TaxTMI 
TaxTMI 
2021 (1) TMI 584
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of Gujarat and for the purpose of establishing 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 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilisation 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 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 su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this Act, shall be in respect of,-- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time 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 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 Aut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cuss the legal provisions under the GST law relevant for the purpose of resolving the present issue in hand, i.e, whether the aforesaid activity mentioned in para supra is supply in terms of Section 7(1) of CGST Act, 2017. Section 7(1) of the CGST Act, 2017 defines the term 'supply' for the purpose of GST. The relevant extract of section 7 of CGST Act is as under- SECTION 7. Scope of supply. - (1) For the purposes of this Act, the expression "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 anyth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker 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;" Emphasis Supplied 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. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sub-section (1) of Section 23 for any purpose other than that for which it was constituted, without previous approval of the State Government. (ix) As per Section 24 of the GIDC Act, the Applicant shall have authority to spend such sums as it thinks fit for the purposes authorized under the Act. As per Section 26 of the GIDC Act, 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. (x) Further, as per sub-section (4) of Section 26, 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. 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 wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der scope of business under clause (a) and (b) of sub-section 17 of Section 2 of CGST Act, 2017. Various limbs of clause (a) of sub-section 17 of Section 2 are as follows:- • any trade, • commerce, • manufacture, • profession, • vocation, • adventure, • wager or • any other similar activity, • whether or not it is for a pecuniary benefit (xv) The Hon'ble Supreme Court in Applicant's own case reported in 227 ITR 414 has categorically held that the Applicant is not a trading corporation. The Gujarat Industrial Development Act, 1962 is in pari materia to Maharashtra Industrial Development Act, 1962. 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. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Corporation, all moneys received by the Corporation from the disposal of lands, buildings and other properties and all moneys received by the Corporation by way of rents and profits or in any other manner. The Corporation shall have the authority to spend such sums out of the general funds of the Corporation or from reserve and other funds. The Corporation is to make provision for reserve and other specially denominated funds as the State Government may direct. The Corporation accepts deposits from persons, authorities or institutions to whom allotment or sale of land, buildings, or sheds is made or is likely to be made in furtherance of the object of the Act. A budget is prepared showing the estimated receipts and expenditure. The accounts of the Corporation 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry of fines from contractors and others, Non Utilization Penalty, Water and Drainage Connection Fees, Sub-Letting Fees, Sub-Division Fees, Amalgamation Fees, Collateral Charges, Interest on delayed payment of revenue charges, Plan Approval Fees, Right of Usage Charges, Grants and Subsidies from Government, Agency Charges, 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, NA Charges, Sundries - Administrative charges, Development charges, Drainage cess, Penal interest, Profit on sale of assets etc., Transfer fee, Dividend Profit, Interest received/accrued and 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. (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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the activities carried out by the assessee can be said to be either in the nature of trade, commerce or business, or rendering any services in relation to any trade, commerce or business for a Cess or Fee or any other consideration so as to attract proviso to Section 2 [15] of the IT Act. 16.Identical question came to be considered by Division Bench of this Court in the case of Ahmedabad Urban Development Authority vs. Assistant Commissioner of Income Tax [Exemption] rendered in Tax Appeal No. 423 of 2016 and other allied Tax Appeals, by which with respect to the Urban Development Authority established and constituted under the provisions of the Gujarat Town Planning & Urban Development Act, 1976, it is held that the activities carried out by the Ahmedabad Urban Development Authority can not be said to be for commercial purpose 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,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the view that the activities performed by the sovereign/ public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government Treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/ public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities. 3. However, if such authority performs a service, which is not in the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Appellate Tribunal. No substantial question of law arises. 14. MIDC is a statutory Corporation which is virtually a wing of the State Government. It discharges several sovereign functions. In our view, the Revenue ought not to have compelled MIDC to prefer Appeals before Appellate Tribunal. Not only that MIDC was driven to prefer Appeals before the Appellate Tribunal, this group of Appeals were preferred by the Revenue. Needless to add that MIDC was required to incur huge expenditure on litigation. All this could have been avoided by the Appellant." Emphasis Supplied (xxiv) The Hon'ble High Court of Bombay clearly held that no service tax is payable under the aforesaid category as MIDC is a statutory corporation discharging its sovereign function. Also, in the identical issue of MIDC, recently, the Hon'ble Tribunal in case of MIDC v. CCE reported at 2018-TIOL-1021-CESTAT-MUM, the Hon'ble Tribunal 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 charge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....saction in connection with or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main activity is not business, then any transaction incidental or ancillary would not normally amount to "business" unless an independent intention to carry on "business" in the incidental or ancillary activity is established. In such cases, the onus of proof of an independent intention to carry on "business" connected with or incidental or ancillary sales will rest on the Department. Thus, if the main activity of a person is not trade, commerce etc., ordinarily incidental or ancillary activity may not come within the meaning of "business" Emphasis Supplied (xxviii) Further, is the case of State of T.N. &Anr. Vs. Board of Trustees of the Port of Madras ((1999) 4 SCC 630), the Hon'ble Supreme Court held as under:- "30. In our view, if the main activity was not "business", then the connected, incidental or ancillary activities of sales would not normally amount to "business" unless an independent intention to conduct "business" in these connected, incidental or ancillary activities is established by the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lic interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:- Table Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 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 (xxx) The Applicant further submits that once the area is notified as industrial estate as per Section 16 of the GIDC act then the Applicant becomes the local authority so far as administration of that estate is concerned. Therefore, without prejudice to the submissions made ab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of cultural, educational and aesthetic aspects. 14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums. 15. Cattle pounds; prevention of cruelty to animals. 16. Vital statistics including registration of births and deaths. 17. Public amenities including street lighting, parking lots, bus stops and public conveniences. 18. Regulation of slaughter houses and tanneries. (underlining supplied) (xxxiii) Section 3 of the Act, as discussed hereinabove, lays down that the Applicant has been established for securing and assisting in the rapid and orderly establishment and organisation of industries in industrial areas and industrial estates in the State of Gujarat. Further, section 13 of the Act states the functions to be performed by the Applicant includes establishment, development and management of industrial estates in the State of Gujarat. Thus, the Applicant has been established for managing and developing the industrial areas and estates, in order to increase the number of industries established in State of Gujarat. In our view, the conjoint reading of Article 243W of the Constitution of Indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... town or village where such area is located. Delinking industrial area from the scope of development of any area is, thus, without any practical sense. 12. In this context a reference to Maharashtra Industrial Development Act, 1962, which is almost analogous to the Gujarat Act, is of some use. While examining issues 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. It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties arid also that the Corporation would receive rents and profits in appropriate cases. Receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries. The Corporation has to prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 17. In the result, we allow these appeals, set aside the judgment under challenge. The answer to the question will, therefore, be in favour of the assessee and against the Revenue. (underlining supplied) (xxxv) Section 14 of the Act, lists out the general powers entrusted to the Applicant, which includes provision of amenities and common 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. Further, 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 commerc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and IXA of the Constitution as well as the Gujarat Panchayats Act, 1961 and the Gujarat Municipalities Act, 1962 - the latter being provisions dealing with local self Government while the former being an Act for industrial development, and orderly establishment and organisation of industries in a State. The industrial areas which have been notified under Section 16 of the Gujarat Industrial Development Act on 7.9.1993 were notified as industrial areas under the Gujarat Industrial Development Act long back in the year 1972. These industrial areas have been developed by the Gujarat Industrial Development Corporation and they can hardly be looked upon as rural areas covered by Part IX of the Constitution. It is only such industrial areas which can be notified under Section 16 of the Gujarat Industrial Development Act, 1963. If by a notification issued under Section 16, these industrial areas are deemed to be notified areas under the Gujarat Municipalities Act and are equated with industrial townships under the proviso to Clause (1) of Article 243Q, the constitutional scheme is not violated. In fact, under Chapter 3 of the Gujarat Industrial Development Act, 1962, the Gujarat Industri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to Article 243Q deals with all three types of municipalities constituted under Clause (1). It provides that a municipality under Clause (1) may not be constituted in certain circumstances. This would refer to any of the three types of municipalities. Although the proviso refers to such urban area or part thereof, this "urban" area also covers a transitional area, in transition from rural to urban. It is because this area is also in the process of turning into an urban area that it is put under Part IXA which deals with municipalities in urban areas. Therefore, in respect of any of these three types of areas set out in Clause (1) of Article 243Q, having regard to the size of the area, the municipal services being provided or proposed to be provided by an industrial establishment in that area, and such other factors as the Governor will deem fit to consider, he may, by public notification specify such area to be an industrial township. All these relevant factors would be in operation in an industrial area already notified many years back under an Industrial Development Corporation Act as in the present case. Therefore, there is no breach of Article 243Q if such an area is, under the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; [(h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker 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; 7. The applicant further stated that the authorities have referred to clause (i) of definition of Business as defined in Section 2(17) of the CGST Act, 2017 it is highlighted above; that the activity of central government, a state government or any local authority would be covered in the definition of business if they are engaged as public authorities; that the above clause is not appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... character / scope and intent of the Act is to be ascertained with reference to the purposes and the provisions of the Act. The Act is one to make a special provision for securing orderly establishment of industrial areas and industrial estates in the State of Karnataka and for that purpose, to establish the board. A careful reading of the aforesaid provisions of KIAD Act and KIADB Regulations would clearly go to show that the appellant is a State undertaking and creature of a statute to exercise the power of 'eminent domain'. The appellant is engaged in discharging statutory functions under an act of Legislature viz. KIAD Act, 1966. It is a statutory body performing statutory functions and exercising statutory powers. Once carrying out the objectives of the Act, then it cannot be treated as a service provider under the Finance Act, 1994. Further we find that there is no service provider-client relationship so as to warrant the levy of service tax under the provisions of Finance Act, 1994. Appellant has undertaken various activities and functions in the State of Karnataka as per the directions of the State Government given from time to time under the provisions of the Act and hence....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Since we have held that appellant is not liable to pay the service tax at all, we do not consider it appropriate to discuss the demand of service tax on individual services allegedly rendered by the appellant on which the learned Commissioner has confirmed the demand. In the result, by following the ratios of the Hon'ble Apex Court in the case of Shri Ramtanu Housing Co-operative Society Ltd., Hon'ble Bombay High Court in the case of MIDC and the Tribunal's decision in the case of Employee Provident Fund Organisation (upheld by Apex Court) cited supra, we set aside the impugned order by allowing the appeal of the appellant. 10. The applicant has further submitted that the facts of the above case and in the present case are identical and therefore applying the ratio above the activities of the Applicants is not taxable under the GST laws. The transaction which is accepted by the Income Tax department as non commercial not in relation to business under the income tax act is not commercial for the purposes of GST laws as well; that the applicant submits that in their own case, Hon'ble Gujarat High Court has held that the Applicants are not in business/ commercial activities; that o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve a legal existence. As in the present case, admittedly, the firm was dissolved before the order of assessment was made, the said order was bad." (at page 462) The Court went on to consider various High Court decisions and ultimately concluded as follows :- "Strong reliance was placed upon two judgments of this Court. This Court in C.A. Abraham v. Income-tax Officer, Kottayam, speaking through Shah, J., held that S. 44 of the Income-tax Act set up a machinery for assessing the tax liability of firms which have discontinued their business. This was followed by this Court again in Commissioner of Income-tax, Madras v. S.V. Angidi Chettiar. These two decisions are of no help to the Revenue in the present case. Indeed, in a sense they are against it. The Income-tax Act contains an express provision for assessing a dissolved firm. Indeed, but for that provision no assessment could be made under that Act on dissolved firms. For the foregoing reasons we hold that the High Court was right in holding that the assessment order on the dissolved firm could not be supported under the provisions of the Act. The High Court has given a correct answer to the question pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 and the Applicant also develops and provides infrastructure facilities like roads, sustained water supply, drainage etc. within the industrial areas or estates and the maintenance and upgradation of the existing infrastructure is also a primary responsibility of the Applicant, in view of section 37(1) of the Act. The applicant has also stated that Section 14(d) of the Act, empowers the applicant to make available buildings on hire or sale to industrialists or persons intending to start industrial undertakings or commercial establishments or both the industrial undertakings and commercial establishments; that the applicant and plot holder have lessor - lessee relationship and ann....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 12AA of the Income Tax Act, 1962 and this Advance Ruling application seeks determination of the issue that whether facilities provided by the applicant to the plot holders in terms of provisions of GIDC Act, 1962 amounts to supply under Section 7 of the Central Goods and Services Act, 2017. The applicant has the following question seeking Advance Ruling on the same: "Whether various activities carried out by the Applicant to the plot holders in terms of provisions of GIDC Act, 1962 and charges collected for the same as may be notified from time to time amounts to supply under Section 7 of the Central Goods and Services Act, 2017 ('CGST Act')?" 15. We also find that the applicant has referred to Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 which grants conditional/unconditional exemption to various types of services falling under various sub-headings and have stated that they are exempted from payment of GST by virtue of Entry No.4 of the aforesaid notification as they are a Governmental Authority. However, they have not clarified on what grounds they would be covered under 'Governmental Authority. Therefore, we feel it necessary to go into the provisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....called the Gujarat Industrial Development Act, 1962. (2) It extends to the whole of the State of Gujarat. (3) It shall come into force at once. Section-3: (1) For the purpose of securing and assisting in the rapid and orderly establishment and organization of industries in industrial areas and industrial estates in the State of Gujarat (and for the purpose of establishing commercial centres in connection with the establishment and organization of such industries), there shall be established by the State Government by notification in the Official Gazette, a corporation by the name of Gujarat Industrial Development Corporation. Section-4: (1) The Corporation shall consist of the following (twelve) (Directors), that is to say- (a) (Three) official (Directors) nominated by the State Government of whom one shall be the Financial Adviser to the Corporation; (b) One(Director) nominated by the State Electricity Board constituted under the Electricity(Supply) Act, 1948; (c) One(Director) nominated by the Gujarat Housing Board constituted under the Gujarat Housing Board Act, 1961; (d) 6(six), 3(Directors)nominated by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....GAS). Also, on going through the various sections of the GID Act mentioned hereinabove, it appears that the said Corporation is totally governed by the State Government and functions just like any other Department of the State Government i.e. State of Gujarat. Further, on perusal of the Audit Report and Annual Accounts of Gujarat Industrial Development Corporation for the financial year 2013-14(available online), it is specifically mentioned therein at Point No.4(Related Party Disclosure) that "Gujarat Industrial Development Corporation is a wholly owned corporation of Government of Gujarat. Hence it is a state controlled enterprise as defined in 'Para-9' of Accounting Standard AS 18 "Related Party Disclosure" issued by the Institute of Chartered Accountants of India. Thus no disclosure is required, keeping the spirit of the accounting standard in mind." It can therefore, be seen from the above, that Gujarat Industrial Development Corporation is nothing but a wing of the State Government i.e. the Government of Gujarat which has come into existence by virtue of the Gujarat Industrial Development Act and Rules, 1962 of the Government of Gujarat. 15.4 Here we would like to refer th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ishing industrial estates and developing industrial areas, acquiring property ....... industries. 18. The Corporation has to provide amenities and facilities in industrial estates and industrial areas. Amenities of road, electricity, sewerage and other facilities in industrial estates and industrial areas are within the programme of work of the Corporation. The fund ....... A budget is prepared showing the estimated receipts and expenditure. The accounts of the Corporation 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. 15.5. As can be seen from the facts of the aforementioned judgements, a reference has been made therein to Maharashtra Industrial Development Act, 1962, (which is almost analogous to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h 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. In this portion of the judgement, it is specifically mentioned that the corporation is the agency of the Government in carrying out the purpose and object of the Act which is the development of industries. The Corporation has also been compared to just another department of the Government. Since, the function performed by Gujarat Industrial Development Corporation under Gujarat Industrial Development Act is similar to the role performed by Maharashtra Industrial Development Corporation under Maharashtra Industrial Development Act, the ratio laid down in the aforementioned judgements is squarely applicable to the applicant in the instant case. In view of the above, It can be construed that the said Corporation being a wing of the Government of Gujarat and an agency of the Government in carrying out the purpose and object of development of industries is just like any other Department of the Government of Gujarat and w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... goods/services provided by the applicant are covered in sub-sections 1 and 1(A) above, since as per their submission itself, they are involved in sale, transfer, rental, lease, etc. and are earning income from provision/supply of various services/goods as listed in para-14 above. However, the second part of the said provision specifically states that the aforementioned supply of goods and services should be made or agreed to be made for a consideration by a person in the course or furtherance of business. It can therefore be seen from the above that supply would include supply of goods or services or both in all the forms, made by a person in course or furtherance of business for consideration. Thus, the primary requirement under Section 7(1)(a) is that all forms of supply of goods or services or both mentioned in the section should be in the course or furtherance of business and to qualify to be supply under Section 7(1)(a) of CGST Act, 2017, the said phrase 'in the course or furtherance of business' will have to be satisfied. Although the phrase 'in the course of furtherance of business' is not defined in the Act, the term 'business' has been defined under Section 2(17) of the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hey are engaged as public authorities" which means that 'business includes any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities'. As discussed earlier, Gujarat Industrial Development Corporation falls under the category of State Government and is hence a public authority. Hence the functions that they are engaged in are undoubtedly undertaken as public authorities only. Therefore, the clause (i) of Section 2(17) covers the activities of the applicant and the said clause read with sub-sections(1) and 1(A) of Section 7 of the CGST Act, 2017 would indicate that the activities of the applicant would definitely amount to supply. However, at the same time, there is another provision under Sub-section(2) of Section 7 under the 'Scope of Supply' which states as under: (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 no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l and aesthetic aspects. 14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums. 15. Cattle pounds; prevention of cruelty to animals. 16. Vital statistics including registration of births and deaths. 17. Public amenities including street lighting, parking lots, bus stops and public conveniences. 18. Regulation of slaughter houses and tanneries. 16.4 As per the submission of the applicant, Gujarat Industrial Development Corporation was established under the provisions of Gujarat Industrial Development Act, 1962 by the State Government of Gujarat for the purpose of securing orderly establishment and organisation of industries in industrial areas and industrial estates in the State of Gujarat and establishing commercial centres in connection with the establishment and organisation of such industries and the GID Act and Gujarat Industrial Development Rules, 1962 govern the functioning of the Applicant. However, on going through the aforementioned list of functions entrusted to the municipality, we find that none of the entries pertain to the establishment or development of industries. As per the submission....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ality under Article 243 of the Constitution of India and therefore liable to exemption from GST under the provisions of Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? We, therefore, are of the opinion that unless and until there is a specific entry pertaining to the establishment or development of industries in the aforementioned list, it cannot, by any stretch of imagination, be construed that the applicant is a Corporation that has been established to carry out activities in relation to functions entrusted to the municipalities under Article 243W of the Constitution of India merely on the grounds that establishment, organisation and development of industries would lead to economic development and would thus be covered under the aforementioned Entry No.3 of the list. In view of the above facts, we conclude that the applicant namely Gujarat Industrial Development Corporation is not eligible for the exemption mentioned at Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time). 16.5 Although, it has been concluded that the applicant is not eligible for the exemption mentioned at Entry No.4 of Notification N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r local authority to business entities. Therefore, in view of the item(d) of Entry No.6 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) no exemption will be available to the applicant. Hence, in view of the above, it can be concluded that the various activities carried out by the Applicant to the plot holders in terms of provisions of GIDC Act, 1962 and charges collected for the same as may be notified from time to time amounts to supply under Section 7 of the Central Goods and Services Act, 2017 ('CGST Act') and are liable to tax under GST. 18. We also find that the applicant has given a lengthy submission highlighting the various functions carried out by them under various sections of the Gujarat Industrial Development Act, 1962 which has given us an in depth view of the functioning of the corporation. However, the reference to various sections of the aforesaid Act does not appear to have helped their cause. We also find that they have relied upon various judgements in support of their contention wherein the main aspect appears to be that entities like Maharashtra Industrial Development Corporation or Gujarat Industrial Development ....