TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 188
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.... clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression "GST Act" would mean the CGST Act and the WBGST Act both. 1.2 The applicant, Food Corporation of India (hereinafter referred to as "FCI"), is a Public Sector Undertaking established under the Food Corporations Act, 1964 and functioning under the Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution, Government of India. FCI is the principal agency of the Government of India entrusted with procurement, storage, movement and distribution of foodgrains under the Public Distribution System and other welfare schemes, with the objective of ensuring food security, maintaining buffer stock and stabilising prices in ....
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.... The economic cost of procurement, storage and distribution is reimbursed by the Government of India in the form of food subsidy. Therefore, FCI performs sovereign and welfare functions of the State in furtherance of food security and public distribution system, which are functions relatable to Article 243G and Article 243W of the Constitution of India. 2.3 The Applicant submits that FCI, for carrying out its statutory functions, avails various input services such as loading, unloading and packing of food grains, storage and warehousing services, transportation services, commission agent services, milling services, manpower services, security services, IT services, repair and maintenance services, telecommunication services and other allied services. Certain services such as loading, unloading, packing, storage and transportation of food grains are treated as exempt services. Other services such as security services, manpower services, renting of immovable property and similar services are treated as taxable and GST is paid either under forward charge or reverse charge mechanism. 2.4 The Applicant submits that security services were procured by FCI, West Bengal Region from M/....
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....transaction audit for FY 2019-20 of FCI, West Bengal Region, raised an audit objection observing that FCI, being a Government entity, is entitled to exemption from GST on procurement of security services under entry no. 3 of Notification No. 12/2017-Central Tax (Rate). The audit objection has created ambiguity regarding the taxability of such services which were earlier treated as taxable. 2.10 The Applicant submits that "pure services" mean supplies where there is no transfer of property in goods and no works contract involved. Security services rendered by the contractor involve deployment of manpower for guarding premises and do not involve supply of goods. Hence, such services satisfy the definition of pure services as envisaged under the exemption notification. 2.11 The Applicant submits that the three essential conditions for availing exemption under entry no. 3 of Notification No. 12/2017-Central Tax (Rate) are fulfilled in the present case, namely: I. the services are pure services; II. the recipient is a Government entity; and III. the services are provided in relation to functions entrusted under Article 243G or 243W of the Constitution. ....
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.... classifiable under SAC 9985 and are taxable at the rate of 18 percent in terms of Sl. No. 23(iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. It has been clarified that such services were taxable under forward charge from 01.07.2017 to 31.12.2018 and thereafter under reverse charge mechanism in terms of Sl. No. 14 of Notification No. 13/2017-Central Tax (Rate), as amended. 3.4 The Revenue has examined the applicability of Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate), which exempts pure services provided in relation to functions entrusted under Articles 243G and 243W. It has been observed that exemption was available to Government Entities with effect from 25.01.2018 upon amendment of the notification. However, with effect from 01.01.2022, the expressions "Governmental Authority" and "Government Entity" were omitted from the said entry, and consequently pure services provided to such entities became taxable. 3.5 The Revenue has concluded that: I. For the period 01.07.2017 to 24.01.2018, security services supplied to FCI were taxable under forward charge. II. For the period from 25.01.2018 to 31.12.2021, security services supp....
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....zf) of Paragraph 2 of Notification No. 12/2017-Central Tax (Rate) Dated 28.06.2017 and revised clause (zf) vide Notification No. 32/2017-Central Tax (Rate) Dated 13.10.2017. The primary objective of the FCI is procurement, storage and distribution of food grains for the requirement of Public Distribution System. The said service is provided by FCI in relation to discharge of functions covered under serial no. 28 of Article 243G of the Constitution of India. Accordingly the applicant believes that the security services provided to FCI is exempt from GST in line with the provisions of Notification No. 12/2017 ibid. 4.5 The Revenue has given his submission in details. The Revenue has distinguished between the concepts of Governmental Authority and Government Entity as provided in Notification 12/2017 Dated 28.06.2017 and opined as under: 'Food Corporation of India (FCI) was established in 1965 under the Food Corporations Act, 1964, an Act of Parliament, with the mandate to ensure food security through procurement, storage, movement and distribution of foodgrains on behalf of the Government of India [under the Ministry of Consumer Affairs, Food and Public Distribution (CA, ....
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....fication No. 12/2017-Central Tax (Rate) vide Notification No. 16/2021-Central Tax (Rate) dated 18.11.2021. Consequently, with effect from 01.01.2022, pure services (excluding works contract services or other composite supplies involving supply of goods) provided by way of any activity in relation to functions entrusted under Article 243G or Article 243W of the Constitution to a Governmental Authority or a Government Entity became taxable. Revenue has examined the applicability of Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate), which exempts pure services provided in relation to functions entrusted under Articles 243G and 243W. It has been observed that exemption was available to Government Entities with effect from 25.01.2018 upon amendment of the notification. However, with effect from 01.01.2022, the expressions "Governmental Authority" and "Government Entity" were omitted from the said entry, and consequently pure services provided to such entities became taxable. The Revenue has concluded that: I. For the period 01.07.2017 to 24.01.2018, security services supplied to FCI were taxable under forward charge. II. For the period from 25.01.2018 to 3....
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....n-conventional energy sources. 16. Poverty alleviation programme. 17. Education, including primary and secondary schools. 18. Technical training and vocational education. 19. Adult and non-formal education. 20. Libraries. 21. Cultural activities. 22. Markets and fairs. 23. Health and sanitation, including hospitals, primary health centres and dispensaries. 24. Family welfare. 25. Women and child development. 26. Social welfare, including welfare of the handicapped and mentally retarded. 27. Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. 28. Public distribution system. 29. Maintenance of community assets. Article 243W: This Article of the Constitution of India reads as under: Powers, authority and responsibilities of Municipalities, etc. - Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow - (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may c....
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....6/2021-Central Tax (Rate) Dated 18.11.2021 and operative with effect from 01.01.2022. Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent) Condition 3 Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority 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. Nil Nil 4.8 The question placed before us has two limbs. First, whether the security services provided by the security agencies to FCI, West Bengal region, qualify as 'pure services' provided to a Government Entity in relation to functions entrusted under Article 243G/ 243W of the Constitution of India. The second limb is whether such services are exempt from GST under Notification No. 12/2017-Central Tax (Rate) Dated 28.06.2017, as amended. According to the facts submitted before us, M/S Bengal Protective Guards (here the service p....
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....r obtains the minimum price that may be announced from time to time and to protect the consumer from the vagaries of speculative trade. 2. The setting up of the Food Corporation of India, as provided for in this Bill, will, therefore, be one of the essential and important steps in the implementation of Government's food policy. The Corporation will be the first organised attempt to take up State trading in foodstuffs on an appreciable scale The Agency will also be used to build up gradually buffer stocks. 3. The Corporation will engage itself primarily in the purchase, storage, movement, distribution and sale of foodgrains.' Going through the provisions of Section 5, 6 and 7 of the Food Corporation Act, 1964, the control of the Central Government over the capital, management and administration of the Corporation can be understood properly. We are reproducing the relevant portions of the provisions. 5. Capital of Corporation. (1) The original capital of the Corporation shall be such sum not exceeding one hundred crores of rupees as the Central Government may fix. (2) The Central Government may from time to time increase the capital....
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.... Municipality under article 243W of the Constitution or to a Panchayat under article 243G of the Constitution; If we carefully examine the above definition and compare it with the definition of Government Entity, we find that the only difference between the two lies in the scope of functions to be carried out by the referred body. The scope of function of Governmental Authority is restricted to any function entrusted to a Municipality or to a Panchayat under Article 243W and 243G respectively. The scope of function of a Government Entity, on the other hand, is restricted to a function entrusted by the Central Government, State Government, Union Territory or a local authority. Here we must keep in mind that FCI itself does not carry out the functions of PDS directly. That function is entrusted with the fair price shops under the control of the state governments. As we have already discussed in Paragraph 4.8, FCI is meant for maintaining effective support operations for safeguarding the interests of the farmers, carrying out distribution of food grains throughout the country for PDS and for maintaining satisfactory level of operational and buffer stocks of food grains to ensure....
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....hout the country for PDS. If we carefully look at the description column of serial no. 3 of the table in Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017, as amended, we must appreciate that the scope of the pure services referred to in this serial has been widened by the phrase 'by way of any activity in relation to any function........' Not only the specific functions entrusted to a Panchayat or a Municipality under Article 243G and 243W respectively are covered by the said entry, but any activity which is incidental or ancillary to the specific functions are also covered so long as they are in relation to those specific functions. Security services is essential for safeguarding the food grains and foodstuffs stored for the purpose of PDS in the depots of FCI and the records related to PDS maintained in the offices of FCI. In our considered view, FCI is a Government Entity and security services provided to FCI is a pure service and it is an activity in relation to serial no. 28 of the Eleventh Schedule to Article 243G. 4.11 Now we come to the second limb of the question i.e. whether such security services provided to FCI being a Government Authority are ex....