GOVERNMENT AUTHORITY & GOVERNMENT ENTITY- DIFFERENCE

[Sadanand Bulbule]

Dear experts

Notification No.12/2017-Central Tax (Rate) dated 28/06/2017 exempts the following services. Further definition attached to this notification also defines the meaning of ' Government Authority' for the purpose of Article 243G & 243W under 2[zf] and Government Entity under 2[zfa] in general.

So whether the Metro Rail Services offered under the joint venture in urban areas and being registered under the Companies Act, which also supplies services like leasing of commercial space, advertisement, naming of stations etc., for consideration fall under the category of ' Government Authority or ' Government Entity?

Further whether such metro rail companies are entitled for tax exemption on supply of services of lease of commercial space, advertisement, naming of stations etc.,?

4	Chapter 99	Services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution.	Nil	Nil
5	Chapter 99	Services by a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution.

AI Summary

Metro Rail Companies qualify as Government Entities but only core services exempt from GST, commercial activities taxable A GST discussion forum addressed whether Metro Rail Companies operating as joint ventures qualify as 'Government Authority' or 'Government Entity' under GST exemption notifications. The query concerned exemptions for core metro services versus commercial activities like leasing space and advertising. Participants concluded that while Metro Rail Companies may qualify as Government Entities if 90% government-owned or established by legislative act, only core services related to constitutional functions under Articles 243G/243W are exempt. Commercial activities like leasing, advertising, and station naming remain taxable at 18% GST as they fall outside constitutional municipal functions and are purely commercial in nature.