TaxTMI 
TaxTMI 
2021 (1) TMI 584
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....ng commercial centers in connection with the establishment and organization of such industries and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the matters aforesaid" 2. The applicant has stated that the GID Act and Gujarat Industrial Development Rules, 1962 (hereinafter referred as the 'said Rules') govern the functioning of the Applicant; that after the establishment of the Applicant, various areas in Gujarat where industries were clustered were declared as GIDC zones and new industrial zones were also created and plots of land were allotted to willing industries (hereinafter referred to as "plot holders" or "allottees") on very economical terms so that overall industrial development could take place in a structured and planned manner; that Section 13 of the Act stipulates various functions to be performed by the applicant which includes promotion and assistance in the rapid and orderly establishment; growth and development of Industries in the State of Gujarat; development of land on its own account or for the State Government for the purpose of facilitating the location of industries and commercial centres; financial assi....
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.... by the Applicant, * Forfeiture of Deposits, * Scrutiny Fees, * Service charges, * Rent of buildings, * Sale of grass, * Water charges, * NAA Charges, * Sundries - Administrative charges, Agency Charges, Development charges,Drainage cess, Water and Drainage Connection Fees, Sub-Letting Fees, Sub-Division Fees, Amalgamation Fees, Collateral Charges, Penal interest, Interest on delayed payment of revenue charges, Plan Approval Fees, Right of Usage Charges, Grants and Subsidies from Government, Profit on sale of assets etc. * Transfer fee, * Dividend Profit, * Interest received/accrued - On Bank Fixed Deposits, Interest on deposit with Companies, Interest on plot/shed/housing quarters, Interest on investment and other deposits, Interest sundries * Income Related Expenditure - Service Charges (Maintenance and Repair Expenditure for Roads, Buildings, Street Lights etc), Water charges (maintenance expenditure on water supply), NA Charges Income 4. The applicant has further submitted that at this juncture, it is vital to mention that they have also been recognized as a Charitable Institution under Section 12AA of the Income Tax Act, 1962 and this Advance Ruling ap....
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....r deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether 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. (ii) Further, Sections 95 to 106 of the GGST Act vide Chapter XVII provide for advance ruling and appeals against the same. Similar to CGST Act, the definitions and questions on which advance ruling is sought is provided under Section 95 and 97 of the GGST Act respectively. The relevant paragraphs are extracted below: Section 95. Definitions: In this Chapter, unless the context otherwise requires,- (a) "advance ruling" means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; (c) "applicant" means any person registered or desirous of obtaining registration under this Ac....
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...."supply" includes - (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; [and] (c) the activities specified in Schedule I, made or agreed to be made without a consideration; [(1A) where certain activities or transactions, constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.] (2) Notwithstanding anything contained in sub-section (1), - (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. [Emphasis Supplied] (v) Thus, supply would include supply of goods or ser....
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....rade, commerce, manufacture, vocation, profession as well as any other similar activity. A transaction which is incidental or ancillary to sub-clause (a) falls under the scope of sub-clause (b) of Section 2(17) of the CGST Act. Similarly, an isolated transaction which is in nature of trade, commerce, manufacture, profession, vocation or any other similar activity is covered under sub-clause (c) of Section 2(17). Sub-clauses (d) to (h) deal with special situations which otherwise may not have been considered as business. (vi) In the present context, to determine whether the facilities provided by the Applicant to the plot holders amounts to business in terms of Section 2(17) of the CGST Act, it is essential to understand the object and purpose for which the Applicant is established by the State of Gujarat. The reading of the preamble of the GID Act makes it clear that the Act is enacted to make special provision securing the orderly establishment and organization of industries in industrial areas and industrial estates in the State of Gujarat(refer to Para 2.1 supra). The Applicant has been established under Section 3 of the GID Act for the purpose of securing and assisting rapid ....
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....together with the audit report thereon forwarded to it under sub-section (3) to be laid annually before the State Legislature. Under Section 30 of the GIDC Act, whenever any land is required by the Applicant for any purpose in furtherance of the objects of the Act, but the Applicant is unable to acquire it by agreement, the State Government may, upon an application of the Applicant in that behalf, order proceedings to be taken under the relevant land acquisition law for acquiring the same on behalf of the Applicant as if such lands were needed for a public purpose within the meaning of the relevant land acquisition law. (xi) Also, section 37 of the Act, empowers the Applicant to lay down, maintain, alter, remove, or repair any pipes, pipelines, conduits, supply or service lines, posts, or other appliances or apparatus in, on, under over, along or across any land in the industrial area or estate for carrying gas, water electricity or construction of sewers or drains necessary for carrying off workings and waste liquids of an industrial process. The aforesaid functions qualify as 'water supply for domestic, industrial and commercial purposes'; 'public health, sanitation conservancy....
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....perative Housing Society Ltd. and another vs. State of Maharashtra and Others 1970(3) Supreme Court Cases 323, the constitutional validity of the Maharashtra Act was challenged before the Hon'ble Supreme Court on the ground that the Corporation is a trading one. The Hon'ble Supreme Court dismissed the writ petition. The relevant observations of the Hon'ble Supreme Court reads as under:- "....16. The petitioners contended that the Corporation was a trading one. The reasons given were that the Corporation could sell property, namely, transfer land that the Corporation had borrowing powers ; and that the Corporation was entitled to moneys by way of rents and profits. Reliance was placed on the report of the Corporation and in particular on the income and expenditure of the Corporation to show that it was making profits. These features of transfer of land or borrowing of moneys or receipt of rents and profits will by themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation. Ordinarily, a Corporation is established by shareholders with their capital. The shareholders have their Directors for the regulation and management of the Corporat....
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....are audited by an auditor appointed by the State Government. These provisions in regard to the finance of the Corporation indicate the real role of the Corporation, viz., the agency of the Government in carrying out the purpose and object of the Act which is the development of industries. If in the ultimate analysis there is excess of income over expenditure that will not establish the trading character of the Corporation. There are various departments of the Government which may have excess of income over expenditure. 19. There are two provisions of the Act which are not to be found in any trading Corporation. In the first place, the sums payable by any person to the Corporation are recoverable by it under this Act as an arrear of land revenue on the application of the Corporation. 'Secondly on dissolution of the Corporation the assets vest in and the liabilities become enforceable against the State Government. 20. The underlying concept of a trading Corporation is buying and selling. There is no aspect of buying or selling by the Corporation in the present case. The Corporation carries out the purposes of the Act, namely, development of industries in the State. The constr....
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....dings, Street Lights etc), Water charges (maintenance expenditure on water supply), NA Charges Income. (xviii)The Applicant submits that the income collected by the Applicant from plot holders is not towards activity of business as the activity performed by the Applicant is a statutory duty and not towards trade or commerce or manufacturing activity or similar activity as viewed by Hon'ble Supreme Court in the case of MIDC. (xix) Recently, in the Applicant's own case reported as CIT Vs GIDC- 2017-TIOL-HC-AHM-IT, the Hon'ble High Court of Gujarat while considering the object and purpose for which the applicant Corporation was established and constituted under the provisions of Gujarat Industrial Development Act, 1962 held that collection of fees or cess is incidental to the object and purpose. The Hon'ble court held that the activities of assessee is for advancement of any other object of general public utility, the same can be for "charitable purpose". The contention of the revenue was that considering the amended provisions, "advancement of any other object of general public utility" shall not be a charitable purpose; if, [a] it involves carrying on of any activity in the natu....
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....pose and proviso to Section 2 [15] of the IT Act shall not be applicable and that the said Ahmedabad Urban Development Authority shall be entitled to exemption under Section 11 of the Act. Division Bench of this Court also observed and held that merely because AUDA is charging fees and/or cess, the activities cannot be said to be in the nature of trade, commerce or business and consequently held that the proviso to Section 2 [15] of the Act shall not be applicable, and therefore, the assessee is entitled to exemption under Section 11 of the Act. Emphasis supplied. (xx) The Applicant submits that the facilities provided by the Applicant does not fall under the realm of term trade, commerce or manufacture and similar activities as categorically held by the Hon'ble High Court in the Applicant's own case. Henceforth, the activities of providing services to plot holders is not in furtherance of course of business, meaning thereby, the same is not supply under Section 7 of the CGST Act, 2017. The Applicant submits that the principle laid down in the case of income tax rulings is applicable to the indirect taxes. In the case of Shabina Abraham v. CCE reported at 2015 (322) E.L.T. 372 (....
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....nature of statutory activity and the same is undertaken for a consideration not in the nature of statutory fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service." Emphasis supplied (xxiii) Further, the Hon'ble High Court placed reliance on the case of Ramtanu Cooperative Housing Limited and another (cited supra), and held as under:- "11. The Apex Court categorically held that functions and powers of MIDC indicate that the said Corporation is acting as a wing of the Government. In the case of Managing Director, Haryana State Industrial Development Corporation, the Apex Court was considering the role played by Haryana State Industrial Development Corporation. The Apex Court held that the said Corporation discharges sovereign functions. The Apex Court also held that considering the objects and purpose for which the said Corporation of Haryana has been constituted, the function discharged by the Corporation must be held as Governmental function. 12. We have already referred to Section 14 of the MID Act which provides that the function of the MIDC is not only to develop industrial areas but to establish....
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....unal following the judicial discipline set aside the demand against MIDC under the category of management, maintenance or repair service. Thus there is no supply in course or furtherance of business by the Applicant. Thus, CGST cannot be levied on the consideration charged by the Applicant to the plot holders. If the activity of GIDC is not business as per statutory provisions, then there cannot be incidental or ancillary activity to such business. (xxv) The Applicant has submitted that the activity of applicant does not fall under sub-clause (a) of Sub-section 17 of Section 2, then automatically, sub-clause (b) is not invokable as the activity is not in connection with or incidental or ancillary to sub-clause (a). Sub-clause (b) of the sub-section (17) of Section 2 which reads as under:- '(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a)'. (xxvi) The Applicant has submitted that once the activity of applicants does not fall under the category of business as mentioned under clause (a), the test of 'in connection with' and 'or incidental or ancillary to clause (a)' does not hold of any relevance as such. For the purpose of analysis....
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....ot normally amount to "business" unless an independent intention to conduct "business" in these connected, incidental or ancillary activities is established by the Revenue. It will then be necessary to find out whether the transactions which are connected, incidental or ancillary are only an infinitesimal or small part of the main activities. In other words, the presumption will be that these connected, incidental or ancillary activities of sale are not "business" and the onus of proof of an independent intention to do "business" in these connected, incidental and ancillary sales will rest on the Department. If, for example, these connected, incidental or ancillary transactions are so large as to render the main activity infinitesimal or very small, then of course the case would fall under the first category referred to earlier." Emphasis supplied (xxix) It is clear that the activity in question does not fall under the definition of business under Section 2(17) of the CGST Act,2017, therefore, for activity to be considered as supply under Section 7 of CGST Act, the same needs to be in furtherance of business, which is absent in the present case. On this ground alone, it is concl....
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....on of that estate is concerned. Therefore, without prejudice to the submissions made above, even if it is treated as business activity for the Applicant, then also it is specifically exempted under the exemption notification. The Applicant submit that activities undertaken by the Applicant in the present case is under the capacity of governmental authority and not as Central Government, State Government or any local authority. (xxxi) Article 243W of the Constitution of India reads as follow: 243W. Powers, authority and responsibilities of Municipalities, etc Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow - (a) the Municipalities with such powers and authority as may be necessary to them to function as institutions of self government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may entrusted to them including those in relation to the matters listed in t....
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....or economic development. Since, the growth in the number of industries is directly proportional to the economic development of any State. Moreover, the establishment of the Applicant has resulted in exponential growth in the number of industries in the State of Gujarat. (xxxiv) Our view is also supported by the decision of the Hon'ble Apex Court in the Applicant's own case, GIDC vs. CIT AIR 1997 SC 3275, wherein it was held that the industrial development is enveloped within the expression "planning, development or improvement of cities, towns and villages or for both" in section 10(20A) of the Income-Tax Act, 1961. The relevant part of the said judgment is reproduced hereinbelow: 9. The Gujarat Act was enacted "to make special provision for securing the orderly establishment of industries in industrial areas and industrial estates in the State of Gujarat, and to assist generally in the organisation thereof, and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the matters aforesaid" as can be discerned from the preamble thereof. 10. Section 2(g) of the Act defines "industrial area" as any area declared to be an industrial ar....
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....industrial estates and industrial areas are within the programme of work of the Corporation. 13. The scheme of the Gujarat Act, as is seen from a survey of the relevant provisions referred to above, would indicate that the Corporation set up thereunder is to chalk out plans for development of industrial area and industrial estate in different places which may locate in cities or towns or villages. Such schemes would normally involve planning the development of such areas. 14. The word "development" in Section 10(20A) of the I. T. Act should be understood in its wide sense. There is no warrant to exclude all development programmes relating to any industry from the purview of the word "development" in the said Sub-section. There is no indication in the Act that development envisaged therein should confine to non-industrial activities. Development of a place can be accelerated through varieties of schemes and establishment of industries is one of the modes of developing an area. 15. One of the reasons for incorporating a specific provision of exemption from income-tax such as Section 10(20A) is to protect public bodies created under law for achieving the purpose of developing ur....
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.... (xxxvi) The Applicant is also empowered to make available buildings on hire or sale to industrialists or persons intending to start industrial undertakings or commercial establishments. Moreover, the Applicant can also construct buildings for housing of the employees of such industries or commercial establishments and allot factory sheds or buildings and shops etc. to suitable persons in the industrial estates or commercial centres established by the Applicant. The aforesaid functions qualify as 'regulation of land use and construction of buildings'. (xxxvii) Section 16 of the Act, empowers the State Government of Gujarat to notify any area as industrial area and the provisions of Gujarat Municipalities Act, 1963 shall not be in force, in such industrial area. (xxxviii)Further, the Hon'ble Supreme Court in the case of Saij Gram Panchayat vs. The State of Gujarat & Ors. AIR 1999 SC 826, has held that the area notified under section 16 of the Act qualifies as 'Industrial Township' under Article 243Q. The relevant portion of the judgment is reproduced here in below: 10. The Gujarat Municipalities Act, 1962 was amended on 20.8.1993 in view of the insertion of Part IXA in the Co....
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....d common facilities in such areas including provision of roads, lighting, water supply, drainage facilities and so on. It may do this either jointly with Government or local authorities or on an agency basis in furtherance of the purposes for which the corporation is established. The industrial area thus has separate provision for municipal services being provided by the Industrial Development Corporation. Once such an area is a deemed notified area under the Gujarat Municipalities Act, 1964, it is equated with an industrial township under Part IXA of the Constitution, where municipal services may be provided by industries. We do not see any violation of a constitutional provision in this scheme. 17. As held by this Court in Solapur MIDC Industries Association Etc. v. State of Maharashtra and Ors. AIR 1997 SC 8, a Municipal Corporation Act and an Industrial Development Act have distinct fields of operation and there is no inter se conflict between the two. By reason of the notifications of 7.9,1993, the industrial area developed under the Gujarat Industrial Development Act is also deemed to be an industrial township for the purposes of local self Government. Any possible conflict....
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....r the areas notified under section 16 of the Act. Thus, in light of the above, the applicant is of the view that they have been entrusted to carry out functions of the municipality as contained under Article 243W of the Constitution of India and Schedule XII of the Constitution of India. (xl) The applicant states that therefore, in the light of the above referred statutory provisions and the judicial precedents, they satisfy all the prescribed conditions and is to be treated as "Governmental Authority", in view of the Notification no. 12/2017- Central tax (rate) dated 28.06.2017. The Applicant submits that the Applicant does not fall under any of the clauses of Section 2(17) of the CGST Act, 2017 which defines the term 'business'. Henceforth, the sub-clause (a) of Section 7(1) which includes activities performed in course of furtherance of business is not satisfied in the facts of present case. Sub-clause (b), (c) and (d) of Section 7(1) has no application to the facts of present case. For sake of brevity, the provisions of SGST Act, 2017 are not referred in the content of above-mentioned application. 6. The applicant has made some additional submissions which were received by e....
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....plicant; that the applicants reiterate that they are constituted under the act of legislative assembly of State of Gujarat and are therefore not covered in the clause (i) of definition of Business as defined in Section 2(17) of CGST Act, 2017. 8. The applicant further submitted that the said clause (i) of Section 2(17) of CGST Act, 2017 is applicable when the said authority acts as a public authority; that they are not acting as a public authority in any way therefore, the said clause is inapplicable to the facts of the present case; that they reiterate that the definition of Business as defined in Section 2(17) of the CGST Act, 2017 is not applicable to them and in similar circumstances it is held that the activities of Applicant is not taxable; that during the course of hearing, the Applicants referred to the decision in their own case wherein Hon'ble Gujarat High Court has held that the Applicants are not a business entity or the activities of the Applicants are not commercial in nature in the context of Income Tax Act, 1961; that the decision in Applicants' own case is reported at 2017 (7) TMI 811 - Gujarat High Court; that the Applicants referred to the recent decision of CES....
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..... In the case of Maharashtra Industrial Development Corporation (MIDC) cited supra, the Hon'ble Bombay High Court has categorically held that no service tax could be demanded on the charges collected by the MIDC, in terms of MID Act, 1961 towards maintenance of industrial areas as the same is in the nature of statutory function performed in terms of the statute. It is pertinent to quote the relevant findings of the Bombay High court, in paras 5, 6, 7: - 7.7. The learned counsel for the appellant relied upon the decision in the case of Employee Provident Fund Organisation vs. CST [2017 (4) GSTL 294 (Tri. Del.)] to submit that the statutory authorities performing statutory functions as per the statute are not liable to pay service tax. He also submitted that the Revenue's appeal against the above decision was dismissed by the Hon'ble Supreme Court on grounds of delay as well as on merits. We have gone through the judgment of the Tribunal. The Tribunal in that case, after considering the judgment of the Supreme Court as well as Kerala High Court, has held that appellants are not liable to pay service tax on their statutory activities performed under the act. In this case, the Tribun....
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....wever, contended that the principles applied in the case of the Income Tax Act should not be applied to the Central Excises and Salt Act as the latter Act is a tax on manufacture of goods and not on persons. We are afraid this argument cannot be countenanced in view of this Court's judgment in State of Punjab v. M/s. Jullunder Vegetables Syndicate, (1966) 2 S.C.R. 457. In that judgment, the question before this Court was whether a dissolved firm could be assessed to sales tax under the East Punjab General Sales Tax Act, 1948, with respect to its pre-dissolution turnover. After analyzing the East Punjab General Sales Tax Act, this Court held :- "The scheme of the Act is a simple one. A firm is a dealer; the said dealer is assessable to tax on its turnover, if its turnover exceeds the prescribed limit. It cannot do business while being liable to pay tax under the Act without getting itself registered and possessing a registration certificate. It is assessed to tax under Section 11 of the Act in the manner prescribed thereunder. If it discontinues its business, it shall within the specified time inform the prescribed authority accordingly. A dealer and its partners are jointly and s....
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....nership firm - all proceedings against such deceased person/dissolved firm abate. The aforesaid judgment has been followed by this Court in Khushi Ram Behari Lal & Co. v. Assessing Authority, Sangrur, (1967) 19 STC 381 and in Additional Tahsildar, Raipur v. Gendalal, (1968) 21 STC 263. 11. On the basis of above, the applicant has submitted that their activities are not in relation to any business or commercial activities and therefore, the Applicant will not fall within the definition of term "supply" as defined in Section 7 of CGST Act, 2017 and that therefore on the basis of the above, they are entitled to succeed in the application filed before Authorities of Advance Ruling. DISCUSSION & FINDINGS: 12. We have considered the submissions made by the applicant in their application for advance ruling, additional submissions (received by email on 24.08.2020) as well as the arguments/discussions made by their representative Shri Jigar Shah, Advocate at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 13. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax A....
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....nt for the allottees; that every year the applicant incurs expenditure to maintain the common facilities such as road, streetlights, water supply etc. and collects maintenance charges from plot holders on annual basis depending upon the size of plot and levy for the maintenance charges is collected in next year on the basis of actual expenditure incurred by the applicant during the preceding year. The applicant has stated that they earn income on the following activities: - * Premium price on lease of plots, * Sale of tender forms, * Recovery of fines from contractors and others, * Non Utilisation Penalty * Hire charges of tools and plants, * Annual rent of the land leased out by the Applicant, * Forfeiture of Deposits, * Scrutiny Fees, * Service charges, * Rent of buildings, * Sale of grass, * Water charges, * NAA Charges, * Sundries - Administrative charges, Agency Charges, Development charges, Drainage cess, Water and Drainage Connection Fees, Sub-Letting Fees, Sub-Division Fees, Amalgamation Fees, Collateral Charges, Penal interest, Interest on delayed payment of revenue charges, Plan Approval Fees, Right of Usage Charges, Grants and Subsidies from G....
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....ed 26.07.2018 (effective from 27.07.2018) vide which certain amendments were made in Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 which reads as under: (a) against serial number 4, in the entry in column (3), the words "Central Government, State Government, Union territory, local authority or" shall be omitted; After the said amendment, Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (effective from 27.07.2018) reads as under: Sr.No. Type of services Classification Rate of GST Conditions 04. 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. Chapter 99 NIL NIL 15.1. On going through the above provisions, we find that the aforementioned exemptions are available only to Central Government, State Government, Union Territory, Local authority or Governmental Authority (upto 26.07.2018) and Governmental Authority only(effective from 27.07.2018) in respect of the services provided by them by way of any function entrusted to a municipality under Article 243W of the Constitution. Therefore, we are required to find out as ....
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....mmon facilities in industrial estates, commercial centres and industrial areas and construction and maintenance of buildings, amenities and common facilities. The amenities include road, supply of water or electricity, street lighting, drainage, sewerage, conservancy and such other convenience as the State Government may specify. Sub-section (3) of Section 23 states that the Applicant shall not utilize the funds as mentioned in sub-section (1) of Section 23 for any purpose other than that for which it was constituted, without previous approval of the State Government. Section 26 states that the accounts of the Applicant shall be audited by an auditor appointed by the State Government, in consultation with the Comptroller & Auditor General of India. Sub-section (4) of Section 26 states that the State Government shall cause the accounts of the Corporation together with the audit report thereon forwarded to it under sub-section (3) to be laid annually before the State Legislature. 15.3 Thus, it can be seen from the above, that the entire top Management of the Corporation including the Chairman, vice-Chairman, Managing Director, Chief Accounts Officer as well as the Directors of....
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....ues relating to the validity of the Maharashtra Act a Division Bench of this Court has said in Shri Ramtanu Cooperative Housing Society Ltd. v. State of Maharashtra [1971] 1 SCR 719. The functions and powers of the Corporation indicates that the Corporation is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing building, allotting buildings, factory sheds to industrialists or industrial undertakings....." (ii) In the case of Shri Ramtanu Cooperative Housing Society Ltd. and another vs. State of Maharashtra and Others 1970(3) Supreme Court Cases 323, the constitutional validity of the Maharashtra Act was challenged before the Hon'ble Supreme Court on the ground that the Corporation is a trading one. Some important portions of the judgement of the Hon'ble Supreme Court stated with regard to Maharashtra Industrial Development Corporation(which is akin to the applicant) which are relevant to the issue in hand, are reproduced below:- "....16. The petitioners contended that the Corporation was a trading one. The reasons given were..... The Corporation is established by the Act....
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....een created by virtue of the Gujarat Industrial Development Act is also a wing of the Government of Gujarat. We, therefore, need to refer to the meaning of 'wing' as per the dictionary. As per dictionary, the meaning of 'wing' is as under: (a) In Architectural terms, 'wing' is a part of a large building, especially one that projects from the main part. (b) In political terms, 'wing' is a group within a political party or other organization having particular views or a particular function. (c) In military terms, 'wing' is the right or left flank of the main body of a battle formation. On going through the above, we find that in each and every aspect, the meaning of 'wing' means a 'part'. While referring to the meaning of 'part' we find that it means 'an amount or section which, when combined with others, makes up the whole of something'. Thus a part is something essential to make up the whole of something. In the instant case, we can say that Gujarat Industrial Development Corporation is a part of the Government of Gujarat. Further, while referring to the aforementioned judgements, we find that in reference to the Maharashtra Industrial Development Corporation, the Hon'ble Ap....
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.... as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) " where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II " (2) Notwithstanding anything contained in sub-section (1),-- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), 1(A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the t....
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....rofession or vocation; (h) activities of a race club including by way of totalisator or a license to bookmaker or activities of a licensed bookmaker in such club; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;" 16.2 The term "business" as defined under sub-clause (a) of Section 2(17) of the Act includes trade, commerce, manufacture, vocation, profession as well as any other similar activity whether or not it is for a pecuniary benefit which means to state that the aforementioned activities would be covered under the term 'business' irrespective of the fact as to whether it is for a pecuniary benefit or otherwise. A transaction which is incidental or ancillary to sub-clause (a) falls under the scope of sub-clause (b) of Section 2(17) of the CGST Act. Similarly, an isolated transaction which is in nature of trade, commerce, manufacture, profession, vocation or any other similar activity is covered under sub-clause (c) of Section 2(17). Sub-clauses (d) to (h) deal with special situations which otherwise may not have been considered as business. However, there is a....
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....hem is by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution of India. We are therefore required to verify whether the services provided by the applicant are by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution of India. Schedule XII of the Constitution of India, lists out the following functions to be performed by the municipalities: TWELFTH SCHEDULE (Article 243W) 1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation, conservancy and solid waste management. 7. Fire services. 8. Urban forestry, protection of the environment and promotion of ecological aspects. 9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. 10. Slum improvement and upgradation. 11. Urban poverty alleviation. 12. Provision of urban amenities and facilities such as parks, gardens, playgrounds. ....
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....id entry as per his whims and fancies to suit his contention. Further, there are many means to achieve economic development of a state/country i.e. construction of shopping malls, hospitals, schools, roads, highways, tunnels, construction of residential and commercial buildings, expansion of railways, construction of new Railway stations and new airports, etc. which would create a lot of jobs, thus, increasing employment opportunities, reducing unemployment and usher in economic development in the long run. Similarly, effective and long term policies of the Government such as good monetary and fiscal policies, regulation of financial institutions, trade and tax policies, programs that provide infrastructure and services such as highways, parks, crime prevention, good and quality educational institutions etc. would also result in economic development and can also be covered under the head 'planning for economic and social development'. Does this mean to say that all these activities would be covered under Entry of Sr.No.3 of the above list thereby meaning that all these activities are in relation to economic development and hence are covered under the functions entrusted to a munici....
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.... transport of goods or passengers; or (d) any service, other than services covered under entries (a) to (c) above, provided to business entities. Chapter 99 NIL NIL 17. It can be seen from the above entry i.e. Entry No.6 that the services supplied by the applicant who is providing or supplying the services as a public authority and falling under the category of 'State Government' as discussed earlier, would be covered under item(d) above which provides that "any service, other than services covered under entries (a) to (c) above, provided to business entities" would be exempted from GST. It is seen that the services supplied/provided by the applicant is to the various industries located in the Industrial area. All the industries as we know, are undoubtedly business entities i.e. entities built or created for the purpose of carrying on business only with the motive of earning profit and are covered under the definition of business as defined in Section2(17) of the CGST Act, 2017. We find that as per item(d) above, exemption is not available to the services provided by the Central Government, State Government, Union territory or local authority to business entities. Therefore, ....