TaxTMI 
TaxTMI 
2021 (4) TMI 560
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....to review the work and progress of the institute or to hold the inquiries into affairs of the institute and to report them in such manner as he directs and that on the basis of the report, the visitor shall take such actions and issue such directions as he may consider necessary, which shall be binding on the Applicant. The applicant has explained some of the sections of the NID Act as under: (1) Section 10 of the NID Act provides that a Governing Council ('Council') shall be an authority of the institution. Moreover, as per Section 11 of the NID Act, Council would comprise of a chairperson who would be nominated by the President of India. Apart from chairperson, the Council also shall have such number of members, who are nominated by Central Government, State Government or visitor / President or Senate of NID. Further, the Director of the Applicant would also be appointed by Central Government as per Section 18 of NID Act. (2) In order to enable the NID to function effectively, Section 22 of the NID Act provides that the Central Government, after due appropriation made by Parliament, would pay to the institution such sum of money as it may deem fit, in each finan....
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....ey believe that their activity of providing education in the field of design is one of the functions of Article 243W of COI and services received by them in relation to/pertaining to education service should be eligible for exemption from payment of GST; that in light of above discussion, if the applicant decides to avail security services from individual or partnership firm, the liability to pay tax rests with the applicant as per Notification #13/2017- CT (Rate), as amended from time to time. The applicant has further stated that apart from the above, they make payment to service providers located outside India for access of e-books or e-database, which are used for the educational purpose. For such services, the liability to pay tax rests with the Applicant as per Notification #10/2017 - IGST (Rate), as amended from time to time, as import of services for which sample copy of invoices have been submitted by the applicant for ready reference. The applicant have also stated that they have obtained registration as tax deductor under Section 24 of CGST Act, 2017. 4. Considering the above facts, the applicant has asked the following questions seeking Advance Ruling on the same: ....
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.... statement of facts, the Applicant would like to submit that they are set up by an Act of Parliament as well as established by the Central Government through Department for Promotion of Industry and Internal Trade (DPIIT) of Ministry of Commerce & Industry, Government of India. Further, the Director, Chairman or Governing Council are appointed by Government and in a way, Government has 100% participation by way of control in NID. They have submitted a copy of annual report for FY 2018-19 for reference. The applicant has stated that for analyzing the question being the subject matter, it would be relevant to refer to the definition of the Governmental Authority as given under Section 2(16) of IGST Act, which has been reproduced hereunder: "Governmental authority" means an authority or a board or any other body,- (i) Set up by an Act of Parliament or a State Legislature; or (ii) Established by any Government, with ninety per cent or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; 7. The applicant has further stated that words used in the definition of G....
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....function entrusted to a municipality under Article 243W of the Constitution is relatable to only sub-clause (ii) of Clause 2(s). It means that an authority established by Government should have 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution to be eligible for exemption. The Authority set up by an Act of Parliament or State Legislature is not and cannot be made subject to the condition of 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution." 8. The applicant has further submitted that they believe that fulfilling the condition prescribed in clause (i) of definition of 'Governmental Authority' is sufficient enough to classify any body as a Governmental Authority i.e. when the body is set up by an Act of Parliament, it would be classified as a 'Governmental Authority' for GST perspective and that they were not required to comply with conditions of 90% of control and functions entrusted under Article 243W. The applicant has stated that notwithstanding above, even if the applicant is also req....
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....so referred to the Ruling of Advance Ruling authority in the case of National Dairy Development Board ('NDDB') vide reference #GUJ/GAAR/Ruling/2019/02 dated February 22, 2019 wherein the facts in that ruling and facts in hand are similar as NDDB was an institution set up by an Act of Parliament viz. National Dairy Development Board Act, 1987, the Government has substantial control over the operations of NDDB, the Board of Directors would be nominated by the Central Government, the auditors of NDDB would be appointed in consultation with Central Government and the audited accounts would be laid before Parliament by the Central Government. The applicant has further stated that in such a scenario, the Authorities for Advance Ruling upheld that NDDB would be considered as Governmental Authority if they fulfil the condition of ninety percent or more participation by way of equity or control to carry out functions entrusted to a municipality under Article 243W of COI. 9. The applicant has submitted that considering above ruling, the applicant observes that when the organization is set up by an Act of Parliament or established by the Government with the condition of 90% or more partici....
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.... 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. 13. Promotion 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." 10. The applicant has submitted that on conjoint reading of statement of objectives, Article 243W and Twelfth Schedule, it is vital to understand that the COI wishes to enabl....
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...., educational and esthetical aspects;" The Applicant has stated that the Twelfth schedule to COI also lists out that promotion of cultural, educational and aesthetic aspects is one of the functions entrusted to a Municipality; that it is crystal clear from the above discussion that rendering of higher and technical education is one of the functions of a Municipality; that it is important to note that there is no restriction envisaged/ stated in above provisions including Article 243W with respect to higher education; that the law intends to cover all type of education including higher & technical education to be covered within the function of Municipality; that the activities of NID are for the promotion of educational aspect and the main and primary objective of NID is promotion of quality and excellence in education, research and training in all discipline relating to Design and matters connected therewith and incidental thereto; that to achieve this objective, NID would develop courses leading to graduate and post graduate degrees, doctoral; that apart from this, NID would also hold examinations and grant degrees, diplomas, other academic distinctions or titles. 12. The ap....
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....be covered as a reason of usage of words 'in relation to'; that to substantiate this, they would like to refer to the judgement of Doypack Systems (P.) Ltd. vs. UOI as reported in 1988 (36) E.LT. 201 (S.C.) wherein it was held that the expression "in relation to" (so also "pertaining to"), is a very broad expression which pre-supposes another subject matter; that these are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context; that it is also held that the expression "in relation to" has been interpreted to the words of wisest amplitude; that they also wish to rely on judgement of State Waqf Board Vs. Abdul Azeer sahib as reported in AIR 1968 Mad 79, wherein it was held that, "in relation to" are words of comprehensiveness which might both have a direct significance as well as an indirect significance, depending on the context. They are not words of restrictive content and ought not to be so construed."; that the term 'in relation to' is very wide and the intention of the legislature is to encompass all those services which are provided so as to enable the organization to perform function entrusted in Art....
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....upply of goods 16. The applicant has further submitted that, similarly, the West Bengal Authorities for Advance Ruling has also pronounced a similar ruling in the case of Mr. Mahendra Roy vide order No.24/WBAAR/2019-20 dated September 23, 2019 wherein the applicant was engaged in providing conservancy/solid waste management services to Conservancy department of Howrah Municipal Corporation ('HMC'); that while making the payment to the Applicant, HMC deducted GST TDS; that the applicant had contended that they are supplying pure services to Municipal Corporation and eligible for exemption under Sl. No.3 of Notification No. 12/2017- CT (rate) and the GST TDS provisions would not be applicable to this transaction. The contention of the applicant was upheld by the authorities who upheld that the services provided by applicant is eligible for exemption. The applicant also wants to rely upon the judgement of the Andhra Pradesh Authority for Advance Ruling in the case of Amaravathi Metro Rail Corporation Limited vide order # AAR/AP/07(GST)/2018 dated July 02, 2018 whereby it was held that the applicant being controlled by the Government of Andhra Pradesh squarely falls under the defini....
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....under reverse charge mechanism. 18.1 Access to e-books/e-database from service provider located outside India as import of service as per Notification No.10/2017 - IGST (Rate) The applicant has stated that e-books and e-database is used by students and faculties/professors during the course of dissemination of education and without this, it would be difficult for the applicant to provide education services effectively and would not enable them to achieve their objectives well; that the availability of e-books provides them with an option of gaining knowledge from people with different kind of perspective to a similar question/problem; that database provides a lot of data/information to students that helps them in undertaking various kind of researches; that the education sector has also become very competitive and in order to remain ahead of the other institutions, NID is required to provide the highest quality of education to its students; that granting them access to such e-books and database enhances the knowledge of their students, thereby achieving the very objective of promoting quality and excellence in the area of education; that the service so procured by NID in form....
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....ifty-one percent or more participation by way of equity or control, to carry out any function would be applicable to body which is established by the Government. This means that the board/body set up by an act of Parliament or State legislature is independent and is not bound by above condition; that, recently, a Circular is issued vide reference No.76/50/2018 - GST dated 31 December, 2018 wherein the clarity is provided on similar aspect or legal interpretation according to which, the long line written in clause (a) in Notification No. 50/2018-Central Tax dated 13.09.2018 is applicable to both the items (i) and (ii) of clause (a) of the said notification; that in other words, the provisions of section 51 of the CGST Act are applicable only to such authority or a board or any other body set up by an Act of parliament or a State legislature or established by any Government in which fifty one per cent or more participation by way of equity or control is with the Government; that even in such scenario, the important question that arises is whether NID fulfils condition mentioned in clause (a) in notification No. 50/2018-Central Tax dated 13.09.2018. On conjoint reading of above, the a....
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....sion, the Court held that the condition attached to the definition of the 'Governmental Authority' given in the erstwhile Service Tax Legislation viz. Participation of government by way of 90% or more of equity and control to carry out the functions of municipality under Article 243W of the Constitution, is relevant only for the Board established by the Government. However, we have to state here that the said judgement is under challenge by the Department before the Hon'ble Supreme Court and has therefore not attained finality. Further, for the purpose of examining whether the applicant is covered under the definition of 'Governmental Authority' or otherwise, we will be required to refer to the definition of 'Governmental Authority as appearing in the IGST Act, 2017. On going through the various sections of the IGST Act, 2017, we find that the definition of 'Governmental Authority' has been provided in the Explanation to Section-2(16) of the said Act and reads as under: 2(16) "non-taxable online recipient" means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or r....
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....D is set-up by an Act of Parliament and the Central Government has complete control over the institution, they believe that they would merit categorization as a Governmental Authority as defined in the GST Act. However, they have not provided any proof/submission with regard to the Government having 90% or more by way of participation of equity or control. Therefore, unless and until it is proved that the Government is having 90% or more by way of participation of equity or control in NID, this condition will not be considered to have been fulfilled. In other words, the applicant can qualify to be a 'Governmental Authority', if and only if, there is 90% or more by way of participation of equity or control by Government in NID. (3) In order to examine as to whether NID has been established to carry out any function entrusted to a municipality under Article 243W of the Constitution or to a Panchayat under Article 243G of the Constitution, we will be required to refer to the list of functions entrusted to a municipality under Article 243W of the Constitution of India and to a Panchayat under Article 243G of the Constitution of India. (a) The list of functions entrusted to ....
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....onal education. 19. Adult and non-formal education. 20. Libraries. 21. Cultural activities. 22. Markets and fairs. 23. Health and sanitation, including hospitals, primary health centres and dispensaries. 24. Family welfare. 25. Women and child development. 26. Social welfare, including welfare of the handicapped and mentally retarded. 27. Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. 28. Public distribution system. 29. Maintenance of community assets. We have gone through the aforementioned lists. As submitted by the applicant, theirs' is an Institute involved in the field of Education i.e. in education, research and training in all discipline relating to Design and matters therewith, and on going through the above list, we find there are two functions related to Education i.e.(i) one appearing at Sr.No.13 in the list of functions entrusted to a municipality under Article 243W of the Constitution and (ii) the other, appearing at Sr.No.17 of the list of functions entrusted to a Panchayat under Article 243G of the Constitution of....
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....e Code (Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 3. Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. NIL NIL 24.1 As can be seen from the above, Sr.No.3 of aforementioned Notifications No.12/2017-Central Tax(Rate) dated 28.06.2017 and Notification No.09/2017-IGST(Rate) dated 28.06.2017 exempts Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental Authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entruste....
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.... to be registered as a tax deductor under GST as per the provision of Section 24 of the CGST Act. For this purpose, we will be required to refer to Section 24 of the CGST Act, 2017. Section 24 of the said Act reads as under: 24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,-- (i) persons making any inter-State taxable supply; (ii) casual taxable persons making taxable supply; (iii) persons who are required to pay tax under reverse charge; (iv) person who are required to pay tax under sub-section (5) of section 9; (v) non-resident taxable persons making taxable supply; (vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act; (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise; (viii) Input Service Distributor, whether or not separately registered under this Act; (ix) persons who supply goods or services or both, other than supplies specified under sub-se....
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....der clause(d) of sub-section(1) of section 51 of the said Act, namely:- (a) An authority or a board or any other body, - (i) Set up by an Act of Parliament or a State Legislature; or (ii) Established by any Government, with fifty-one percent, or more participation by way of equity or control, to carry out any function; (b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860(21 of 1860). (c) Public sector undertakings. 25.3 Since, the applicant is not covered under any of the categories of (b) or (c) mentioned above, we are required to examine whether they are covered under the category of (a) above. As discussed earlier, NID has been formed by an Act of Parliament of the Government of India i.e. the NID Act. However, they have not given any proof with regard to 'fifty-one percent, or more participation of Government by way of equity or control, to carry out any function'. Hence, we find that since it has been established that NID has been formed by an Act of Parliament, the applicant will have to be registered as a tax deductor under the provisi....