TaxTMI 
TaxTMI 
2021 (8) TMI 785
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....rs. 2. The applicant has submitted that a resolution was passed by AMC on September 14, 2007 in the General Board Meeting to form AJL and it was decided that following members would act as Chairman & Directors of AJL: Chairman: Municipal Commissioner, Ahmedabad Directors: Mayor of Ahmedabad Chairman of Standing committee Leader of Opposition Deputy Commissioner of AMC Transport committee chairman of AMTS Additional Commissioner - Traffic Police, Ahmedabad Chairman / CEO of AUDA Secretary - Ministry of Urban Development, GOI MLA (Ahmedabad) Secretary - Ministry of Urban Development, GOG Secretary - Ministry of Finance, GOG Subject expert Subject expert Representative from private sector Representative from private sector 3. The applicant has submitted that Ahmedabad Municipal Corporation (AMC) is 100% shareholder of AJL i.e. AJL is nothing but a mere offshoot of AMC and for all practical purpose, AJL is an inseparable part of AMC; that the applicant is an extended arm of the Municipal Corporation and does the activiti....
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.... AMC has played pivotal role, hence, the applicant believe AJL squarely falls under the definition of local authority as provided in the GST legislation. 8. The applicant submits that Sl. No. 3 of Notification no. 12/2017 - Central Tax (Rate) and Notification no. 9/2017 - Integrated Tax (Rate) exempts pure services provided to a Central Government, State Government or Union Territory or local authority or a Governmental Authority by way of any activity in relation to a function entrusted to a Municipality under Article 243W of the Constitution). as follows: Sr.No. Chapter, Section, Heading, Group or Service 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 th....
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....AJL receives all its funds from AMC; that the AMC receives grants from various sources for operations/capital needs and deploys the funds to AJL for BRTS operations; that in one instance, AMC has managed to receive funds to purchase electric buses for BRTS operations; that considering that AJL manages the fund provided by AMC, AJL would be construed to control/ manage local or municipal fund; that AJL is established and managed by AMC, which is a municipal corporation, and AJL would render transportation service as is entrusted to a municipal corporation; that the applicant would also like to draw reference to Advance ruling order in the case of Ahmedabad Municipal Transport Service vide order number GUJ/AAR/R/13/2021 dated January 27, 2021 where the facts in the case were similar in hand wherein the applicant had sought an advance ruling on whether the Applicant qualifies to be a 'local authority' and while analyzing the definition of the term 'local authority', the AAR observed the following: "In Agricultural Produce Market Committee Narela, Delhi [(2008) 9 SCC 434] the Apex Court has examined the context in which it has earlier interpreted the words 'other authority' in....
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....both have a direct significance as well as an indirect significance depending on the context; that it has also held that the expression "in relation to" has been interpreted to the words of wisest amplitude. 10.1 The Applicant cited case law-State Waqf Board Vs. Abdul Azeer sahib-AIR 1968 Mad 79. The applicant submits that services which are directly used for providing passenger transportation service or those service without which it is difficult to provide passenger transport service such as security services would be included within the term 'in relation to' and accordingly, would be covered within'; that apart from the above, the applicant wishes to place reliance on the recent Advance Ruling in the case of A. B. Enterprise vide order #GUJ/GAAR/R/2020/18 wherein the Applicant is engaged in supplying manpower for security and housekeeping to the Central Government, State Government and Local Authority and it was upheld in the AAR that these pure services would be eligible for exemption from payment of tax subject to the condition that the services provided to these entities mentioned above are provided by way of any activity in relation to any function entrusted to a Panchaya....
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....vided to a person other than Central Government, State Government or Union territory or local authority; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) Transport of goods or passengers. Central Government, State Government, Union territory or Local authority Any business entity located in the taxable territory. 12. The Applicant submits that under the GST Regime, TDS provisions have been made effective from October 01, 2018; that from a combined perusal of Section 51 of the CGST Act, 2017 read with Notification No. 50/2018-Central Tax dated September 13, 2018, the list of persons required to deduct TDS inter-alia includes local authority; that the applicant merit classification of local authority and therefore required to obtain registration as TDS deductor. 13. The applicant submits that if they do not qualify to be a 'local authority', can they be construed to be a 'government entity'. The term 'government entity' has been defined under Notification 12/2017 dated June 28, 2017 to mean as: "Government Entity" means an authority or a board or any other body including a socie....
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....P model. B. Advance Ruling sought for the following Questions: 1. Whether AJL would be qualified as 'Local Authority' under the Central Goods and Services Tax Act, 2017? 2. Whether AJL is liable to pay GST on procurement of security services received from any person other than body corporate under reverse charge mechanism, considering the exemption granted in sl. no. 3 of Notification No. 12/2017 - Central Tax (Rate) or sl. no. 3 of Notification No.09/2017 - IGST (Rate)? 3. Whether AJL is required to pay GST on advertisement services or the service recipient of AJL is required pay GST under reverse charge mechanism considering Notification no. 13/2017-Central tax (Rate) dated 28-06-2017? 4. Whether AJL is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act? 5. If AJL does not qualify to be local authority under Central Goods and Services Tax Act, 2017 in Part A, can be it construed to be a government entity or a governmental authority? C. Personal Hearing: 15. Shri Hardik Shah C.A. and Shri Rutvij Modi, C.A. appeared on 30-06-21 reiterated the contents of the application. The foll....
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....L has not been notified as local/ municipal funds by any Legislative Act passed by Gujarat legislature or by Gujarat Treasury Rules. Further, we do not find AMC to be the Central Government/ The State Government. We bear in mind that AJL has separate legal existence and is a legal person incorporated with Registrar of Companies with PAN no.AAGCA6478F. AJL is a Private limited Company and when Funds of any nature- be it local funds/ municipal funds or otherwise are granted to AJL, those funds in the hands of AJL become grants/ Revenue for AJL and unless the State Government notifies those grants or revenues now in the hands of AJL as a local/municipal fund, the grants/revenue of AJL does not merit to be termed local/municipal funds any longer . Suppose, (If) we agree with the submission of the applicant that AJL is a local Authority, then indirectly, this Authority is notifying the Revenues/grants in the hands of AJL as local/municipal fund, which is illegal, for the competency to notify rests with the Gujarat State Legislature or vide the Gujarat Treasury Rules to notify the same. The wordings of the statute at Section 2(69) (c) CGST Act, for the definition of Local Authority is cl....
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....efinition as per Section 2(69) (c )CGST Act, enacted by Competent Union Legislature was not existent when the order was passed. In GST era, we find that local authority has to be interpreted and defined as per definition available in the CGST law.We find if apt to refer to CBIC's Sectoral FAQ of Government Services which is reproduced herein as follows: Question 5: Are all local bodies constituted by a State or Central Law regarded as local authorities for the purposes of the GST Acts? Answer: No. The definition of 'local authority' is very specific and means only those bodies which are mentioned as 'local authorities' in clause (69) of section 2 of the CGST Act, 2017. It would not include other bodies which are merely described as a 'local body' by virtue of a local law. For example, State Governments have setup local developmental authorities to undertake developmental works like infrastructure, housing, residential & commercial development, construction of houses, etc. The Governments set up these authorities under the Town and Planning Act. Examples of such developmental authorities are Delhi Development Authority, Ahmedabad Development Authority, Bangalore De....
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....er the Central or a State Act or various companies registered under the Companies Act, 1956/2013 or autonomous institutions set up by the State Acts will not be covered under the definition of 'Government' and therefore, services provided by them will be taxable unless exempted by a notification. 20.2 We therefore find no merit to consider AJL a Government authority/ Government entity. 20.3 We note that the relevant Notifications cited by AJL is relevant for consideration in case the matter involves Central Government/ State Government/local authority/Government entity/ Government authority. Thereby the case laws of Doypack Systems (P.) Ltd; State Waqf Board for meaning of the word 'in relation to' as appearing in the Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28-6-17 is not attracted. They come into picture for reference, if AJL would qualify to be local authority/ government authority/ government entity. For this same reason, case laws of M/s. A. B. Enterprise; Shri Jayesh Anilkumar Dalal; Shri Sumitabha Ray; Sri Roopesh Kumar reliance placed by the applicant are misplaced. In the case law of Advance Ruling in M/s Arihant Dredging Developers Private Limit....
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....t, 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." The applicant is therefore not covered at section 51(1)(d) CGST Act. For Government agencies meaning, we refer to Wikipedia for common meaning of the term, as follows: "government or state agency, sometimes an appointed commission, is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an administration. There is a notable variety of agency types. Although usage differs, a government agency is normally distinct both from a department or ministry, and other types of public body established by government. The functions of an agency are normally executive in character since different types of organizations (such as commissions) are most often constituted in an advisory role-this distinction is often blurred in practice however, it is not allowed. A government agency may be estab....
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.... to different persons which have different constitution and establishment and are different from it in legality and as a person. Further as per law as stipulated in Section 103, CGST Act, Advance Rulings pronounced shall be binding only on the applicant who had sought it in respect of any matter referred to in Section 97(2) CGST Act for Advance Ruling and the concerned officer or the jurisdictional officer in respect of the applicant. The applicant without establishing that its revenues are notified as local/municipal funds by the competent authority cannot make a case by misplaced reliances on other Advance Rulings as per said section 97(2) CGST Act. 22.1 With reference to AAR No. 10/AP/GST/2020 dated May 5, 2020 in the case of M/s.Zigma Global Environ Solutions Private Limited, the service recipient-Tirupati Smart City Corporation Limited (TSCCL) was termed as 'Governmental authority' as it was created by the Government of Andhra Pradesh. With reference to AAR No. 10/AP/GST/2021 dated February 25, 2021 in the case of M/s. Shapoorji Pallonji & Company Private Limited, the applicant was supplying services to to Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) and AA....