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TMI Blog2024 (9) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... local authority - as on the date of filing of the application dated 01.05.2024 for the present proceedings, the Equity in the applicant company i.e. THDC India Limited is shared between NTPC Limited and Government of UP in a ratio of 74.496 % and 25.504 %, which is less than the stipulated 90% of equity and hence does not fulfill the condition of with 90 per cent, or more participation by way of equity or control, . There is no doubt that at the time of registering the Company, as a Public Limited Company, under the Companies Act, 1956, in July 1988, the Government had 100 % equity or control (Govt, of India and Govt, of Uttar Pradesh in the ratio of 75:25), but as admittedly accepted by the applicant in their application and during the course of personal hearing on 07.06.2024, the equity or control of the Government became less that 90 %, as Government of UP held only 25.504 % of the total equity i.e. paid up capital - the status of the applicant i.e. the Company with respect to equity or control of the Government did not remained same and got reduced to 25.504 %, which is less than the stipulated 90 % or more. At present the equity or control of the Government is less than the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime 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. 5. In the application dated 01.05.2024, the applicant submitted that: a. That the Applicant i.e. THDCIL is a Public Sector Enterprise and registered as a Public Limited Company under the Companies Act, 1956 and has been conferred Mini Ratana-Category-I Status and up-graded to Schedule A PSU by the Government of India. b. That as per the URL https://thdc.co.in/en/content/company-thdcil, the Equity of Company was earlier shared between Govt, of India and Govt, of Uttar Pradesh in the ratio of 75:2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. , as under- From the aforesaid definition we observe that condition of 90% or more participation by way of equity or control to carry out a function entrusted by the Government, State Government, Union Territory or a local authority is relatable to only sub-clause (ii) of the definition of Government Entity. This fact confirm from the Civil Writ Jurisdiction Case No. 16965 of 2015 of Hon ble High Court of Patna in the case of Shapoorji Pallonji and Company Pvt. Us CCE. Further, authority had also held that- We find that in India, there are various entities established by the Government by way of 90% or more participation in equity or control; however, after the establishment of such entities, the Government participation by way of equity or control is usually diluted to less than 90%. The definition of governmental entity merely contemplates that an entity is required to be established by the Government by way of 90% or more equity or control. The definition does not contemplate continuous fulfilment of such re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance 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. We note that the Applicant in their application has mentioned that the AAR Uttarakhand vide Application No. 11/2018-19 had treated NHPC Limited as a Government Entity, by holding as under: From the aforesaid definition we observe that condition of 90% or more participation by way of equity or control to carry out a function entrusted by the Government, State Government, Union Territory or a local authority is relatable to only sub-clause (ii) of the definition of Government Entity. This fact confirm from the Civil Writ Jurisdiction Case No. 16965 of 2015 of Hon ble High Court of Patna in the case of Shapoorji Pallonji and Company Pvt. Vs CCE. The applicant further stated that the Authority also held that We find that in India, there are various entities established by the Government by way of 90% or more par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017. We find that the 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 the Governmental Entity . For better perspective the relevant portion of the said notification is reproduced as under: x. 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. . We are of the opinion that from the above definition is clear that in order to qualify as a Government Entity , such ENTITY must be either set up by an Act of Parliament or State Legislature; or established by any Government, with 90per 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 . We find that as per the website https://thdc.co.in/en/content/company-thdcil, the company THDCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /www.oxfordlearnersdictionaries.com/defmition/english/comma, comma has been defined as the mark (,) used to separate the items in a list or to show where there is a slight break in a sentence. In view of the above definitions of a comma/the mark(,), it is clear that the punctuation mark (,) is used where there is a listing of items or to separate a non-restrictive clause or phrase from a main clause and hence the usage and placement of a comma/ the mark (,) in the definition of Government Entity indicates that such words/ phrase/group of words, are independent of each other and have to be read and construed in that way only. This shows that to be categorized as a Government Entity , following conditions has had to be met and fulfilled independently: must be an authority or a board or any other body including a society, trust, corporation, 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. We observe that there is no doubt about the applicant fulfilling the first two conditions i.e. must be an authority or a board or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity holding of the Government, would still be claiming them as a Government Entity ? We are of the opinion that the usage of the word Government by any organization/ firm/entity/company, signify and indicate that the Government has a controlling stake (legal power) in the day to day affairs of such organization/ firm/entity/company. In case where the equity holding of the Government is zero, there would not and cannot be any controlling stake (legal power) in the day to day affairs of such organization/ firm/entity/company. In this regard, it would not be out of place to mention that as per Section 2(53) of the Central Goods and Services Tax Act, 2017 the Government means the Central Government; and that as per Section 2(53) of the Uttarakhand Goods and Services Tax Act, 2017, the Government means the Government of Uttarakhand, hence, the usage of word Government , with or in relation to any organization/ firm/entity/company has had its own sanctity and has had to be under its control by way of equity or control as stipulated in the statute. And in the instant case the Government of Uttar Pradesh holds equity to the tune of 25.504 % only, which is less than the stipulated 90% in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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