TaxTMI 
TaxTMI 
2022 (7) TMI 504
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.... referred to CGST Act and APGST Act respectively) by M/s. Andhra Pradesh Medical Services and Infrastructure Development Corporation (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: 3.1 The Andhra Pradesh Health & Medical Housing & Infrastructure Development Corporation (APHMHIDC), which was renamed as Andhra Pradesh Medical Services & Infrastructure Development Corporation is registered under Public Society Act 1350 in the year 1987 and established vide G.O.Ms.No.309, HM&FW (F1) Dt.22.05.1987 under the administrative control of Health Medical and Family Welfare Department. 3.2 The Government vide G.O.Rt.No.672, HM & FW (M1) Dept., Dt.20.05.1998 has notified the APHMHIDC as a nodal agency for procurement of medicines and subsequently the Government vide G.O.Ms.No.78, HM & FW (M2) Dept., Dt.24.02.2001 has entrusted the job of procurement of equipment to the Corporation. Further, the Government vide G.O.Ms.No.99, HM&FW (M2) Dept., 05.05.2010 have entrusted the sanitation services to APMSIDC with a request to select the implementing agencies for each District adopting an open and transparent tender pro....
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....of the Vice Chairman and Managing Director of the Corporation. 3.7 The operational structure of the organization: • The organisation functions as a nodal agency to the Government of Andhra Pradesh and it has no budgetary support. • As per G.O.Rt 672 dated 20-5-1998 and G.O.Rt 1357 dated 19-10-2009, the acquisition and distribution of drugs was undertaken by the organisation and the Government had agreed to pay 2% on such works undertaken as establishment charges. • As per G.O.Rt 672 dated 20-5-1998 and other procurement procedures issued by the government on 13-01-2016, the organization started procurement of equipment and distribution of the same to Hospitals and PHCs on which government had agreed to pay 2% on such executed works. • All the receipts received from the Government were only to meet establishment expenses of the organization and the surplus left over after meeting the said expenses were not distributed to any person and they were used to meet future expenses. • The Government of Andhra Pradesh had stipulated to pay some margin on works undertaken by the organization to meet its employee cost and othe....
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....ue, for which the Advance Ruling sought by the applicant. 5. Applicant's Interpretation of Law: 5.1 APMSIDC is a Society, which was established in pursuance to a G.O issued by the State Government of Andhra Pradesh to discharge one of the functions entrusted to panchayat i.e., public health. 100°/o of the equity and control are held by the Government of Andhra Pradesh alone. The total management is overseen by the Board of Directors who are all nominated by the Government of Andhra Pradesh. Thus, Corporation qualifies for the definition of "Government Entity/Government authority' as provided in Notification 12/2017 Central tax (rate). 5.2 The applicant submits that all the services provided by the corporation are in relation to public health. Public health is one of the items enumerated under entry No: 26 of the Eleventh Schedule of the Constitution of India falling under the Article 243G, which is as under. The following activities are covered under Eleventh Schedule 1. Agriculture including agricultural expansion 2. Land improvement, implementation of land reforms, land consolidation and soil conservation 3. Animal Husbandry, ....
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....s involving the supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Government 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 the Constitution" is exempt from GST. 5.5 Finally, the applicant submits that on account of the following reasons, the establishment charges received by the Corporation are eligible for exemption under entry 3 or 3A of Notification no: 12/2017 Central tax (Rate) a. Corporation is a government entity b. Services rendered are only 'pure services' c. Services are rendered to the State Government. d. The activity is coordinating and monitoring the distribution of Drugs, surgical equipment etc., which is an activity in relation to a function entrusted under article 243G of Constitution of India. In order to get a clarification on the stand being taken by APMSIDC on the taxability of incomes received, they approached the Authority for Advance Ruling. 6. Virtual Hearing:....
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....hat the purchase/procurement of the medicines is done under the purview of the GST Act, abiding by the provisions of the Act. Moreover, the applicant in his submission assigns certain attributes/features to the transaction in question, which are listed as under: * The procurement is done by the organization on 'no profit/ no loss basis'. * There are also no commercial interest involved in delivery of the drugs and equipment * The Government will reimburse the actual amounts incurred by APMSIDC on procurement. * There is no value addition in the hands of APMSIDC * There is no intent to undertake the business in the supplies made by it. The above attributes/features alone cannot pull the transaction out of the purview of the concept of 'business.' Business is defined as under: Section 2 (17) -business includes -- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; By the above definition it is evident that for a transaction/activity to be qualified under 'business', it need not be for a pe....
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....upplied to a Governmental Authority or Government Entity. Thus, services mentioned in Serial No. 3 and 3A provided to Governmental authority and Government Entity shall no longer be exempt from January 1, 2022 and shall attract GST as applicable under Services Rate Notification." Before going into the nitty-gritty of the different aspects of the transaction such as, whether it is provided to governmental authority/entity/ or State Government itself, or whether the activity falls under 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 the Constitution, etc., we examine the nature of the activity, primarily, whether as per entry 3, the services shall essentially be 'Pure Services', or not to be claimed under exemption. The applicant claims that corporation does not incur any profit or loss on any of the commodities and hence the remuneration earned by Corporation is for the pure services alone. But, as a matter of fact, the applicant undertakes the procurement of drugs, surgical equipment, etc, and raises an invoice in the name of MD, APMSIDC. In addition to the abov....