TaxTMI 
TaxTMI 
2021 (6) TMI 562
X X X X Extracts X X X X
X X X X Extracts X X X X
....after called the 'Applicant') is registered 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 servic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Non payment of tax under reverse charge under Si No 5A of Notfn No 13/2017 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for TV advt. in bus-stand, locker rent provided in bus-stand, cycle stand, scooter, auto, four wheeler stand in bus stand and other places, Bunk stalls, annual track rent cable operator fee (Optical fibre laying fee). 2.2 They have stated that, they undertake a. Direct collection till it is entrusted to the lease 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... • the right to use the advertisement through TV in the bus stand; • the right to use the collection of rent of locker in the bus stand; • Consideration is the amount determined and confirmed in the tender process (One of the main condition is the amount realized from the public should be as per the amount prescribed by the Municipal Corporation) 2.4 They have stated that they collect Charges towards (1) cutting, repairing & rectification of roads and (2) payment of annual rent for the optical cable laid alongside roads based on Contract in which the applicant is the service provider, the operator of phone/mobile services is the service recipient. The claim is as to whether the whole service 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Panchayat under article 243G of the Constitution or to a Municipality under article 243W of the Constitution" is not a service. Hence it is not chargeable to tax. • Even if an argument is placed that it is a service, it is exempted as per SI No 4 of Notification 12/2017 dated 28.06.2017 as amended which states that 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 is NIL. The applicant has stated the relevant head under which the activities are covered as per the entries in the Twelfth Schedule to Article 243 W of the Constitution along with activity specific exemptions, as under: • Fees from Parks- - Maintenance of park is covered under (1) of Twelfth Schedule to Article 243W of the Constitution which reads as follows : (1) Provision 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 soc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mil Nadu District Municipalities Act, 1920 it is a fact that the contractors of municipal corporation are public servants and the services rendered by the municipal corporation to the contractors (public servants) could not be termed as service and the contractors could not be termed as business entities but they are agents of the municipality as per the definition under Section 2(5) and Section 2(105) of the CGST Act 2017. Hence the collection and maintenance work entrusted by the municipality to the contractors could not be termed as service since it is arrangement between principal and agent (ie) in this case Govt. and public servant and amount paid by the contractor to Govt. towards rendering of work entrusted under Section 374 and other provisions of the Tamil Nadu District Municipalities Act, 1920 and the functions entrusted to a municipality under the twelfth schedule to article 243W of the constitution could not be termed as service. As there is no service the question of payment of GST will not arise on all those lease contracts since 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 rece....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elt there is no need to collect GST from Service availer once again and the lapse can be condoned and regularised in future. 3.7 Rent on building-Residential purpose: The amount realised relates to renting of residential dwelling for use by the officers of State Government which is covered under full exemption by way of renting of residential dwelling for use as residence under Sl.No.12 of Notfn 12/2017 CT(rate) dated 28.06.2017 3.8 Annual Track rent - Cable operator laying fee - Two charges are collected (i) road cutting charges towards laying of cable; (ii) renting of road for the optical cables laid. They have stated that, in this case, as per Section 2(30) the supply for which charges collected is a 'Composite Supply', the principal supply being renting of space for laying cable, the whole service has to be classified as renting of immovable property service. As per Si no SA of the table to Notification 13/2017 CT(R) dated 28.06.2017 New Delhi, the 28th June, 2017 the telephone companies who are registered with GSTN have to pay GST under reverse charge. 3.9 Renting of immovable property service to another central /state Govt Departmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overed as under: SL.No. Description of the service Entry of Twelfth Schedule under which the service is covered A B C 1 Fee from parks (1) of 243W 2 Market fee-daily (xxii) of 243 G 3 (i) Market fee -weekly (ii) Running a Fish market (xxii) of 243 G (v) of 243 G & (xxii) of 243 G 4 Fees for bays in bus stand (bus stand entrance fee collection) (q) of 243 W 5 Bus-stand (others) (A) charges for of TV advt. in bus-stand (B) locker rent provided in bus-stand NA (1) of 243 W 6 Bunk stalls (xvi) & (xxviii) of 243 G 7 Slaughter house fees (r) of 243 W 8 Fees on pay &use toilets (q) of 243 W 9 For entry vehicle in the bus stand- two wheeler stand (1) of 243 W and (xxii) of 243 G 10 Renting of immovable property (Shopping complex) NA 11 Lease of land NA 12 Community hall NA 13 Rent on building -residential purpose 14 annual track rent -Cable operator laying fee (optical fibre laying fee) NA 15 Renting of immovable property NA The applicant has stated that • they are a local authority....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in II floor, Kumaran Shopping complex, Tirupur which is owned by the applicant • The tender documents for the years 2017-2018, 2019-2022 containing the conditions of tender/contract/lease covering most of the services rendered by the Municipality including SI.No.1,2,3(i)84(ii),4,5A8413,7,8,9 is submitted Sample contract orders in respect of Fee on Pay & use toilet, Fee for running fish market, Market fee-Weekly, Slaughter house fee, Fees for bays in bus stand fee, Fee from parks • Sample allotment letter for Slaughter house activity • Sample token issued in the name of Municipality for Market fee daily, fee for bays in bus stand. 4.5 On perusal of the details furnished, it was seen that the following were not furnished and the applicant were asked to furnish the same vide letter dated 09.12.2020: • They have furnished sample allotment letter in respect of Slaughter House activity (Sl.No.7). It may be confirmed whether in respect of all activities for which ruling is sought, the allotment letter to the successful bidder has the same terms & conditions as in the above allotment letter, if not sample allotment letter for othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....application. 5.2 The Central Jurisdictional authority was asked to furnish comments on the issue raised in the Advance Ruling application of the applicant. The central Jurisdictional authority vide their letter dated 04.08.2020 submitted that the applicant is under the administrative control of the state authorities. However, prior to GST, the assessee had one case of non-payment of service tax and non-filing of ST-3 return under the category of "Renting of Immovable property service". The SCN was issued by DGCEI and adjudicated. The assessee had filed an application under SVLDRS (LD2611190000311) and their application was accepted and discharge Certificate (SVLDRS 4) was also issued. Further in response to the letter issued by the Authority for Advance Ruling, seeking the details of SCN issued in the applicants case, the Central Jurisdictional authority vide their letter dated 11.09.2020 submitted the following documents. • SCN No.18/2018 (ST) dated 25.04.2018 issued by DGGSTI, Coimbatore Zonal Unit • ORDER -IN-ORIGINAL ORDER Sl.No.05/2019-COMMR dated 28.05.2019 issued by the Principal Commissioner of GST & Central Excise, Coimbatore â€....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly can be applied or not for classifying the said service as renting of immovable property service and reverse charge can be applied or not for collecting GST as per S.No. 5A of Notification 13/2017 CT(Rate) dated 29.06.2017 as amended form the telephone operators who are GSTN holders. Q.4 In respect of S.No. 13 full exemption is applicable or not as noted against the Sl.No. (ii)In respect of S.No. 15 the renting of immovable property service rendered by us as a local authority to (i) pure State Govt. Offices (viz) State tax, Police, local fund audit, ration shops are fully exempted nor not as per Sl.No. 8 of Notification 12/2017 dated 28.06.2017. (ii) Central Government Offices (viz) post offices are fully exempted nor not as per SI.No. 8 of Notification 12/2017 dated 28.06.2017. (iii) Co. operative society" transport corporation TNSTC, SIDCO, Pollution Control Board, Common Effluent Treatment Plants are exempted or not as per SI.No. 8 of Notification 12/2017 dated 28.06.2017. (iv) Nationalised Banks and General Insurance Companies are exempted or not as per Sl.No. 8 of Notification 12/2017 dated 28.06.2017 6.2 Of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8-06-2017 2 Market fee-daily (xxii) of 243G Notfn. No. 14/2017 dt 28-06-2017 (or) sl no 4 of 12/2017 dt 28-06-2017 (or) Sl.No. 24 of the table to Notification No. 11/2017-C.T. (Rate), dated 28-06-2017 3 Market fee -weekly (xxii) of 243 G Notfn. No 14/2017 dt 28-06-2017 or sl no 4 of 12/2017 dt 28-06-2017 (or) Sl.no. 24 of the table to Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 4 Fees for bays in bus stand (bus stand entrance fee collection) (q) of 243 W Notfn. No 14/2017 dt 28-06-2017 or sl no 4 of 12/2017 dt 28-06-2017 5 Bus -stand (others) (A) charges for of TV advt. in bus-stand (B) locker rent provided in bus-stand NA (l) of 243 W A. Exempted vide SI No 7 of Notfn. No 12/2017 (or) payment of tax under reverse charge under sl no 5 of Notfn. No 13/ 2017-Central Tax (Rate) dated the 28th June, 2017 B. Notfn No 14/2017 dt 28-06-2017 or no 4 of 12/2017 dt 28-06-2017. 7 Slaughter house fees (r) of 243 W Notfn No. 14/2017 dt 28-06-2017(or) sl no 4 of 12/2017 dt 28-06-2017 8 Fees on pay & use toilets (q) of 243 W Notfn No 14/2017 dt 28-06-2017 (or) sl no 76 of Notfn. No 12/2017 dt 28-06-2017.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tivities in relation to a function entrusted to a Municipality under Article 243 W of the Constitution (effective from 26.07.2018), when undertaken by a 'Local Authority' in which they are engaged as public authority, are to be treated as neither supply of goods nor supply of services. Local Authority is defined under Section 2(69) of the GST Act 2017 as: (69) "local authority" means- (a) a "Panchayat" as defined in clause (d) of article 243 of the Constitution; (b) a "Municipality" as defined in clause (e) of article 243P of the Constitution; .....................................; Or (g) a Regional Council constituted under article 371A of the Constitution Applying the above, to the case at hand, the applicant being a Municipality as defined in clause (e) of article 243 P of the Constitution, is a Local Authority under the GST Act. Therefore, if the services listed at Si. No. 1 to 6, 8, 9 8s 13 are found to be that in relation to the entries of Eleventh/Twelfth Schedule of the Constitution, and the said activities are undertaken by the applicant, a Local authority, when engaged as a 'Public Authority....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lected for allowing the public, entry to the park maintained by the applicant. As per entry (1) of the Twelfth Schedule above, 'Provision of Urban amenities such as Parks' is a function bestowed with the Municipality under Article 243 W of the Constitution. The applicant being a local authority is to provide such urban amenities as a public authority. The said fee for allowing the public is a consideration collected by the applicant as a public authority for maintenance of the parks, therefore, the same is in relation to the function-Provision of Urban amenities and facilities such as Parks' as per entry (1) of the Twelfth Schedule of the constitution. The said activity when provided by the applicant, as per Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended with effective from 26.07.2018, is neither a supply of goods nor supply of service and not taxable to GST. 2. & 3(i). Market Fees- Daily & Weekly- It is stated that the applicant collects entrance fee from the farmers/Merchants on daily basis for allowing them entry into the market. From the submissions, it is seen that the considerations are for the infrastructure of the shop (thatched ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... states 'Provision of urban amenities and facilities such as parks, gardens, playgrounds.' Here, the activity is providing Lockers in the Bus-stand which is not in the genre stated in the said entry. Therefore, providing lockers in the Bus-stand is not an activity in relation to the function at (1) of the Twelfth Schedule and hence, Notification No. 14/2017-C.T.(Rate) dated 28th June 2017 as amended is not applicable to this activity. 7. Slaughter house fees: It is stated that the service is allowing the public for the purpose of slaughter of animals. The applicant has stated that the same is in relation to the function at (r) Regulation of slaughter houses and tanneries of the Twelfth Schedule of the Constitution. 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/ 201 7-C.T. (Rate) dated 28.06.2017 as amended effective from 26.07.2018. 8. Fees on Pay 85 use Toilets: The applicant has stated that the activity is allowing the public, use of the toilet. They claim that the activit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icle 243 G and 243 W of the Constitution and therefore is treated as 'Services' and Locker Rent is liable to GST. 8.1 In respect of Q.No. 2 above, the applicant has sought ruling as to whether in respect of the services rendered by them from Si No 1 to 9 through tender contractors, they are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted vide the Notfn. no. mentioned against each Si No. In this question, the applicant seeks the eligibility of the exemption notification, when the services/activities are provided by the contractors, to whom the right to collect the consideration from the service recipients is supplied by the applicant through the tender process. Their contention in this claim is that • On combined reading of CGST Act, 2017 with The Tamil Nadu District Municipalities Act, 1920, the contractors of municipal corporation are public servants and the services rendered by the municipal corporation to the contractors (public servants) could not be termed as service and the contractors could not be termed as business entities but they are agents of the municipality as per the definition under Section 2(5) and Section 2(105) o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t there may be in his right to hold that situation. `Public Servant' is to be understood as every person who is in actual possession of the situation of a public servant, whatever, the legal defect there may be in his right to hold that situation as per the Indian Penal Code; and the Tamilnadu District Municipalities Act 1920, under 5.358 provides that every contractor or agent for collection of any fees shall be deemed to be a public servant. The applicant on reading the above provisions, contends that the contractor who has been awarded the right to collect the various fees instituted by the applicant is a Public servant and they cannot be termed as business entities. 8.3 In the case at hand, from the terms of the tender documents and the contract agreements furnished before us, we find that the contractors are vested with the right to collect the fees fixed by the applicant for various activities through a tender process. The eligible persons/entities submit their bid for every activity and the person/entity who is the highest bidder and satisfies all the tender condition is awarded the contract. The contractor then enters into an agreement with the app....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be paid by him to the applicant, irrespective of any defaulting conditions relating to affecting the collection of fees fixed for the said amenity, that may prevail. Thus, it is seen that once the tender process is completed, with the contractor entering into the agreement with the applicant and on paying the sum bided in the tender, the possession of the situation is given to the contractor and thereupon the entire control of the said situation is shifted to tender contractors and the applicant do not hold any control over the transferred situation. In the case of agent- principal relationship in a transaction, the entire control over the transactions are well with the principal and not in the hands of agents and the agents merely act as intermediary between the customer and principal for certain commission which is not the case in hand. The tender is floated to enable the business entities to participate for a fee, and the person who bids a high price for such tender, i.e., collection of fees fixed by the applicant for the various public amenities is awarded the contract for a period of three years. The applicant, in the case at hand, supplies the right of collection of fees fix....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the applicant are the suppliers of the said services to the service recipients. Section 95 (a) of CGST and TNGST Act defines `Advance Ruling' as (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 (I) of section 100. in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant: Thus, a person can seek ruling only on the supplies being undertaken or proposed to be undertaken by him and cannot seek ruling on the supplies being made or proposed to be made by any other person. Moreover, the ruling pronounced by this authority is binding only on applicant and Jurisdictional Officer and not on any other person. Therefore, the GST law empowers the Advance Ruling Authority to issue ruling for the issues/matter/questions relating to the applicant only. Hence, we hold that the contractors being not 'agents of the applicant and the applicant supplying the 'Right to undertake certain activities' to the contractors, who are independent entities, the Question raised by the appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... business. In the case at hand, the 'Road Cut charges' are one-time charges collected initially while OFC is permitted to be laid and the Annual Track charges are periodical charges collected by the applicant from the service recipients. Both these charges are collected from the same service recipient (i) for allowing the cutting of road for laying the OFC and (ii) for allowing the space of road to be used for the OFC lines. While the Road cutting is a onetime supply, the rental charges are periodical. Thus, it is evident that both these supplies are not supplied in conjunction with each other in the ordinary course of business and therefore the same is not a 'Composite supply'. 9.5 In view of the above, we hold that the supply of allowing the road cut for laying the OFC and allowing the space alongside the road for the OFC lines are not `composite supply' in as much as these two supplies are not made in conjunction with each other in the ordinary course of business. 10.1 The Q.No. 4 raised before us is in respect of S.No. 13- renting of building-Residential purpose. It is stated that the rent is being recovered from the salary of the employee and the applicant has claimed fu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the premises is leased on monthly rental basis. The nature of supply is 'Renting of immovable property' as claimed by the applicant. The issue to be decided is whether the exemption under SI.No. 8 of the Notification 12/2017 dated 28.06.2017 is applicable to such supplies. 11.4 The entry at S1.No.8 of the Notification 12/2017 dated 28.06.2017 is as follows: 8 Chapter 99 Services provided by the Central Government. State Government. Union territory or local authority to another Central Government. State Government. Union territory or local authority: Provided that nothing contained in this entry shall apply to services- (i) by the Department of Posts by way of speed post. express parcel post, life insurance. and agency services provided to a person other than the Central Government. State Government. Union territory; (ii) in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) of transport of goods or passengers. Nil Nil From the above, it is seen that any service provided by Central Government, State Government, Union territory or a local authority to another Central Governme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9 Providing stand for cycle, scooter, auto, four wheeler stand in bus stand and other places 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 Q 2. In respect of services rendered by us from SI No 1 to 9 through tender contractors whether they are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted vide the Notfn. no. mentioned against each Sl No.as follows. The applicant supplies the 'Right to collect the fees/right to certain amenities' to the contractors and the supply undertaken by the contractors are as per the tender conditions which is an independent supply. The applicability of the Notification to the supplies of the contractors is not answered as per S.95(a) readwith S.103(1) of the GST Act. Q 2(ii) In respect of Sl No 10 to 12 w.e.f. 25-01-2018, instead of reverse charge we collected tax under direct charge from the service availers who are registered with GSTN and whether it can be regularlised. (to be treated as technical lapse and condoned since the service rendered by us had suffered tax and....