TaxTMI 
TaxTMI 
2023 (5) TMI 1067
X X X X Extracts X X X X
X X X X Extracts X X X X
.... would also mean a reference to the same provisions under UPSGST Act, 2017 and the vice versa. Brief facts of the case The instant appeal has been preferred against Advance Ruling No. UP ADRG-12/2022 dated 23.09.2022 passed in the case of applicant i.e. M/s Indian Hume Pipe Company Ltd. Gwalior Road, Karari Jhansi, Uttar Pradesh. The Brief facts of the case are as under: 1. The Applicant undertakes contracts for construction of head works sumps, pump rooms, laying jointing of pipe line and commissioning and maintenance of the entire work for water supply projects/sewerage projects/facilities. 2. The Customers of the Applicant include Government bodies/entities/authorities mainly, M/s Utttar Pradesh Jal Nigam for the aforementioned work. 3. M/s Uttar Pradesh Jal Nigam hold PAN AALU0256C under Income Tax Act, 1961 and GSTIN- 09AAALU0256C320 under the Goods and Service Tax Act, 2017. 4. Notification No. 15/2021 Central Tax (Rate) seeks to amend Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017 prescribing the rate of tax on construction services at SI.No. 3 of the table therein, viz- "(iii) composite supply of works contract as defined in clause 119 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....21. (b) If the supplies as per Question 1 are covered by Notification No. 15/2021-Central Tax (Rate) dated 18th November, 2021 read with Notification No. 22/2021-Central Tax (Rate), dated 31.12.2021, then what is the applicable rate of Tax under the Goods and Service Tax Act, 2017 on such supplies made with effect from 01.01.2022; and (c) In case the supplies as per question 1 are not covered by the Notification above, then what is the applicable rate of tax on such supplies under the Goods and Service Tax Act, 2017 with effect from 01.01.2022. 8. The Authority for Advance Ruling in its impugned ruling held as under- (a) The supply of services by the Applicant to M/s Uttar Pradesh Jal Nigam is not covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021 read with Notification No. 22/2021-Central Tax (Rate) dated 31st December, 2021. (b) Not answered as per reply of question above. (c) The applicable rate of tax shall be 18- CGST 9% and SGST 9%. 9.0 The appellant being aggrieved by the aforesaid ruling has preferred an appeal before the Appellate Authority for Advance Ruling as the Authority for advance ruli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the submission already made by the appellant. 11.0 Discussion and Findings We have gone through the submission made by the Appellant and examined the detailed reply submitted by them. We find that as per the scope of work submitted by the Appellant they are engaged in contracts for construction of head works sumps, pump rooms, laying jointing of pipe line and commissioning and maintenance of the entire work for water supply projects/sewerage projects/facilities. They are mainly supplying these services to Government Authorities/Government entities, mainly to M/s Uttar Pradesh Jal Nigam. The Appellant had sought Advance Ruling as to- (a) Whether supply of services by the Appellant to M/s Uttar Pradesh Jal Nigam is covered by Notification No. 15/2021-Central Tax (Rate) dated 18th November, 2021 read with Notification No. 22/2021-Central Tax (Rate), dated 31.12.2021. (b) If the supplies as per Question 1 are covered by Notification No. 15/2021-Central Tax (Rate) dated 18th November, 2021 read with Notification No. 22/2021-Central Tax (Rate), dated 31.12.2021, then what is the applicable rate of Tax under the Goods and Service Tax Act, 2017 on such supplies ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted works contract services supplied to Central Government, State Government, Union Territory and a local authority only, with effect from 01.01.2022. Further, Entry No. 3(iii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 was omitted vide Notification No. 03/2022-Central Tax (Rate) dated 31.07.2022, accordingly, the Authority for Advance Ruling Ruled that question raised by the Appellant has no significance in view of omission of entry no. 3(iii) with effect from 18.07.2022. However, this entry existed prior to 18.07.2022, therefore, the Authority ruled that supply of services by the Appellant provided to M/s Uttar Pradesh Jal Nigam is not covered by Notification No. 15/2021-Central Tax (Rate) dated 18.11.2021 read with Notification No. 22/2021-Central Tax (Rate) dated 31.12.2021. As the services provided by the Appellant not covered under aforementioned Notification the applicable Tax Rate on such supplies shall be 18% with effect from 01.01.2022. 12.0 We have gone through the submission made by the Appellant and arguments made by them in support of their claim. We also find that question raised by the Appellant before the Authority for advance ruling has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t U.P. Jal Nigam was brought into existence to provide for establishment of a corporation, authorities and organization for the development and regulation of water supply and sewerage services and for matters connected therewith. (ii) The Section 3(3) of the UPWSS Act provides that the assessee corporation shall for all purposes be deemed to be a local authority and Section 4 of the UPWSS Act relates to its constitution, according to which it shall consist of a Chairman, to be appointed by the State Government. It also provides that the Members other than the Chairman shall be a Managing Director, a Finance Director, both to be appointed by the Government and secretary to the State Government in the Finance Department (Ex-officio), Secretary to the State Government in the Local Self Government Department (Ex-officio), the Director of Local Bodies, Uttar Pradesh (Ex-officio), the Director of Medical and Health Services U.P. (Ex-officio) and three elected Heads of Local Bodies in the state to be nominated by the State Government. (iii) Section 40(1) of the UPWSS Act provides that the corporation shall have its own fund to be called the Nigam Fund which shall be deem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Port Commissioners shares with 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 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 ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....und. In case of UPJN, there is no local fund entrusted by the Government With UPJN. 14. A perusal of the UPWSS Act, would reveal 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. 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 14.1 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 (supra). The relevant portion of the order is reproduced below- Order dated 22.09.2011 delivered by Hon'ble Justice Devi Prasad Singh- "43. Thus, to hold statutory body as an "authority", 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 cor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the instant case, the assesse 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 duties and functions 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. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfillment of their projects by levying taxes, rates, charges, or fees. This may be in addition to money provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority". 14.2 Although, the aforesaid order in Income Tax Appeal No. 128/2008 denying UP Jal Nigam the status of local author....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e established by the Government of U.P., as such, the second requirement of governmental authority has also been fulfilled in the present case. Moreover, the UPJN is constituted for the development and regulation of water supply and sewerage services in the State of U.P. Under Section 14 of UPWSS Act, UPJN is inter alia entrusted with the function to operate, run, and maintain any water works and sewerage system. As per Article 243W read with Twelfth Schedule of the Constitution of India, water supply for domestic, industrial and commercial purposes and public health, sanitation conservancy and solid waste management is a function of municipality. In view of the above, the requirement that the authority must be established to carry out any function entrusted to a Municipality under article 243 W of the constitution has been fulfilled in the present case. Thus M/s UPJN is a 'Governmental Authority' in our view. 15.0 Now coming to legal provisions under Goods and Service Tax Act, 2017 as amended from time to time we find that Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 was amended vide Notification No.15/2021-Central Tax (Rate) dated November 18, 2021, wh....