TaxTMI 
TaxTMI 
2022 (1) TMI 798
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....ant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) On the applicant who had sought it in respect of any matter referred to in subsection (2) of Section 97 for advance ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Go....
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....17 dt28-06-2017or sl no 4 of 12/2017 dt 28-06-2017 5 Bus -stand (others) A) charges for of TV advt. in bus-stand Some times in some months Three years lease 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) locker rent provided in bus-stand B. Notfn No 14/2017 dt28-06-2017or sl no 4 of 12/2017 dt 28-06-2017. (C) flower shop in bus stand in open space C. Notfn/-14/2017 dt28-06-2017(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 D) cycle stand, scooter, auto, four wheeler stand in bus stand and other places D. Notfn 14/2017 dt28-06 2017(or) sl no 4 of 12/2017 dt 28-06-2017 (E) collection of room rent for temporary stay E. Notfn 14/2017 dt28-06-2017(or) sl no 4 of 12/2017 dt 28-06-2017 or Sl no 14 of 12/2017 dated 28-06-2017 6 Slaughter house fees Some times in some months Three years lease Notfn No 14/2017 dt28-06-2017or sl no 56 of Notfn. No 12/2017 dt 28-06-2017. 7 Bunk stalls Three years lease SI No 7 of Notfn No....
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....ervices rendered by them directly are covered under Twelfth Schedule to Article 243W of the Constitution and /or exempted under the Notfn. No mentioned against each SI No. Q2. In respect of services rendered by them from SI No 1 to 13 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 SI No. Q.3. In respect of SI No 14 they are collecting charges for laying of cables alongside roads and collecting road cutting charges as well as annual rent. They require advance ruling whether composite supply can be applied for classifying the said service as renting of immovable property service and reverse charge can be applied for collecting GST as per entry SI No 5A of the table to Notfn No 13/2017 (CE rate) dated 29-06-2017 as amended from the telephone operators who are GSTIN holders Q.4. In respect of SI No 15 w.e.f. 25-01-2018, instead of reverse charge they collected tax under direct charge from the service availers who are registered with GSTIN and whether it can be regularised, (to be treated as technical lapse and condoned since the service rendered by us had....
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....heir room rent/day/person is not exceeding rupees 1000/-. 6 Providing Slaughter house facilities Not a Supply of Service as per Notification. No 14/2017 - CT(R) & dt 28-06-2017 as amended vide Notfn. No. 16/2018 dated 26.07.2018 8 Providing travellers bungalows & rest house This is exempted from tax as per SI. No. 14 of Notification 12/2017 CT(R)- dated 28.06.2017 for the reason that their room rent/day/person is not exceeded rupees 1000/-. 9 Providing Toilet facilities Not a Supply of Service as per Notification. No 14/2017 - CT(R) & dt 28-06-2017 as amended vide Notfn. No. 16/2018 dated 26.07.2018 13 Entry of vehicle in the market Not a Supply of Service as per Notification. No. 14/2017 - CT(R) & dt 28-06-2017 Q2. In respect of services rendered by us from SI No 1 to 13 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 SI 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 ....
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....f the table to Notfn. No 12/2017 dated 28-06-2017. Service of renting of immovable property by the applicant to another Central/State government/Union territory or Local authority alone is exempted from tax as per SI. No. 8 of Notification 12/2017 dated 28.06.2017 and the services of renting of immovable property to other than Central/State Government, Union Territory or Local authority, are not exempted under SI. No. 8 of the table to Notification No. 12/2017- C.T. (Rate) dated 28.06.2017. 5. Based on the above decision, the Appellant has filed the present appeal. The grounds of appeal are paraphrased as follows: 5. GROUNDS OF APPEAL (i) Sl No 6- Slaughter house fees- In the application to the ARA it was pleaded that Services by way of slaughtering of animals is exempted vide entry SI No 56 of the Notfn No 12/2017 dated 29-06- 2017 as amended which reads as follows. 56 Heading 9988 Services by way of slaughtering of animals. Nil NIL Even though AAR in the order has given a ruling that services by way of slaughtering of animals is not a service as per Notfn. No 14/2017 dt. 28.06.2017 it is requested that exemption under SI No 56 of the Notfn No 12/2017....
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....,''including" under (q) of the functions entrusted to Municipality in twelfth schedule to Article 243 W have vide coverage and it could not be restricted to the definition as ordered of the ARA. Hence it, is submitted the looker rent may be declared as an activity covered under Twelfth Schedule to Article 243W of the Constitution and covered under Notfn No. 14/2017 and it may be declared as "not a service". While discussing the following services rendered by the appellant direct lo the public it was declared by the ARA as not a supply of service . It may please be noted that it is not an exemption Notfn/- but a Notfn issued under Section 7 (2) to treat whether the activity undertaken by the local authority is a service or not since it is a function entrusted to a Municipality under article 243 W of the Constitution. When it is not a service it is outside the scope of supply (ie) levy and collection of tax under Section 7. It was already declared /ordered by the ARA that the activity done by the appellant under 243 W is not a service in respect of SI. No. 1 Fee from parks SI. No. 2- Market fee daily SI. No. 3- Market fee -weekly SI. ....
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....g for economic and social development (i) Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. (1) Provision of urban amenities and facilities such as parks, gardens, playgrounds. (b) It has been order by the ARA w. r. [S] No. 2& 3. Market fee daily & Market fee weekly that direct collection by municipal corporation are covered Twelfth Schedule to Article 243W of the Constitution and as per Notification No. 14/2017 Central Tax (Rate) New Delhi, the 28th June, 2017 the services by way of any activity in relation to a function entrusted to a Municipality under article 243 W of the Constitution is not a service. Hence both the services are not chargeable to tax. The same ruling will apply to tender contractors also . It is submitted that exclusion from service was granted to the activity and not to the person (ie) whether it is done by X or Y or by the appellant it is outside the scope of service . When the activity is out the scope of service there is no need examine the details of the activity receiver (tender contractors) and the consideration towards the activity (tender money). Hence the above activi....
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....sted to a municipality under article 243W of the Constitution is not a service. Hence the service is not chargeable to Tax. The same ruling will apply to tender contractors also . It may please be noted exemption is granted to the activity and not to the person (ie) whether it is done by X or Y or by the appellant it is outside the scope of service. When the activity is out the scope of service there is no need examine the details of the activity receiver (tender contractors) and the consideration towards the activity (tender money) Hence the above activity may be declared as not a service but an activity in relation to a function of Municipality under article 243W of the Constitution and covered under Notfn No 14/2017CT (Rate) dt 28 06 2017 as well as the relevant GO of TNGST Act, 2017.lt is submitted that it is not a taxable service due to the following reasons. As per the Tamil Nadu District MunicipaliIes Act, 1920 as detailed in para C above 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 terme....
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.... amount paid by the contractor to Govt. towards rendering of work entrusted under Section 374 and other provisions of the Tamil Nadu District Municipality's 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 activity is 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; C) flower shop in the bus stand 4x4 in open space in various places of bus stand and in RC buildings flower shop is covered under (i) of Twelfth Schedule to Twelfth Schedule to Article 243 W of the Constitution which read as follows : (i) Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. It is also covered under the functions entrusted to a Panchayat under the Eleventh Schedule to Article 243G of the Constitution are as under : (I) Agriculture, including agricultural extension. ....
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....to tax. When it is out side the scope of service there is no need to examine who is the service availer and consideration received etc. When it is not a service the same contention of the Notfn. is applicable to tender contractors also due to the following reasons. As per the Tamil Nadu District Municipalities Act, 1920 as detailed in para C above 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 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 ser....
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....reet lighting, parking lots, bus stops and public conveniences. As per Notification No. 14/2017-Central tax (Rate) New Delhi, the 28^th June, 2017 "Services by way of any activity in relation to a function entrusted to a 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. While discussing the services rendered by the appellant direct to the public it was declared by the ARA as not a supply of service. It may please be noted that it is not an exemption Notfn/ but a Notfn issued under Section 7 (2) to treat whether the activity undertaken by the local authority is a service or not since it is a function entrusted to a Municipality under article 243W of the Constitution. When it is not a service it is outside the scope of supply (ie) levy and collection of tax under Section 7. It was already declared /ordered by the ARA that the activity done by the appellant under 243 W is not a service in respect, 'Fees on pay & use toilets'. When the above activities were declared ' not a service' under Notfn No 14/2017 then there is no necessity to go into the detail....
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.... df 28-06-2017 it was requested that the exemption under SI No 76 of the Notfn No 12/2017 dated 29-06 2017 may also be considered and extended. It may please be noted that exemption is granted to the service and not to the person. (ie) whether it is done by the Municipality to the tender contractors or by any other person to any body and whatever may be the consideration it is fully exempted unconditionally and hence exemption has to be granted to the appellant in respect of the tender contractors 10. Avenue receipts, enjoyments of fruits of the trees in high ways of particular urea. The functions entrusted to a Panchayat under the Eleventh Schedule to Article 243G of the Constitution arc as under : (i) Agriculture, including agricultural extension. (ii) Land improvement, implementation of land reforms, land consolidation and soil conservation. (iii) Minor irrigation, water management and watershed development. (iv) Animal husbandry, dairying and poultry. (v) Fisheries. (vi) Social forestry and farm forestry. (vii) Minor forest produce. (viii) Small scale industries, including food processing industries. ....
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.... and not to the person, (ie) whether it is done by the Municipality to the tender contractors or by any other person to any body and whatever may be the consideration it is fully exempted unconditionally and hence exemption has to be granted to the appellant in respect of the tender contractors 11. Right to fishing in bond- Enjoyments of right - fishing in a particular bond. i) Three years tender contracts by tender notice for the purpose of right to fishing (a) Service provider is the municipal corporation. (b) Service availer is the tender contractor who succeeded in the tender process (c) Service is right to take fish in a particular bond as per the prescribed conditions of tender. (d) consideration is the amount determined and confirmed in the tender process. It may please be noted that exemption is granted to the service and not to the person, (ie) whether it is done by the Municipality to the tender contractors or by any other person to any body and whatever may be the consideration it is fully exempted unconditionally and hence exemption has to be granted to the appellant in respect of the tender contractors 12. Running a fish ....
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....nicipal 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 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 (ic) in this case Govt. and public servant and amount paid by the contractor to Govt . towards rendering of work entrusted under Section 373 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 activity is 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. Question No 3. 14. Annual track rent -Cable operator laying fee (optical fibre laying f....
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....s renting and supplementary supply is road cutting in view of the above the contention of the appellant, that, composite supply has to be adopted for road cutting charges may be accepted. 6. PERSONAL HEARING: The Appellant was granted personal hearing through Virtual Personal Hearing as required under law before this Appellate Authority on 23-09-2021. The Authorized representatives of the Appellant Tvl. K. Sankaranarayanan , Advocate of the appellant company appeared for hearing. They reiterated the written submissions and emphasized that 1. In addition to the grounds of appeal submitted with the paper book documents the following grounds are submitted and the same was also requested to be taken on records as written submissions for the virtual hearing to be held on 23 09-2021. 2. During the service tax period prior to 01-07-2017, show cause notice C.NO.V/15/48/2018 ST Adj.; SCN SI No 06/2018 Comr. dated 24-10 2018 (Annexure A attached) was issued by the Commissioner of Central Tax , Salem to Erode City Municipal Corporation (the appellant).in para 6 to 8 in page number 2 to 4 of the show cause notice, Commissioner discussed various provisions of THE TAMIL NADU DISTRICT....
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....aken into consideration and it is submitted that the ratio of the decisions is also applicable to the present appeal. (i) 2018 (364) E.L.T. 768 (Sett. Comm.) BEFORE THE SETTLEMENT COMMISSION, CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, CHENNAl|ADDITIONAL BENCH]S/Shri C. Rajendiran, Vice-Chairman and R.D. Negi, Member IN RE : COMMISSIONER, MAHAEOODNAGAR MUNICIPALITY, TELANGANA Final Order No. 3/2018 S.T., dated 10-1-2018 in Application No. S.A. (S.T.) 51/2017 SC] wherein it was decided that Service Tax liability of market fees collected from contractors and slaughter house fee charges collected from contractors were not chargeable. (ii) 2019 (28) G.S.T.L. 198 (Cal.) IN THE HIGH COURT AT CALCUTTA Protik Prakash Bannerjee, J.PIONEER COOPERATIVE CAR PARKING SERVICING AND CONSTRUCTION SOCIETY LTD .Versus STATE OF WEST BENGAL W.P. No. 9625 (W) of 2019, decided on 30.05.2019 wherein it has been decided that Parking services Municipal Parking lots under Kolkata Municipal Corporation - Parking fees collected by a Cooperative Car Parking Servicing and Construction Society Ltd. for providing Municipal Parking lots, prima facie, not liable to GST as Municipal Corporation is also....
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....3 G/W of the Constitution d. The LA has ruled that road cutting charges is one time supply; the rental charges are periodical; Both the supply are not in conjunction with earn other in the ordinary course of business and therefore the same is not a composite supply The above are taken up for consideration and ruling as under. 8.1 In respect of Q1 (SI. No. 6 and 9), the AAR has given a ruling that services by way of slaughtering of animals / fees on pay & use toilets is neither a supply of goods nor a supply of service as per notfn. No. 14/2017-CT(R) as amended by notfn. No. 16/2018-CT(R) being an activity in relation to a function entrusted to a Municipality under Article 243W of the constitution, in which they are engaged as public authority. However, the appellant is not satisfied and has sought to appeal seeking another ruling from the appellate authorities that the activity is also covered under Sl no. 56 /76 of the table in notfn. No. 12/2017-CT(R). The very terms of reference for AAR as per S.93(a) is to provide a ruling for an applicant, in relation to a supply being or proposed to be undertaken by the applicant only (emphasis supplied). The Erode City Municip....
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....rporation but by the tender contractors (Q2), the appellant is aggrieved of the fact that the AAR had answered in negative for exemption and hence the appeal. The argument of the counsel for the municipal corporations is that section. 7(2)(b) allows the government, on the recommendation of the council, to notify such activities of transactions undertaken by the central government, state government or any local authority in which they are engaged as public authorities, to be treated neither a supply goods nor a supply of services. In pursuance of this, the government has notified in notification 14/2017, that services by way of any activity in relation to a function entrusted to a Panchayat under article 243W of the Constitution or to a municipality under article 243W of the Constitution shall be treated neither as supply of goods or a supply of service. In the present case, there are three parties, namely the corporation, the contractor and the public/consumer. The corporation enters into a contract, with the contractor, requiring the contractor to provide to the public, a service which constitutes an activity covered under the above notification. This arrangement results in two....
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....ppear to render back to back services to the municipal corporation. Needless to say, this exemption will not apply if the contractor has performed an activity that only has an indirect connection with the functions entrusted or if the activity is only an incidental component of a more comprehensive supply of other services. Clearly, the transaction between the corporation and the contractor is an activity/transaction undertaken by the local authority, engaged as public authority. The requirement explicitly stated in section 7(2)(b) are met. Further, in as much as this transaction/activity undertaken by the corporation is an activity covered under the above notification, this transaction/activity under sl. No. 1 to 9 and 13 ('except. SI.No. 5A Charges for TV advt. in Bus Stand; 5C- Flower shop in bus stand in open space & SI.No. 7-Bunk Stall') listed by the AAR as neither a supply of goods nor a supply of service are available to contractors also provided the same are rendered as hack to back services to the appellant. 9.2 With respect, to operation of flower shops by contractors, Bunk Stalls by contractors as well as advertisement rent through TVs installed in the bus....