TaxTMI 
TaxTMI 
2021 (6) TMI 562
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered with GSTIN No. 33AAALT1624R1ZO. The applicant is a "Municipality" as defined in clause (e) of article 243P of the Constitution. They are rendering taxable services (viz) renting of immovable. property service, mandap keeper service and are doing the functions entrusted to a municipality under Twelfth Schedule to Article 243W of the Constitution. They have stated to undertake the following services directly/ through contractors by tender process and have sought ruling on the application of Notifications specified in Column E below: Sl.No. Description of the service Direct service by the corporation Service through contractors by tender process Advance ruling is required on the following whether the services mentioned in Column B are exempted vide Notfn No or SI No entry of the table to Notfn as noted against each SI No in Column E. A B C D E 1 Fee from parks Yes Yes (Three years lease) Notfn. No 14/ 2017 dt 28-06- 2017(or) Si no 4 of Notification 12/2017 dated 28.06.2017 Composite supply has to be applied w.r.t small canteen service rendered inside the park as the fee for park service and also small canteen service exempted vide entry Sl.No.9 of Notification ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-2018 in case of services to GSTN holders 12 Community Hall Direct by municipality on lease contract No Middlemen involved Nonpayment of tax under reverse charge under SI No 5A of Notification 13/2017 CT(R )dated 28.06.2017 but paid under direct charge and whether it can be condoned and regularised for the period from 25-01-2018 in case of services to GSTN holders 13 Rent on building- residential purpose Recovered from salary of Government Servants Exempted vide Sl.No. 12 of Notification No.12/2017 CT(Rate) 14 annual track rent -Cable operator laying fee(optical fibre laying fee) Direct Service based on contract Composite supply can be applied for road cutting charges by treating it as renting of immovable property service and reverse charge is applicable under Sl No 5A of Notification 13/2017 CT(R )dated 28.06.2017 as amended. 15 Renting of immovable property Direct by the municipality on lease contract to another Central / State Government SI no 8 of the table to Notification 12/2017 dated 28.06.2017 The Questions for which the ruling is sought are: Q.1. Advance Ruling is required in respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ease contractor in respect of * Fees from Park; * Bus-stand -others -locker rent * Slaughter house fees * Cycle stand, scooter, auto/scooter two -wheeler stand in bus stand and in such cases * service provider is the applicant. * Service is * allowing public, who are service recipients entry to Park; * use the locker in Bus Stand by paying consideration to the locker rent @ Rs. 5 per bag/suitcase. * allowing use of the slaughter house facility by the Public, who are service recipients * allowing public to park cycle/scooter/auto/car on hourly/daily basis * consideration is the fee charged by the applicant for entry/use of the above facilities. b. Direct Collection in respect of * Market fee-daily for vegetable market; * Market fee -weekly vegetable/animals/fish * Fees for bays in bus stand * Fees on pay & use toilets and in such cases: * service provider is the applicant. * Service is * allowing farmers/Merchant, who are service recipients to use the infrastructure in respect of daily/weekly Markets; * allowing parking of bus by bus-owners/Govt. Transport Department, who are service recipients, in the bays in bus stand. * allowing the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vice can be treated as renting of immovable property service as composite supply and reverse charge can be applied since the service recipients are registered with GSTN and the service provider is a local authority. 2.5 On the renting of immovable property (Shopping complex etc.)/Lease of land/Community Hall, they have stated that they have rendered the renting services to persons registered under GST and the liability to pay the tax is as per Reverse Charge on the service recipient whereas the applicant has stated to have collected GST under direct charge instead of reverse charge w.e.f 25.01.2018 and has sought if this can be regularised 2.6 They have further stated that they have rented immovable property to (i) to state Govt.(viz) state tax, police, local fund audit, ration shops (ii) to Central Govt. (viz) Post office etc (iii) to Co-operative society(viz) transport corporation TNSTC, SIDCO, Pollution Control Board, Common Effluent Treatment Plants (v) Nationalised Banks and General Insurance Companies and has sought to know whether full exemption is applicable as per SI.No. 8 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 3.1 The applicant o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision of urban amenities and facilities such as parks, gardens, playgrounds. * Market fee-daily & Market fee-weekly - Market fee is covered under (c),(i) and (1) of Twelfth Schedule to Article 243W of the Constitution which reads as follows : (c) Planning for economic and social development (i) Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. (l) Provision of urban amenities and facilities such as parks, gardens, playgrounds. As per Si no 24 of the table to Notification No. 11/2017-C.T. (Rate), dated 28.06.2017 as amended it is a support service and hence it is fully exempted * Fees for Bays in Bus stand (bus stand entrance fee collection) - covered under (q) & (1) of Twelfth Schedule to Article 243 W of the Constitution which reads as follows : (q) Public amenities including street lighting, parking lots, bus stops and public conveniences (l) Provision of urban amenities and facilities such as parks, gardens, playgrounds. * Bus Stand -Others- * Locker Rent - covered under (1) of Twelfth Schedule to Article 243W of the Constitution which reads as follows : (l) Provision of urban ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ince the rate fixed by Govt. was adopted and the service was rendered by the contractor to the public in the name of the local authority and receipt has been issued in the name of the local authority to the public. 3.5 Apart from the general contention, as above in respect of the activities undertaken entirely through contractors, the applicant has stated as follows: * Fish Market(Weekly)- As per the functions entrusted to a Panchayat under the Eleventh Schedule to Article 243 G of the Constitution, Entry (v) states `Fisheries'. As per Sl.No. 5 to Notification 12/2017 dated 28.06.2017 and Notification No. 14/2017-C.T.(Rate) dated 28th June 2017, this activity is exempted as they are doing the activity of Panchayat; Further the service is exempted as per the departmental clarification on Agriculture, forestry, fishing and Animal husbandry support services; As per SI.No. 24 of Notification No. 11/2017-C.T.(Rate), it is a support service and hence it is fully exempted * Bus stand-others-TV Advt in bus Stand: As per entry SI.No. 7 of Notification 12/2017 dated 28.06.2017, the services provided by the applicant to the business entity whose aggregate turnover is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....verse charge. 3.9 Renting of immovable property service to another central /state Govt Departments - As per Si No 8 of the table to Notification 12/2017 dated 28.06.2017 as amended the renting of immovable property service rendered by them as a local authority to pure state Govt. offices (viz) Asst. Director of L F Accounts, Police Department, ration shops, State Tax and Central Govt offices (viz) Central Tax are fully exempted. The renting of immovable property service rendered by them as a local authority to Co-operative society, TNSTC, Office of Pollution Control Board, SIDCO, TWAD Board are not exempted but chargeable to tax since the Co-operative society, transport corporation TNSTC, Office of Pollution Control Board, SIDCO, TWAD Board are covered under the definition of Government Entity only and they are not State Govt. General Insurance Companies (Viz) New India Insurance Co. Ltd and Banks are not central Govt. and so the services rendered to them are not exempted but chargeable to tax. 4.1 Due to prevailing pandemic, the applicant was addressed through their e- mail seeking their willingness to participate in the hearing in the digital mode. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ublic authority and rendered the above services as listed in the above table SI.No. 1 to 9 except SA, by way of any activity in relation to a function entrusted to a Panchayat under Article 243 G of the Constitution or to a Municipality under Article 243 W of the Constitution and hence exempted as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 * there is no restriction to do the services listed in 243 G as a public authority * As per the Notification No. 14/2017-C.T.(Rate) dated 28th June 2017, when it is neither treated as supply of goods nor a supply of service the question of levy of GST will not arise and the services listed in the table from SI.No.1 to SI.No.9 (except Sl.No. 5A) are not treated as supply of service and it is not at all chargeable to GST when either done by them directly or through tender contractors. * Even if the functions are treated as service, they are exempted as per Notfn No. 11/2017, 12/2017 * When the service itself is exempted, it is not chargeable to GST when either done by them or through tender contractors since it is a function under 243W as well as 243G. * As per Schedule I of CGST 2017, Supply of goods from the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed upon with other State/ Central Government offices, Public Sector Undertaking mentioned in SI.No.15 of their ARA application has the same terms & conditions as in the above cited lease agreement, if not sample lease agreement for each class of tenant may be furnished. Further, sample rent receipts may also be furnished. * The work order submitted in respect of activity mentioned in SI.No.14 it is seen that the work order issued by Erode Corporation is submitted. The document corresponding to Tirupur City Corporation may be furnished. Further, details of Account Head under which the income for the activity (Sl.No.14) is accounted along with trail of accounts maintained is required for decision. * The applicant was also asked whether they wished to be heard again virtually. 4.5 The applicant vide their letter dated 12.01.2021 received on 22.01.2021 submitted that * The terms and conditions in the allotment letters are the same. Sample copies of allotment letters for pay and use toilets, fee from parks, acceptance letter of contractor for market fee weekly, fee from parks, tender advertisement copy, rental collection receipts for market fee daily, fee from park, pay and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y' as defined in clause (e) of article 243 P of the Constitution and has stated to be covered under the definition of 'Local Authority' as defined under Section 2(69) of the CGST Act 2017. They are rendering the following functions directly as well as through contractors(through tender process)and collecting (1) Fee from parks; (2)Market fee-daily; (3)(i) Market fee -weekly,(ii)Fish Market weekly; (4) Fee for bays in bus stand; (5) Bus Stand Others (A) Charges for TV Advt in bus-stand (B) Locker rent provided in bus stand; (6) Bunk stalls; (7) Slaughter House fees; (8) Fees for pay and use toilets bus stand and other common places; (9) Fee for entry vehicle irt bus stand-two wheeler stand; (10)Renting of immovable property(Shopping complex); (11) Lease of land; (12) Community hall; (13)Rent on building residential purpose; (14) Annual track rent-cable operator laying fee(optical fiber laying fee); (15) Renting of immovable property. They have stated that they require clarifications whether these activities are covered under Twelfth Schedule of Article 243 W of the constitution so as to claim appropriate exemption under Notfn No. 12/2017 & Notification No. 14/2017-C.T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sought. For ease of reference, the section is reproduced as under: 97 (2) The question on which the advance ruling is sought under 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. The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97(2) and no other issue can be decided by the Advance Ruling Authority. The question at SI.No.4 seeks regularization of the payment made by them considering the same as a technical lapse, which is not in the purview of this authority as per Section 97 (2) above. This position was explained duri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Twelfth Schedule of the Constitution are as under: Twelfth Schedule: (l) Provision of urban amenities and facilities such as parks, gardens, playgrounds. (q) Public amenities including street lighting, parking lots, bus stops and public conveniences. (r) Regulation of slaughter houses and tanneries Eleventh Schedule: (xxii) Markets and fairs. They claim exemption in respect of all the activities vide Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 (or) SI.No. 4 of Notfn.No. 12/2017-C.T.(Rate) dated 28.06.2017 apart from certain other specific entries such as SI.No. 56/76 of Notfn. No. 12/2017-C.T.(Rate) dated 28.06.2017 and/or sl.no. 24 of Notification no. 11/2017-C.T. (Rate) dated 28.06.2017. 7.3 Notification No. 14/2017 under which exemption is claimed in respect of all the activities where they provide the services directly is examined as under: Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 In exercise of the powers conferred by sub-section (2) of section 7 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council hereby notifies that the followin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ective from 26.07.2018 and stands covered under Notification No. 14/2017-C.T.(Rate) dated 28th June 2017. Further, Governmental Authority as defined under 2(zf) of the Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 effective from 13.10.2017 is as follows: (zf) -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 90per cent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution. In the case at hand, the applicant is a Municipality, which is a local authority and is not a Governmental Authority. Therefore, this entry does not have any application to the applicant. Advance Ruling is applicable to the supplies currently being made or proposed to be made as per S.95 of the GST Act. In that count also, the application in hand being filed after 26.07.2018, the date effective which, the words, 'Local Authority' stands omitted, sl.No. 4 of the notification No. 12/2017-C.T.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... listed in the Eleventh Schedule. The said activity when provided by the applicant, as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017, is neither a supply of goods nor supply of service and not taxable to GST. 4. Fees for bays in bus-stand: It is stated that the applicant collects the fees from the bus owners/Govt. transport department for allowing parking of bus on per day basis and they claim the same is in relation to the public amenity listed at (q) of Twelfth Schedule of the Constitution. Entry (q) states -` Public amenities including street lighting, parking lots, bus stops and public conveniences'. From the submissions it is seen that the fees are collected for maintenance of bays in bus bus-stand, while providing the said bus-bays for the buses in the bus-stand which is an activity in relation to that stated at (q) of Twelfth Schedule above. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended effective from 26.07.2018. 5. Bus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ended effective from 26.07.2018. 9. Cycle Stand, Scooter, Auto/ scooter two wheeler stand in Bus-stand: The applicant has stated that the activity is allowing public to park cycle/scooter/auto on hourly/daily basis in the bus-stand. The consideration is charged towards maintenance of such facility. They claim that the activity is in relation to the function at (q) of the Twelfth Schedule of the Constitution. 'Public amenities including street lighting, parking lots, bus stops and public conveniences' is listed at (q) of the said Schedule. The applicant provides parking lots which is an activity specified in the said entry. The applicant undertakes the above activity as a public authority and therefore, the said activity when provided by the applicant, is neither a supply of goods nor supply of service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended effective from 26.07.2018. 7.6 In view of the above, we hold that the activity (1) Fee from Parks; (2) Market fee-daily; (3)(i) Market fee-weekly; (4) Fees for bays in bus-stand; (7) Slaughter house fees; (8) Fees on pay & use toilets; (9) - Cycle stand, Scooter, auto stand in the bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the contractor to the public in the name of the local authority and receipt has been issued in the name of the local authority to the public. 8.2 The relevant statutory provisions referred by the applicant are examined as under: Section 358 of the Tamilnadu District Municipalities Act, 1920 states as: 358. Application of term public servant' to municipal officers, agents and sub­agents .- Every municipal officer or servant, every contractor or agent for the collection of any municipal tax, fee or other sum due to the Municipal Council and every person employed by any such contractor or agent for the collection of such tax, fee or sum shall be deemed to be a public servant within the meaning of Section 21 of the Indian Penal Code (Central Act XLV of 1860). Section 21 of the Indian Penal Code is as below: 21. "Public servant".-The words "public servant" denote a person falling underany of the descriptions hereinafter following; namely:- ((Twelfth) -Every person- (a) in the service....................................... Government; (b) in the service or pay of a local authority, a corporation established by or under a Central, Provincial or State ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5) of the GST Act. Section 2(5) of GST Act 2017 defines agent as (5) "agent" means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another; Thus, a person who carries on the business of supply of service on behalf of another is defined as 'agent'. Section 2 (105) of the GST Act, defines supplier as: (105) "supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied; In the case at hand, the criteria for the contractors to be termed as 'agent' of the applicant is when the contractors act on behalf of the applicant, i.e., when such contractors are assigned only the collection of the fees fixed by them and remittance of the same to the applicant. On perusal of the various conditions of the tender Documents and the contracts, it is seen that the contract is awarded to the successful bidder for a period o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of applicant that the tender contractors are to be considered as agents as in the principle-agent relationship is not acceptable and rejected. 8.5 In this scenario, the ruling sought on whether in respect of services rendered by them from SI No 1 to 9 through tender contractors are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted vide the Notfn. no. mentioned against each SI No is taken up for consideration. As brought out in para 8.4 above, the applicant supplies the 'Right to collect the fees/right to sell in the fishing market' in respect of the various activities form SI.No. 1 to 9 in the table mentioned at Para 1 above. Supply of Rights held by the applicant to the contractors through the tender process is a supply made by the applicant to the contractors, who are business entities for furtherance of their business and is not an activity in relation to the functions entrusted under Article 243 G/243W and therefore the considerations received from the successful contractors are liable to tax. 8.6 On the question whether in respect of the services rendered by them from Sl.No. 1 to 13 through tender contractors are covered under Twel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arges towards laying of cable and (ii) renting of road for the optical cables. Their claim is renting of space for laying cable is the principal supply and therefore applying the definition of 'composite Supply' under S.2(30) of the GST Act, road cutting charges has to be treated as renting and the whole service has to be classified as renting of immovable property. 9.3 On perusal of the document C1/2715/2017 dated 02.04.2018 issued to M/s. JIO digital, it is seen that permission is granted to lay OFC cable alongside the length of road, on payment of Road Cutting Charges and annual track rent charges. It is further stated that the Track rent is accounted under Accounting head 1110 and the Road cutting charges (Road restoration) is accounted under Accounting head 1041. From the above, it is evident that while Annual Track rent is a recurring charge to be paid by the service recipient, the Road cutting charges (Road restoration) is a onetime charge collected while laying the OFC initially. 9.4 Section 2(30) of the GST Act 2017 states that "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....11.1 The final question to be considered is whether the renting of immovable property service rendered by them as a local authority to (i) Pure state Govt. offices (viz) Asst. Director of L F Accounts, Project Officer, ICDS, ICDS Centre: Deputy Supt. Of Police and pure Central Govt offices (viz) post offices; (ii) Co-operative society(viz) Chindhamani Super Market, Jeeva Co-Op Society, TNSTC Staff Society, Jeeva Co-Op Society and transport corporation TNSTC; and (iii) Nationalised Banks are fully exempted or not as per entry SI no 8 of the table to Notification 12/2017 dated 28.06.2017. 11.2 The applicant in their submissions has stated that the Renting of Immovable Property service rendered by them as a local authority to State Govt. offices and Central Govt offices are fully exempted. The renting of immovable property service rendered by them as a local authority to Co-operative society are not exempted but chargeable to tax since the society and transport corporation TNSTC are covered under the definition of Government Entity only and they are not State Govt. Nationalised Banks are not central Govt. and so the services rendered to them are not exempted but chargeabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....43W of the Constitution and /or exempted under the Notfn. No mentioned against each Sl No as detailed below . Sl.No. Description of the service Ruling 1 Maintenance of Park Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended vide Notification No. 16/2018 dated 26.07.2018 2 Providing Market facilities -daily Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 3 (i) Providing Market facilities -weekly Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 4 Providing bays in bus stand Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended vide Notification No. 16/2018 dated 26.07.2018 5 (B) Locker rent facilities (B) Facility of providing locker for rent directly by the applicant is taxable for the reason that this does not fall under Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 and is taxable 7 Providing Slaughter house facilities Not a Supply of Service as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended vide N....