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

Governmental services exemption applies to core metro functions, while commercial leasing and advertising remain taxable under GST.
Metro rail joint-venture companies that meet statutory criteria may qualify as Government Entities or Authorities; their pure services provided to government/local authorities relating to functions entrusted under Article 243W or 243G - such as construction, operation and maintenance of metro systems - are eligible for exemption under Sl. No. 3 of Notification No. 12/2017. Commercial activities like leasing of space, advertising and naming rights are not functions entrusted under those constitutional provisions and remain taxable supplies subject to GST.