GST Applicable on Municipal Council's Market Area Fees in Goa

The Authority for Advance Ruling determined that GST is applicable on the collection of "Sopo" by a Municipal Council in Goa. The fee for occupying space in the market area qualifies as a supply of services under the CGST Act, as it involves the license to occupy land. Despite the Council's argument that the fee is for market area maintenance, the ruling clarified that it falls within the scope of GST levies on intra-state supplies of goods or services. The exemption notification by the Central Government for certain activities by local authorities did not apply in this case. Consequently, GST is payable on the collection of "Sopo" from July 1, 2017.

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Issues:
1. Whether GST is payable on the collection of Sopo.

Analysis:
The application was filed seeking an Advance Ruling on whether GST is applicable on the collection of "Sopo" by a Municipal Council in Goa. The "Sopo" is a nominal fee collected from vendors for occupying space in the Municipal Market area. The Council argued that this fee does not amount to renting of immovable property as vendors are not allocated fixed spaces or provided with amenities. The collected amount is primarily used for market area maintenance, which is an obligatory duty of the Council under the Goa Municipalities Act.

The Commissioner (Appeals) had previously set aside the liability of service tax on "Sopo." However, the Authority for Advance Ruling analyzed the GST Act's provisions. Section 9(1) of the CGST Act, 2017 levies GST on all intra-state supplies of goods or services. The expression "supply" includes various transactions for a consideration in the course of business. Schedule II of the Act specifies activities to be treated as supply of goods or services, including the transfer of business assets and land-related transactions.

The Authority noted that as per Schedule II of the CGST Act, a license to occupy land is considered a supply of services. Considering the nature of "Sopo" as a fee for occupying space in the market area, it falls within the definition of "supply" under GST. Additionally, a notification by the Central Government exempting certain activities by local authorities from GST did not apply to the case at hand.

The ruling delved into the functions entrusted to a Municipality under Article 243W of the Constitution and those entrusted to a Panchayat under Article 243G. The functions related to markets and fairs are listed under the Panchayat's responsibilities, not the Municipality's. Therefore, the Municipal Council's collection of fees for space occupation does not fall under the functions entrusted to a Municipality. Hence, the ruling concluded that GST is payable on the collection of "Sopo" from July 1, 2017, based on the provisions of the CGST Act, 2017.

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