TaxTMI 
TaxTMI 
2022 (12) TMI 1288
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....Khurja STPP along with all ancillary works such as development of roads/paths, drain septic Tanks, sewer line, water supply system, external electrification, service connection to building, etc would be covered under Entry 3(iii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. 4. As per the declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending in any proceedings nor decided in any proceedings in the applicant's case under any of the provisions of the CGST Act, 2017/UPGST Act, 2017. 5. The applicant has submitted that- (1) The Applicant is engaged in execution of projects involving laying of cement concrete pipes. (2) The Applicant has been sanctioned a tender by Uttar Pradesh Jal Nigam (for short 'UPJN') vide letter dated 7.10.2021 for execution of works involving construction & design of pumping plant containing prestressed concrete cylinder pipelines (PCCP). (3) The work to be undertaken by the Applicant is intended to supply water to the Khurja Sewerage Treatment Plant Project from the Mundakhera Reservoir. (4) The Applicant would also undertake all ancillary works such as development of....
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....e Hon'ble Supreme Court in the cases of Municipal Corporation of Greater Bombay & Ors. Vs. Indian Oil Corporation Ltd AIR 1991 SC 686 and Triveni Engineering & Industries Limited vs CCE, 2000 (120) E.L.T. 273 (S.C.), which hold that any infrastructure which is permanently attached to the earth, and which cannot be removed without disrupting or causing damage to the system would be treated as an immovable property. A similar finding has been given by the CESTAT, Mumbai in the case of Alfa Laval (India) Ltd. Vs. CCE, Pune, 1998 (99) E.L.T. 649 (Tribunal) wherein it was held that a contract for supply, installation and commissioning of Neutralisation-Washing-cum-Degumming Equipment for Vanaspati Plant would result in existence of an immovable property as it would be permanently attached to earth and the activity did not bring into existence any marketable, movable or excisable goods. On the basis of these judgments and the clarification issued by the CBIC in Circular No. F. No. 154/26/99-CX.4 dated 15.1.20021, the Applicant has been treating the contract for erection and commissioning of pipelines to be in relation to immovable property. (12) Further, as mentioned above, the con....
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....f which is specified in the corresponding entry in column (3) of the Table under the Notification, falling under the Chapter, Section or Heading of the scheme of classification of services as specified in the corresponding entry in column (2) of the said Table. (6) The relevant entry under the Notification No. 11/2017-CT (Rate) reads as under: SL.No. Chapter, Section or Heading Description of Service Rate (%) 3 Heading 9954 (Construction services) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Central Government, State Government, Union territory or a local authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, - - a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); - canal, dam or other irrigation works; - pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. 6 (7) As....
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....L No. (a); (b); (d); (e); (f) and (g). However, it is submitted that UPJN qualifies as a local authority as it is an 'authority which is legally entitled to the control or management of a local fund', thereby falling under SI. No. (c) mentioned above. (14) It is submitted that on 18.6.1975, Uttar Pradesh State legislature passed the UP-Water Supply and Sewerage Act, 1975 (for short 'UPWS Act') for the establishment of a corporation, authorities and organisations for the development and regulation of water supply and sewerage services and for matters connected therewith. (15) The term 'Nigam' has been defined under Section 2 (15) of the UPWS Act as the 'Uttar Pradesh Jal Nigam' (UPJN) which has been established under Section 3 of the UPWS Act. Further, Section 3 categorically states that the Nigam would be a local authority for all purposes. Relevant provisions of the UPWS Act are reproduced hereunder:- 2. Definitions.- In this Act, unless the context otherwise requires- (15) "Nigam" means the Uttar Pradesh Jal Nigam established under Section 3 3. Establishment of the Nigam. - (1) The State Government shall, by notification in the Gazette ....
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....PJN was held to be a local Authority. (21) Reliance is also paced on the decision in the case of UP. Jal Nigam Vs. CIT 2011 (1) TMI 1038- Allahabad High Court. In the said case, Section 3(31) of the General Clauses Act, which defines 'local authority, was discussed. It may be noted that Section 3(31) of the General Clauses Act carries an identical definition of a local authority as given under Section 2(69) of the CGST Act. While interpreting the definition and applying the decision in the case of Union of India Vs. R. C. Jain 1981 (2) TMI 200- SC, the Hon'ble High Court held that UPJN was a 'local authority'. (22) Reliance is also placed on the decision in the case of Newton Kolkata Development Authority 2019 (3) TMI 1740- Authority for Advance Ruling, West Bengal, wherein New Town Kolkata Development Authority was held to be a local authority in terms of Section 2 (69) (c) of the CGST Act, being an authority other than a Municipal Committee, a Zilla Parishad or a District Board that is legally entitled to and entrusted by the State Government with the control and management of a local fund. (23) Similar reasoning was given IN RE: Ahmedabad Municipal Transpor....
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....local authority. (3) no proceedings on the question raised in application is pending or decided under any provisions of the Act. 8. The opportunity of personal hearing was granted on 27.07.2022 which was attended by Shri Kunal Aggarwal,. During personal hearing, the applicant reiterated the submissions made in the application of advance ruling. DISCUSSION AND FINDING 9. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the 'CGST Act'. 10. We have gone through the submissions made by the applicant and have examined the explanation submitted by them. The applicant has ticked following issues in column no. 13 of Form GST ARA-01- (1) Applicability of a notification issued under the provisions of this Act. We find that the issue raised in the appl....
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....S Act provides that the corporation shall have its own fund to be called the Nigam Fund which shall be deemed to be a local fund and to which shall be credited all moneys received otherwise than by way of loans by or on behalf of the corporation. 13. The applicant has submitted that the UPJN is covered in the definition of 'Local Authority'. We find that for answering the question raised by the applicant, it is necessary to examine as to whether Construction & Design Services Division of the Uttar Pradesh Jal Nigam is 'local authority' or 'governmental authority'. 14. The term local authority is defined in S. 2(69) of the CGST Act as follows:- (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; (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any Stale Government with the control or management of a municipal or local fund: (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006)....
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....h any other local authority? First, the authorities must have separate legal existence as Corporate bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. Next, they must be entrusted by Statute with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. etc. Broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to r....
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.... there must be. Perusal of the UPWSS Act reveals that the UPJN is not enjoying appreciable nature of autonomy as discussed below- (1) As per Section 4(1) of the UPWSS Act, the Chairman shall be appointed by the State Government. (2) As per Section 6(3) of the UPWSS Act, the Managing Director and finance director shall hold office on such terms and conditions as the State Government may, by order, specify. (3) As per Section 14 of the UPWSS Act, the UPJN is entrusted (i) to prepare State plans for water supply, sewerage and drainage on the directions of the state government. (ii) to operate, run and maintain any waterworks and sewerage system, if and when directed by the State Government, on such terms and conditions and for such periods as may be specified by the State Government; (iii) such other functions as may be entrusted to the Nigam by the State Government by notification in the Gazette. (4) As per section 46(2) of the UPWSS Act, the UPJN may, from time to time, with the previous sanction of the State Government and subject to the provisions of this Act and to such conditions as the State Government may, by general or special order determine, borrow any sum req....
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....veal that no municipal or local fund has been entrusted by the Government. The fund of UPJN is its own fund and cannot be equated with a fund entrusted by the Government. So for as local fund is concerned as it is not a sound rule of interpretation to seek the meaning of words used in an Act, in the definition clause of other statutes. The definition of an expression in one Act must not be imported into another. Thus, the important requirement in order to qualify as a local authority, viz. control and management of a municipal/local fund is absent in the present case. The applicant has referred to Hon'ble Supreme Court decision in the case of Union of India Vs R,C. Jain 1981 (2) TMI 200-SC, and argued that Hon'ble High Court on the basis of definition given in the judgement has decided that M/s UPJN is a local authority, but this argument is a quite contrary to what the Hon'ble judges have observed. 20. Further, the Hon'ble High Court, Allahabad (Lucknow Bench) in the Income Tax Appeal No. 128/2008 has held that UP Jal Nigam is not a 'local authority. While passing the order, the Hon'ble High Court has discussed various case laws including RC Jain case (su....
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....rity", it shall be necessary that the authority must have 'local fund' which shall be spent for providing civic amenities and also shall have right to generate fund by imposing taxes within the statutory jurisdiction, managed by elected body. Merely because a corporation has local fund, does not mean that it shall be the "local authority" as contemplated under Section 3 (31) of the General Clauses Act. At the cost of repetition, it may be mentioned that in the instant case, the assessee has three wings namely; (i) Jal Nigam Wing; (ii) Nalkoop Wing; and (iii) Construction & Design Wing. In the case of R. C. Jain; AIR 1981 (SC) 951, it was observed that the "local authority" must be entrusted by statute with such governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. Broadly, it may say that they may be entrusted with the performance of civic duties and functions which would otherwise be governmental duties and function.....
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....cation No. 31/2017-Central Tax (Rate) dated October 13, 2017, which amended the Notification No 11/2017 - Central Tax (Rate) dated June 28, 2017, defined Governmental Authority as follows:- "ix. Governmental Authority" means an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90 per cent, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution." 25. Thus, in order to qualify as a governmental authority, such authority must be set up by an act of Parliament/State Legislature, should have 90% or more stake of government, and should carry out any function entrusted to a Municipality under article 243 W of the Constitution of India. 26. As already discussed, the UPJN is a body corporate formed by the State legislature under UPWSS Act enacted by the UP State Legislature. As such, the first requirement of a governmental authority stands fulfilled in the present case. Further, as per Section 3 of the UPWSS Act, UPJN is a body corporate establ....