII within the framework of Constitution of India so as to hold that MJP has performed the function entrusted under Article 243G 243W of the Constitution of India. Whether Services provided to MJP for the Constitutional function of State Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies are in fact made to the Central State Government? - HELD THAT:- The Jal Jeevan Mission is implemented through SWSM, which is Society and has authority to undertake work, as per guidelines of the Jal Jeevan Mission. Authority and responsibility to Open Bank account. Both the Governments will transfer funds as grants in this account. Money is not directly going to be paid to the vendors/ contractors of SWSM, directly by respective Governments. Use of PFMS is binding. Hence it can not be said that the respective Governments are liable to pay to the vendors/contractors making supply to SWSM or MJP, as the case may be. Payment received through PFMS, proves that both the Central Governments have paid to applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices provided before 01.01.2022? 5. Who is the service receiver within the meaning of Sec. 2 (93) of CGST/MGST Act in respect of amounts received as grants by MJP which are paid to the applicant on services provided after 01.01.2022? 6. Whether appointment of MJP as an agency to implement water supply schemes amounts to delegation of sovereign function enumerated in Sch. XI XII within the framework of Constitution of India so as to hold that MJP has performed the function entrusted under Article 243G 243W of the Constitution of India? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression GST Act would mean CGST Act and MGST Act. 1. FACTS AND CONTENTION - AS PER THE APPLICANT: 1.1 The Applicant M/s Primove Infrastructure Development Consultants Pvt. Ltd is a company engaged in the business of providing technical consultancy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eption in trade that the activity of the applicant is no longer exempted but is chargeable to full rate of tax i.e., 18%. However, there is no uniformity in understanding the exact legal position of tax eligibility on the applicant s activity, for some of the Zilla Parishad s, some State Governments add GST payable @ 18% to the invoice payable in respect of pure service activity performed, by tax Persons identically situated, to that performed, by the applicant. Therefore, this present application is preferred in order to officially clarify the rate of tax applicable to the activity performed by the applicant viz. pure services in the nature of project management consultancy provided to Central/State Governments/Local Authority/Government Authority/Entity before 01.01.2022 after 01.01.2022. 2. STATEMENT CONTAINING APPLICANT S INTERPRETATION OF LAW. - 2.1. The applicant submits that since time immemorial there are certain activities or services, the responsibility for provision of which solely resides in the monarch or the sovereign. Activities such as minting of money, maintaining an army, waging war, preservation of law order also provision of basic necessities such as electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andi Samiti Mandi Parishad other municipal bodies are not subject to service tax. d. Cuddalore Municipality (55 GSTL 397) Wherein it was reiterated that services provided to Municipalities with respect to functions specified in article 243 G W are not chargeable to service tax. 2.1.2. The applicant provides technical management consultancy services to the MJP, these services are related to water supply, irrigation sewage management. The aforesaid services have been entrusted to the State Governments, panchayats municipalities under article 243G W of the constitution given, the fact that they are sovereign in nature. Similarly, the services provided to the respective Governments were also exempted on the ground that the services were in the nature of outsourcing of sovereign function which otherwise was to be performed by the respective Government. 2.2. So far as the services rendered prior to 01.01.2022 are concerned, the applicant believes that MJP, which has been allotted the work, is a Government Authority/Entity insomuch so as it is created by an act of Maharashtra Legislature is fully controlled by the State Government. Its expenditure is financed through Government Grants the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting Under Secretary as the Drawing Disbursing Officer Deputy Secretary as the controlling officer. 2.1.3 Thus, even in case of services rendered post 01.01.2022, the applicant submits that the services rendered, though apparently rendered to MJP, become services rendered to State Government/Central Government because the MJP in the instant case is working as an agent of the Government in execution of a constitutional duty/function. Therefore, the Applicant /submits that even after the deletion of the words Government Authority Government Entity from notification no. 12 of 2017 w.e.f. 01.01.2022, the services of the Applicant continue to remain exempted as being services rendered to Central/ State Government or Municipality. 2.3. Thus, insofar as the services rendered by applicant is concerned it would be seen that the consideration is paid to applicant as and when MJP receives the grants from Central/State Government. The same has been specified in the Operational Guidelines for Jal Jeevan Mission issued by the ministry of Jal Shakti.- SWSM (State Water Services Mission - In this case managed by Maharashtra Jeeevan Pradhikaran) will open a single nodal account in any scheduled co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I, respectively, of the Indian Constitution. The applicant submits that where the makers of the constitution have assigned a certain responsibility upon the government. The government cannot, by enacting a legislation or otherwise, further delegate the same to any other authority even when such activity is delegated it remains to be the responsibility of the respective Government as per the scheme of the Constitution. The aforesaid law was laid down by the Hon ble Supreme Court in K.C. Ganapathi Narayan Dev Vs State of Orissa. The Honourable Supreme Court has held that a legislature having restrictive power cannot seek to do something indirectly which it cannot accomplish directly within the scope of its power. A legislature cannot overstep the field of competency indirectly. (M.P. Jain s Constitutional Law of India 4th Edition 1987 page 273). In the present case the Maharashtra Government could not have by an executive order simply delegated or passed the duty onto some municipal authority or body. Similarly, the Maharashtra Government also cannot, by enacting a legislation viz the Maharashtra Jeevan Authority Act, 1976, now say that it is no longer responsible for its constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that have an irrigation potential of more than 2000 hectares whereas less than 2000 hectares are minor projects. Schedule XI entry 3 mentions Minor irrigation, water management and watershed development. As within the realm of panchayats. Thus, the major projects are within the realm of State Governments. 2.6.2. It is in discharge of this Constitutional function that the MJP Act 1976 was enacted. The duties were formerly discharged by MWSSB i.e. Maharashtra Water Supply Sewage Board. Thus, the major projects are implemented in Maharashtra through MJP the minor projects are implemented by the Panchayats mostly through MJP. 2.6.3. The notification 12/2017 ENTRY 3 exempts pure services excluding composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority 1aa [***] 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. Thus, as may be seen the notification itself contemplates that though certain functions are within the realm of Panchayats or Munici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments are restricted limited to schemes implemented through Jal Jeevan Mission which is a Central mission scheme. 2.6.6. The payments received by the applicants is through Public Finance Management System (PFMS). PFMS is a web based financial application developed Implemented by Controller of Accounts. Department of Expenditure. Government of India. The payment at no point of time is under control of MJP. It is only the regulation part which has been delegated to MJP. i.e. role in respect of supervision of implementation of water projects. The operational guidelines in respect of JJM clearly point out that the Central/ State Government is in total control of the payment process at no point of time, MJP has any role in it except to the extent of certifying the measurements completion of projects or stages therein. Kindly seethe Operational Guidelines of JJM issued by the Government of India, (uploaded at page no 42 to 50 of paper book). The Guidelines lay down that the State Governments after receipt of Central share i.e. 50% in case of Maharashtra shall transfer it along with their 50% share to a designated account. The designated account is in the name of State Water Sanitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpreting Section 2 (93), i.e. person liable to pay. 2.6.13. Section 2 (93) specifically includes an agent acting on behalf of principal as recipient, the present facts clearly point out that MJP who is acting as an agent of Central/ State Government thus making the latter recipient of service. 2.7 Further Additional Submission dated 26.06.2024 In continuation of the earlier additional submissions, the applicants respectfully further submit as follows: 2.7.1. During the course of earlier hearing the controversy narrowed down to the limited aspect as to who is liable to make the payment to the applicants within the meaning of Section 2 (93) of GST Act so as to reckon that person as the service receiver. 2.7.2. On the above issue, the applicant respectfully submits that it emerges from para 3 4 of the agreement read with para 5.5 of the tender terms, that MJP is contractually bound (liable) to make the payment to the applicants. The applicants had during the course of earlier hearing submitted along with evidences that the payment is factually made through budgetary allocations by Central State Governments. It was earlier submitted that the said allocation was made in consequence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation undertaken remains with the supplier. Similarly, it is submitted, that in the present case despite the fact that MJP has undertaken the contractual liability to pay, the same is overridden by the Governments Constitutional Legal liability to pay. 2.7.5. Alternatively, in the earlier submission, the applicants had submitted that MJP is acting as an agent of State Government agent as such is included in the definition of service receiver. For the sake of convenience, the relevant portion of Section 2 (93) is reproduced as under .............and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied; . It is submitted that the above provision only reiterates the common/ civil law provision that supply to agent amounts to supply to principal. It is submitted that the applicants had in his earlier submissions submitted that MJP is acting as an agent in the present facts because the community assets being produced in consequence of the presently impugned agreements are not owned by MJP but are held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion number 12/2017-Central Tax (Rate) was again amended on 18-November-2021by issuing Notification number 16/2021 Central Tax (Rate) in the following manner: In the said notification, in the TABLE, - I) against serial numbers, in column (3), in the heading Description of Services , the words or a Governmental authority or a Government Entity shall be omitted; Now for any supply to be covered under Sr. No 3 mentioned in notification number 12/2017-Central Tax (Rate) firstly, the supply should be in respect of only Pure Services, secondly such Pure Services must be provided to the Central Government, State Government or Union territory or local authority or a Governmental authority for a Government Entity) and finally such services should be provided 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. We need to analyses these conditions as applicable to applicant in order to determine taxability of the same. 3.3 Applicant has submitted agreement signed between Maharashtra Jeevan Pradhikaran and M/s. Primove Infrastructure D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to pay attention to the fact that Maharashtra Water Supply and Sewerage Board (MWSSII) was established as per MWSSB Act 1976 for Rapid development and proper regularization of water supply and sewerage services in the State of Maharashtra, by the Government of Maharashtra, MWSSB was subsequently named as Maharashtra Jeevan Pradhikaran in 1997. The Principal responsibilities of Maharashtra Jeevan Pradhikaran according to MWSSB Act 1976 are Planning, designing and implementation of water supply and sewerage schemes including facilitation for necessary financial provisions, as directed by the Government of Maharashtra (Government of Maharashtra); taking over any water supply as well as sewerage scheme for operation and maintenance, to establish service level bench marks for water supply and sewerage sector, to extend relevant support, regarding water sector, to Government of maharashtra as well as Local Self Governments; to support Government of Maharashtra to prepare Annual Plan and to 6 establish/modify tariff/tax/cess structure in water sector. In this context Article 243G of Indian Constitution should also be looked upon. Schedule 11 appended to Constitution of India elaborates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and business services) (ii) Other professional, technical and business services other than (i) above. 9 - Thus, services provided by applicant to Maharashtra Jeevan Pradhikaran after 31-12-2021 will attract CGST at the rate of 9% and SGST at the rate of 9% as covered by above entry. Taxpayer has further asked rate of Tax in respect of work allotted by Maharashtra Jeevan Pradhikaran as a part of Jal-Jeevan mission which is mission of Government of India which is performed and invoiced after 01-01-2022 but which is allotted before 01-01-2022. In this regard we need to go through section 13 of CGST act which deals with time of Supply of services. From the perusal of above Section it is very clear that Time of Supply of services is earliest of date of issue of invoice by supplier, date of provision of service or the date on which recipient shows receipt of services in his books of accounts. There is no provision for deciding time of supply based upon time of allocation of work. Hence it is very clear that even though work has been assigned by Maharashtra Jeevan Pradhikaran to applicant on or before 31-12-2021 and which has been performed and invoiced after 01-01-2022 need to be scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he application was admitted and called for final hearing on 26.06.2024. Mr. Mr. Amit Arun Sheode, Advocate, appeared made oral and written submissions. Jurisdictional Officer Mr. Shendarkar, Deputy Commissioner of State Tax, PUN-LTU-512, LTU-2 appeared. We heard both the sides. 5. OBSERVATIONS AND FINDINGS: 5.1 Uncontroverted facts of the case, in brief are as under, 5.1.1. M/s. Primove Infrastructure Development Consultants Private Limited, (hereinafter referred as Applicant ), is Registered taxable person. 5.1.2. The Maharashtra Jeevan Authority [erstwhile the Maharashtra Jeevan Pradhikaran] (Hereinafter referred as MJP ), is a body Corporate set up by The Maharashtra Jeevan Authority Act, 1976 . (hereinafter referred as the MJA Act, 1976 ), for rapid development and proper regulation of water supply and sewerage services in the State of Maharashtra. 5.1.3 The MJP has granted a contract for supply of Technical Consultancy for Project Development and Management support services to the Applicant vide agreement for Empanelment dated 30th of March 2021. 5.1.4 Important terms of the Contract, necessary for decision are reproduced as under, (a) The agreement between Maharashtra Jala Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided in schedule of Payments of this Contract as per scope of work. (c.) Page 64 Para 6.4-6. Contract price and payments to the Consultants 6.4. Terms and conditions of payment: The rates given in schedule of payments are including GST and statutory taxes. Payments will be made as per payment schedule stated in the Schedule of payment Appendix II. Any other payment shall be made after the conditions listed in the Schedule for such payment have been met, and the consultants have submitted an invoice to the MJP specifying the amount due. If there is delay in payment due to shortage of funds or any other reason no extra payment or Interest will be payable on account of delay of payment, however MJP will tried to release payment as early as possible from other sources of MJP by taking approval from competent authority. The Maharashtra Jeevan Pradhikaran shall make the payment of the Consultants periodically as given in schedule of payment above within Thirty days on receipt of invoice from the consultant after the receipt by the Maharashtra Jeevan Pradhikaran of bills with supporting documents. Only such portion of a monthly statement that is not satisfactorily supported may be w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HSN/ SAC Code and applicable entry in Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017. The related entry is as under, Heading Group Service Code (Tariff) Service Description Heading 9983 Business and Production Services Group 99839 Other professional, technical and business services. Heading 9983-Group 99839 99839 Other professional, technical and business services n.e.c. Explanatory Note- This service code includes drafting services (detailed layouts, drawings, plans and illustrations of buildings, structures, systems or components from engineering and architectural specifications, done by architectural draftsmen or engineering technicians); compilation services of facts and information (i.e. databases), n.e.c. Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017. Sr.No. Chapter, Section or Heading Description of Service Rate (percent.). Condition (1) (2) (3) (4) (5) 18 Section 8 Business and Production Services 21 Heading 9983 (Other professional, technical and business services) (ii) Other professional, technical and business services other than [(i) and (ia) above] [and serial number 38 below] media. 9 - 5.3.1 Applicants submission- These services a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplies to the Central and State Governments, for following reasons- In brief teach of the arguments and decision thereon are as under, 5.4.1 Applicants Submission: -Supply of water is constitutional Duty of the Governments, and hence supplies by him to MJP, are legally supplies made to the Governments, as per Constitution. The Central Government and similarly, the Maharashtra Government also cannot, by enacting a legislation viz the Maharashtra Jeevan Authority Act, 1976, now say that it is no longer responsible for its constitutional duty of providing water, irrigation, canal or sanitation facilities as has been specifically entrusted to it by the Constitution. In order to be compliant with the constitutional provisions of article 243 G W, it has to be construed that the function of water supply, irrigation, canaling etc. is being carried on by the State Government through the agency of Maharashtra Jeevan Pradhikaran, any attempt to interpret otherwise would mean that the State Government has abdicated its function of water supply, irrigation, canaling etc, to the Maharashtra Jeevan Pradhikaran which would be entirely unlawful contrary to the constitutional prescriptions and proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (i) Authority means the Maharashtra Jeevan Authority established under section 3; (b) Chapter II-ESTABLISHMENT, CONDUCT OF BUSINESS, DUTIES AND POWERS OF THE AUTHORITY Section 3.-Establishment of the Authority (1) As soon as may be after the commencement of this Act, the State Government shall, by notification in the Official Gazette, with effect from a date to be specified therein establish for the purposes of this Act 2 [an Authority] to be called the Maharashtra Jeeven Authority. (2) The Authority shall be a body corporate, having perpetual succession and a common seal, with powers, subject to the provisions of this Act, to acquire, hold or dispose of property, both moveable and immoveable, and to contract, and may sue or be sued by its corporate name aforesaid. (Emphasis supplied). Section 24. Execution of contracts, etc Every contract or assurance of property on behalf of the Authority shall be in writing and executed by such authority or officer and in such manner as may be provided by regulations. (Emphasis supplied). b. The Empanelment supply of Service Contract executed between the MJP and the Applicant dated 31-03-2021, does not mention that MJP is agent of the Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t persons for the purposes of this Act. (5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act. (c) SCHEDULE I [See section 7]- ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION (1) .............................. (2) Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business; c. Provisions of Article 282 of the Constitution of India- 282. Expenditure defrayable by the Union or a State out of its revenues The Union or a State may make any grants for any public purpose, notwithstanding that the purpose is not one with respect to which Parliament or, the Legislature of the State, as the case may be, may make laws. Hon ble Karnataka High Court in case of K N Subba Reddy v state of Karnataka, published in AIR 1993 Kant 66, has explained the purpose , Scope and Rights arising out of Grants under Article 282 has explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State and withdrawal of moneys from such account and all other matters connected with or ancillary to matters aforesaid shall be regulated by law made by the Legislature of the State, and, until provision in that behalf is so made, shall be regulated by rules made by the Governor of the State. From the reading of Article it is very clear, that it just regulates the payment of moneys into such Funds, the withdrawal of moneys therefrom, the custody of public moneys other than those credited to such Funds received, by no stretch of imagination, this Article creates any right for benefit of vendors and suppliers of implementing Agencies., as claimed by the Applicant. 5.4.4 Decision - Submission of the Applicant is not based on the provisions of the MJA Act, 1976, the GST Act, 2017 and terms of Contract. The applicant could not produce any evidence (Binding Judgment on this issue) that The State Government has abdicated its responsibility while setting up the MJP. Secondly, to say that MJP is agent of State in Common Law and hence supplies made to MJP are in fact supplies made to the State Government, is contrary to the express provisions of section 15, 25 and Para v2 of Schedule I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,264 crore, which shows an increase of Rs. 4,13,848 crore over Actuals of FY 2022-23 . Page 16 shows Budget outlay for Major Schemes in Which in Heading Core Scheme at Sr No 8-Jal Jeevan Mission ? JJM/ National is mentioned and outlay for Fy 2024-25 is mentioned at Rs 70,163/- Crores. Finance Bill 2024 does not contain any statement that The Centre has undertaken liability to pay to the suppliers of the JJM Scheme in the said Budget or Finance Bill. Thus this argument is also without any evidence, hence rejected. The issue of creation of rights against the Grants by the Central Government is decided by Hon ble High Court of Punjab Haryana, in Sukhpal Singh Khaira vs State Of Punjab And Others Civil Writ Petition No.20278 of 2012 (O M) decided on January 16, 2013, in which it is held as under, 21. We make it clear that because of the reason that petition is rejected as not maintainable, we have not gone into the proprietary wisdom and justification of the expenditure involved. It is for the Legislators to debate, at the Floor of the House, as to whether the expenditure is justified and can be treated as in public interest or not; whether it serves any public interest to give donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IES AND OBLIGATIONS AND TRANSFER OF EMPLOYEES. 18. (1) From such different dates as may be specified, from time to time, by the State Government (hereinafter in this section referred to as the appointed date ), - (1). (a) the properties and assets (including water works, buildings, laboratories, stores, vehicles, furnitures and other furnishing), specified in that behalf, which immediately before the appointed date, were vested in the State Government for the purposes of the Maharashtra Environmental Engineering Service, shall vest in and stand transferred to the Authority; and (b) the rights, liabilities and obligations of the State Government, whether arising out of any contract or otherwise pertaining to the said service, shall be the rights, liabilities and obligations of the Authority. (2) such properties, assets, rights, liabilities and obligations shall valued in such manner as the State Government may determine. (3) All suits and other legal proceedings with respect to the matters referred to above instituted or to be instituted or defended by or against the State Government before the appointed date may be continued, or instituted, or defended by or against the Authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant. 5.4.12 Findings and discussion decision- a. As per terms of contract between the MJP And Applicant , the terms of payment are as under, NOW THIS AGREEMENT WITHNESS AS FOLLOWS - 3. The MJP hereby agrees to pay the Consultant in consideration of the performance of the Services such amounts as may become payable under the provisions of the agreement at the times and in the manner prescribed in the Consultancy Agreement. 4. In consideration of the payments to be made by the MJP to the Consultant as hereinafter mentioned in Clause 4 of the Consultancy Agreement, the consultant hereby agrees with the MJP to perform the Services of Project Development Management Support as CLASS II Consultant for Pune Region in conformity with the provision of the Agreement. Tender Document- Page 63 64 Para 5.5 6.4- Payment: In consideration of the Services performed by the Consultants under this Contract, the MJP shall make to the Consultants such payments and in such manner as is provided schedule of Payments of this Contract as per scope of work. Terms and conditions of payment: The rates given in schedule of payments are including GST and statutory taxes. Payments will be made as per payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A Act,1976- Has made express provisions for Financial Resources Authority to Contract and section 33 provides that The Government of Maharashtra is only guarantee the loan taken by MJP. Here consideration against supply of services is not loan given by Applicant to the MJP. CHAPTER IV. CONTRACT, FINANCE, ACCOUNTS AND AUDIT.- 24. Execution of contracts, etc Every contract or assurance of property on behalf of the Authority shall be in writing and executed by such authority or officer and in such manner as may be provided by regulations. 25. Authority Fund The Authority shall have its own fund to be called the 2 [Authority] Loan Fund , which shall also be deemed to be a local fund and to which shall be credited all moneys received by or on behalf of 1 [the Authority] by way of loans 28. Grants and subventions to the Authority. The State Government may, under appropriation duly made in this behalf, from time to time, make grants and subventions to the Authority for the purposes of this Act, on such terms and conditions as the State Government may determine. 29. Loans to the Authority The State Government, from time to time, advance loans to the Authority on such terms and conditions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of that scheme. Para-11. Public Financial Management System (PFMS): A commercial account has been opened in a Scheduled / Nationalized Bank through the State Water and Sanitation Mission and is being approved by the Government. After the central government fund is received in the A fund of the state government, it will be transferred along with the state share to the Central Department of State Water and Sanitation Mission within days. As per the guidelines of Jal Jeevan Mission, financial expenditure control should be done only through Public Financial Management System (PFMS) system. It is mandatory to act according to the instructions received from the central government. 5.4.14 Findings and decision- Provisions of the aforesaid GR clearly state that (i) SMSM-is Registered as a society registered on 10-02-2010 under the Society Registration Act, I860. (ii) A commercial account has been opened in a Scheduled / Nationalized Bank through the State Water and Sanitation Mission and is being approved by the Government. (Emphasis supplied) (iii) The respective Governments have made available the Grants to MJP for Execution various Water Supply Schemes. Provision of Grant to M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accounts (CGA), Department of Expenditure, Ministry of Finance, Government of India. (ii) Payment Exchequer Control: Article 283 (1) of the constitution paved way for framing of Government of India Receipts and Payments Rules, which govern the payment and exchequer control functions. PFMS which has codified these rules facilitates this entire process online in a seamless and paperless manner. Instructions issued by Ministry of Jalshakti vide No. PD-26025/ 2/2019-SBM dated 21-07-2024 about Implementation of PFMS by Implementing agencies are in brief as under, (i) Brief introduction of Public Financial Management System (PFMS) is a web-based application for online management of schemes of GOI and information decision support system (DSS) for stakeholders. (ii) It is for Just-in-time Release of funds. It assists in complete monitoring of usage of funds including information on its ultimate utilization. (iii) The system is developed and maintained by O/o CGA, Dept, of Expenditure, Ministry of Finance, Government of India, New Delhi, o It is monitored by Prime Minister Office (PMO) regularly. Para 16.1- Release from Centre to State level implementing body.... The funds under SBMG will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessed for payment through PFMS. (iv) The account from which amount is paid belongs to The MJP for implementation of the Scheme. (v) MJP or for that matter any implementing agency is allowed to open multiple Bank accounts qua scheme for use on PFMS. After the approval of Bill and after sufficient funds are received in the MJP account, transfer of funds is approved by MJP through PFMS. The account which is debited, is of MJP and not Government account. From the guidelines stated above, it is very clear is that PFMS- (i) is The Public Financial Management System (PFMS) is a web-based financial management application, not Central or State Government, nor is it Bank account of either Government, (ii) Each Nodal Body either of Centre, State, District or the implementing agency will have to open their own Bank account, which shall not be changed during implementation of the scheme, (iii) Grants will be released by Centre and State just in time. Thus, it is clear that payment through PFMS is not payment by Government, but payment made by Implementing Agency (here either MJP or SWSM), out of the grants received by them from respective Governments. (Emphasis supplied) Last but not least- I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 , where the issue of benefits of exemption available to Governmental Authorities vide Section 10 (20A), and effect of its deletion on the levy of Income Tax is decided. In para S3 Hon ble Supreme Court held as under, Para 53....The following passage from Cape Brandy Syndicate v. IRC 1921 (1) KB 64 has been approved by the Apex Court in the decisions rendered by their Lordships. in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied, one can only look fairly at the language used. (Emphasis supplied) 5.5 Supply of services where Time of supply is on or before 31-12-2021. 5.5.1 To decide applicability of the Exemption entry at Sr. No. 3 of the Notification No. 12/2017-Central tax (Rate) to the supplies during impugned period, following issues need to be decided. Table SL. No Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (percent.) Condition (1) (2) (3) (4) (5) 3 Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. a. Submission of Applicant- It is submitted that the aforesaid services provided for Works to be executed by MJP for Water supply and in particular Jal Jivan Mission. Hence are in relation to the function entrusted under article 243G 243W. b. Submission of Jurisdictional Officer- Officer agreed with the applicant. c. Findings and Decision on the issue From the agreement, it is clear that the applicant has provided Technical Consultancy for Project Development and Management support services for water supply scheme at various locations implemented by the MJP for supply of water, which are the function stated in article 243G 243W. For sake of reference-relevant functions are reproduced as under, (a) ELEVENTH SCHEDULE (Article 243G) - Sr No. 3. Minor irrigation, water management and watershed development. at Sr No 11. Drinking water. (b) TWELFTH SCHEDULE (Article 243W)- Sr No. 5. Water supply for domestic, industrial and commercial purposes Sr No. 6. Public health, sanitation conservancy and solid waste management 5.5.5 Whether the MJP is Governmental Authority as required in entry number 3 defined in definition 2 (zf) of the exemption notification. a. Submission of Applicant- It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surmises and very specious argument and hence rejected and are in fact supplies made to the MJP. 5.6.2 Submission of the Applicant-In this regard also, the applicant has argued that Supply of Services by it, to the MJP for Jal Jeevan Mission, are in fact supplies to the Central Government, State Government for the aforesaid reasons. These arguments are found to be is not based on evidence, far-fetched and based on conjectures and surmises and very specious argument and hence rejected and are in fact supplies made to the MJP. 5.6.3 Jurisdictional Officers submission-However, measure shift in this condition has effected by notification number 16/2021 Central Tax (Rate) which has omitted the words or a Government Authority or a Government Entity . Till Maharashtra Jeevan Pradhikaran was qualifying as Government entity, benefit of Entry number 3 was being extended to taxpayers. Now as from 01-01-2022 the words Government Entity has been omitted from entry number 3 of notification number 12/2017-Central Tax (Rate), Maharashtra Jeevan Pradhikaran does not get covered by the said entry and three conditions, as mentioned in above paragraphs, required to be satisfied to become eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both, ***** Sub-section (20A) was omitted by the Finance Act, 2002 w.e.f. 01.04.2003. Deciding the applicability of exemption to the Appellant after deletion of subsection 10 (20A), Hon ble Supreme Court held as under, Para 53.....The following passage from Cape Brandy Syndicate v. IRC 1921 (1) KB 64 has been approved by the Apex Court in the decisions rendered by their Lordships. in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied, One can only look fairly at the language used. (Emphasis supplied) 54. We fully endorse the views taken by the High Court in the above two judgments. 55. Now, reverting back to Explanation to Section 10(20), these are entities which mean the local authority. The submission of the appellant is that the appellant is covered by Clause (ii) of the Explanation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rate), dated 28th June 2017. As the words or a Government Authority or a Government Entity , are omitted from the aforesaid Entry at Sr. No. 3. 6. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons as discussed in the body of the order, the questions are answered thus - Question 1: What is the rate of tax in respect of work allotted by Maharashtra Jeevan Pradhikaran ( MJP ) as a part of Jal Jeevan Mission which is a mission of Government of India allotted, performed invoiced before 01.01.2022? Answer :- Nil, being exempted under Entry at Sr No. 3 of the Notification No. 12/2017-Central tax (Rate)-dated 28th June 2017. Question 2: What is the rate of tax in respect of work allotted by Maharashtra Jeevan Pradhikaran ( MJP ) as a part of Jal Jeevan Mission which is a mission of Government of India which is performed invoiced after 01.01.2022 but which is allotted before 01.01.2022? Answer : - Taxable at rate of 18% (at 9% under CGST SGST Act, each), being covered by Entry at Sr. No. 21 Heading 9983, (ii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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