TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 1135
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....ollowing question for advance ruling in the application for Advance Ruling filed by it. "Whether various activities carried out by the appellant to the plot holders in terms of provisions of GIDC Act, 1962 and charges collected for the same as may be notified from time to time amounts to supply under Section 7 of the CGST Act, 2017?" 4. The appellant has submitted that they were established under the provisions of Gujarat Industrial Development Act, 1962 (hereinafter referred as GID Act) by the Gujarat Government for the purpose of orderly establishment and organization of industries in industrial areas and estates as well as establishing commercial centers in connection with the establishment and organization of such industries in the State of Gujarat. Referring to various provisions and sections of CGST Act, 2017, GID Act, the appellant submitted that their activity in question is not to be considered as supply under Section 7 of CGST Act as the same does not fall under the definition of business under Section 2(17) of CGST Act, 2017. The appellant also submitted that as per their interpretation of law, their activities are exempted by the virtue of Sr.No. 04 of the Notificati....
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....appellant has filed the present appeal. 7. The appellant in the ground of appeal has submitted that GAAR rejected all the arguments of appellant without giving any reasons and also failed to understand that both the nature of activity and identity of provider plays equal role in determination of supply. The appellant referring to case laws of Cyril Lasardo (Dead) Vs Juliana Maria Lasardo 2004 (7) SCC 431 and Asst. Commissioner, Commercial Tax Department Vs Shukla & Brothers [2010 (254) ELT 6 (SC)], submitted that ruling of GAAR being non-speaking, is liable to set aside. 8. The appellant has submitted that as per Section 7(1)(a) of CGST Act, 2017, all forms of supply of goods or services or both should be in course of furtherance of business. The phrase 'furtherance of business' is not defined under CGST Act, 2017 but the term 'business' is defined under Section 2(17) of CGST Act. To determine whether the facilities provided by the appellant to the plot holders amounts to business in terms of Section 2(17) of the CGST Act, it is essential to understand the object and purpose for which appellant is established by the State of Gujarat. The appellant submitted that they have been es....
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....on the above case laws submitted that their activity is not in furtherance of business and the same is not supply under section 7 of CGST Act, 2017. 10. The appellant referred to case of CCE Vs Maharashtra Industrial Development Corporation reported at 2017-TIOL-2629-HC-MUM-ST, the Bombay High Court relying upon the circular No. 89/7/2006 dated 18.12.2006 and on the case of Shri Ramtanu Cooperative Housing Society Ltd held that no service tax is payable on service charges recovered by MIDC as MIDC is a statutory corporation discharging its sovereign function. The appellant also referred to CESTAT's order in case of Karnataka Industrial Area Development Board Vs CCT [2020 (6) TMI 227-CESTAT, Banglore] wherein it was held that Karnataka Industrial Area Development Board is not liable to pay service tax on their statutory activities performed under the act. The appellant submitted that GAAR has wrongly based its reasoning on only one interpretation that appellant falls under the category of state government, the activities carried out by them amounts to supply under Section 7 of CGST Act, 2017 and liable to GST without considering the nature of activities carried out by them. 11. Th....
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.... and State Government shall appoint one of the Directors to be Chairman and one of other Directors as Vice-Chairman; Under Section 12(1) of GID Act, State Government shall appoint a Managing Director (signing authority) and a Chief Accounts Officer of the appellant. The appellant further submitted that powers like demarcation/withdrawal of notified area, issuance of specific direction of policy, control over reserve and other specially denominated funds, approval of program of work, conduction of audit of the account of appellant, dissolution of the appellant etc vested with State Government under various provisions/sections of GID Act and hence State Government controls the function of the appellant either directly or indirectly. 13. The appellant submitted that as per section 3 and 13 of GID Act, they have been established for securing and assisting in the rapid and orderly establishment and organization of industries in industrial areas/estates in order to increase number of industries and upon conjoint reading with Article 243W of constitution of India, it is clear that appellant has to prepare and execute plans for economic development as it is directly proportional to growth....
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...., State Government can appoint the local authority who have all the powers for collection of tax and to provide other civil amenities. The appellant further submitted that from the combined reading of Notification No. 14/2017 - Central Tax (Rate) and Section 7(2) of CGST Act, 2017, it is clear that if the activity of a local authority is any function entrusted to it under Article 243W (which also refers to Schedule XII) then exemption can be claimed by such local authority. The appellant submitted that their activity can be covered under Sr.No. 2, 3 and 17 of Schedule XII which reads as "2. Regulation of land-use and construction of buildings, 3. Planning for economic and social development and 17. Public amenities including street lighting parking lots, bus stops and public conveniences." and hence they are eligible for exemption from payment of GST. 17. During the course of personal hearing held on 22.03.2022, the appellant reiterated the submissions made in the appeal dated 04.12.2020. 18. Time limit for filing appeal 18.1 The impugned Ruling has been passed by the GAAR on 17.09.2020. In the Form GST ARA-02 regarding Appeal to the Appellate Authority for Advance Ruling....
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....rms of GID Act, and charges collected for the same amounts to supply under CGST Act, 2017, we need to refer to definition of supply as per CGST Act, 2017: "7(1) For the purposes of this Act, the expression "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by t....
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...., 2017. Further, provision (i) which states any activity or transaction undertaken by Central Government, State Government or local authorities in which they are engaged as public authorities. The appellant while referring to various provisions and sections of GID Act submitted that for determination whether their activities amounts to business as per CGST Act, 2017, understanding the object and purpose for which the appellant is established by State of Gujarat is essential and that Gujarat Government is in control the function of the appellant directly or indirectly. We are of view that the words 'object' and 'purpose' are neither directly nor indirectly related to the definition of business provided in CGST Act, 2017. Further, provision (i) of Section 2(17) defines the activity or transaction related to Central/State Government or public authority as business. The activities in which the appellant is engaged are undertaken as public authority, therefore clause (i) of section 2(17) of CGST Act, 2017 covers the activities of the appellant. The provisions of sections 7(1) and 7(1A) of CGST Act, 2017 read with clause (i) of section 2(17) of CGST Act, 2017 indicates that the activiti....
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....ellant's contention. Further we are of view that when it is established beyond doubt that the activity of the appellant amounts to business, the question of invocation of clause (b) of section 2(17) of CGST Act, 2017 losses its relevance. 27. Whether the appellant is eligible to claim exemption under Sr.No.4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended), we need to refer to the abovementioned entry of said notification: Sr.No. Type of activities Classification Rate of GST Condition 4. Services by Central Government, State Government, Union territory, local authorities or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the constitution Chapter 99 Nil Nil The above notification was amended vide Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018 (effective from 27.07.2018) which reads as under: Sr.No. Type of activities Classification Rate of GST Condition 4. Services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the constitution Chapter 99 Nil Nil It is clear that a....
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....notify any area as 'notified area' and to withdraw the same respectively. Section 25 of GID Act states that the appellant has to prepare and submit annual financial statement (budget) and program of work for the succeeding financial year to the State Government for approval. Section 27 of GID Act empowers State Government to conduct concurrent and specific audit of the accounts of the appellant. Section 48 of GID Act empowers State Government to dissolve the appellant if the State Government is satisfied that the purpose of the appellant is substantially achieved. From the foregoing, it is amply clear that the appellant is wholly owned corporation of the State Government and the State Government controls the function of appellant directly or indirectly. Thus, we are of the view that the second condition which is "90% or more participation of Government, by way of equity or control" is fulfilled by the appellant. 29. To examine whether the appellant fulfills third condition, to carry out function entrusted to a municipality under Article 243W of the Constitution, we refer to Article 243W of the Constitution of India: "243W. Powers, authority and responsibilities of Municipalities....
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....industries in industrial area and estates in order to increase the number of industries established in the state of Gujarat. The appellant submitted that their activity falls under the entry at Sr.No. 3 of XII Schedule which reads as "planning for economic and social development" as growth in the number of industries is directly proportional to economic development. Economic development is different from economic growth; whereas economic development is policy intervention aiming to improve the well-being of people, economic growth is a phenomenon of market productivity and increased GDP. Economic development is broadly based and sustainable increase in the overall standard of living for individuals within a community. Further, in view and furtherance of above, it can be stated that activities viz. upliftment of oppressed people by providing them proper shelters, easy loans for business, encouraging their children for study by providing them scholarships etc are covered in "planning for economic and social development". We are of view that the activity of appellant i.e. establishment, organization and development of industries and industrial areas and estates is not at all related t....
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....nment Entity'. To the above extent we disagree with the findings of GAAR which concluded that GIDC falls under the category of 'State Government'. 33. In view of forgoing discussion, we hold that the appellant is not eligible to claim exemption under Sr.No.4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended) as they are not a governmental authority carrying out function entrusted to a municipality under article 243 W of the Constitution. 34. The appellant in their additional submissions have submitted that they are eligible for exemption under the provisions of Notification No. 14/2017-Central Tax (Rate) dated 28.06.2017 as amended. The said notification is reproduced below: Government of India Ministry of Finance (Department of Revenue) Notification No. 14/2017-Central Tax (Rate) New Delhi, the 28th June, 2017 G.S.R......(E).- 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 following activities or transactions undertaken by the Central Government State Government [or Union territo....