AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 1818
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....TS 2.1 The appellant is a registered taxable person and holds GSTIN 30AADC13938D1Z1. The Applicant is engaged in the business of developing City Gas Distribution (CGD) infrastructure to supply Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) to household, commercial and industrial sectors. 2.2 The applicant taxpayer sought through the advance ruling for the purpose of determination of the following questions: "Whether GST on permission charges, reinstatement charges, road cutting charges and ground rent charges levied by Goa PWD authorities is to be paid under reverse charge by IOAGPL in terms of Serial No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28-06-2017?" 3. Appellant's Submission before Advance Ruling Authority as per Order: For sake of clarity, the submissions filed by the appellant/the applicant before the Advance Ruling Authority is summarised hereunder: (i) Section 9(3) of the CGST Act 2017, the government may by way of notification specifies the categories of supply of goods and services on which tax shall be paid on reverse charge basis by the recipient of such goods and services. In this regard, the government has iss....
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....ts are managed and controlled by the Governor and the officers subordinate to Governor of Goa; (ix) CPWD qualifies as 'Central Government' where the administration and functioning is headed by Director General, who is also the Principal Technical Advisor to the Government of India, the Public Works Department established by Government of Goa for developmental activities like planning, design, construction, operation and maintenance of all types of construction works in the State of Goa would qualify in the definition of 'State Government' under GST; (x) Person liable to pay tax on services provided by State Government: In light of Entry number 5 of Notification No. 13/2017-Central Tax (Rate) dated 28 June 2017 (supra), the services supplied by the Central Government, State Government, Union territory or local authority to the business entity located in the taxable territory are liable for payment of GST under reverse charge mechanism. In the instant case, as the PWD authorities are one of the departments of State Government and qualifies in the definition of 'State Government' under GST, the above entry would be applicable; (xi) Therefore, GST on services....
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....upply; (v) On the basis of Notification No.14/2017-CT(Rate) dated 28.06.2017 read with Notification No.16/2018-CT(Rate) dated 26.07.2018, they claim that services by way of any activity in relation to roads and bridges are neither supply of goods nor services as it is a function covered under Article 243G and 243W of the Constitution of India and have accordingly claimed that activity of collecting restoration charges for restoration of roads is an activity carried out by Governments, Local Authorities and Government Authorities as entrusted to it vide Article 243G and Article 243W of the Constitution of India and further claimed that the said activity carried out by Central Government, State Government or local Authority would not be treated as supply of goods or services and outside the purview of "supply" as per GST Act, 2017; (vi) the restoration service is in relation to roads. The said service is by way of activity in relation to function entrusted to Panchayat under Article 243G and to Municipality under Article 243W of the Constitution of India. The said services by way of activity in relation to function entrusted to Panchayat under Article 243G and to Mu....
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....s, to say that their permission for road cutting would be a "service" is absurd. The restoration of the road is in pursuance of the statutory prescription and cannot be treated as a service for the appellant. As per Section 54(1) of the Goa Highways Act, 1974 (earlier Goa, Daman and Diu Highways Act), no person shall wilfully cause or allow any animal or vehicle to cause damage to any highway. Highway is defined in Section 2(i) and declaration of various categories of highways is as per Section 3 of the said Act. Section 54(2) thereof prescribes that the Highway Authority (PWD) shall repair and recover those expenses from the person causing the damage under Section 25 of the Act by various methods prescribed therein including as arrears of land revenue. The permissions to dig the roads and the recovery of the road cutting and restoration charges are formalised in public interest presumably in terms of the above sections of the Goa Highways Act. Consistent with this law, the PWD GOA has put the condition as per Circular No. 3-3-05/SSW-PWD/Vol 1/2020-21/135 issued by the Government of GOA through Principal Chief Engineer & Ex-Officio Addl. Secretary to the Government, that the road t....
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....e Engineering Vs. CCE&ST (2025) 96 CENTAX 191 (Tri-Ahmd.) and CST Vs. Repco Home Finance STA-511 of 2011 LB-2018 are cited; (iv) The activities of the state authorities are not "in course or in furtherance of business" and hence would not be covered under RCM Notification No. 13/2017-Central Tax (Rate). The activities of the Goa PWD are as per the duties bestowed on them as per the Constitution and not commercial in nature. The definition of "business" as in 2(17) does not take within its ambit the statutory and constitutional functions, which are not commercial in nature. In support, CERC Vs. ADG, GSTI (2025) 26 CENTAX 239 (Del) is cited; (v) Without prejudice to the earlier submissions, Ground Rent Charges being in the nature of renting of immovable property are not covered by RCM Notification number 13/2017-Central Tax (Rate) dated 28th June 2017; (vi) Without prejudice to the earlier arguments that these charges are nothing but statutory charges and for activities which are neither a supply of goods or services and not liable for GST, it is submitted that the ground rent charges are liable to be paid on forward charge basis, and not under reverse char....
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....ory of the appeal that the following four charges are collected from the Appellant Viz. Permission Charges, Road Cutting Charges, Reinstatement Charges and Ground Rent Charges. These charges are collected from the Appellant as per the procedure laid down as per the 3-3-05/SSW-PWD/Vol.I/2020-21/135 dated 23/06/2020 for issuing the NOC for laying cables/pipelines etc. In the said Circular at Page 8 it was specifically stated that the estimates would be inclusive of all taxes as applicable in the detailed estimates. However, there was some confusion was prevailing in the PWD Authorities in the facts of this case whether the taxes were payable or not. They were not issuing the NOC when the Appellant was paying the charges made as per the Demand Note net of the GST as the obligation to pay is on them and as the detailed estimates are inclusive of taxes as applicable which were borne by the Appellant (not by the Government). Resultantly, the Appellants were on the one hand paying GST under reverse charge and further paying the charges in the Demand Note which was inclusive of GST. This was an additional burden on them. Hence the Advance Ruling was sought as advised when the Appellant app....
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....ties or transactions of Union Territory Government in which they are engaged as public authority along with the Central, State or Local Authorities in so far as any activity related to a function entrusted to a Municipality under Article 243W of the Constitution at B above should be treated neither as a supply of service nor as a supply of goods. Therefore, whatever activities done by Goa PWD in relation to Municipal or Panchayat Roads are concerned are neither is a supply of service nor a supply of goods. Consequently, there is no obligation flows to the Appellant under Reverse Charge for payment of any GST. (iv) No person can wilfully damage the roads, as per Section 54(1) of the Goa Highways Act. If anyone does so, under Section 54(2) of the said Act the Government repairs the same and recovers the amount from the person damaging the road. Similar provisions exist under Section 36(2) of the Control of Nation Highway (Land and Traffic) Act,2002 with regard to National Highways. Further, under Section 3(2) of the Prevention of Damage to Public Property Act, 1984 any damage to roads attracts 5 years Rigorous Imprisonment. In other words, for any person who is damaging the ....
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....f Section 54(2) of the Goa Highways Act for damaging the road (and not for tolerating such a damage) as pointed out earlier; (viii) The restoration of the road was not a service to the Appellants but to the public at large and therefore fees collected for restoration cannot be treated to be a consideration for providing service to them; (ix) As far as the Ground Rent Charges are concerned, these being specifically a service of rent of immovable property to a business entity there is an exclusion from reverse charge payable under Serial No. 5 of the Notification no 13/2017 dated 28th June 2017. This exclusion stands even as on today despite several amendments to the said notification. Being a specific entry this is more appropriately applicable to the Appellant. DISCUSSION AND FINDINGS 7. We have carefully gone through the impugned Advance Ruling Order dated 30.01.2025, grounds of appeal filed by the appellant, oral and written submissions made by the authorized representative during personal hearing held on 10.07.2025 and other documents/records, as submitted before us during the proceedings. 8. The present appeal before us is against the Order No. GOA/GA....
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....nt have also taken plea that the order is not valid as the same was issued after 90 days' time provided under Section 98(6) of the CGST Act, 2017. 10.1 As regards appellant's contention or plea that AAR order dated 30.01.2025 is issued after 90 days' time limit provided under Section 98(6) of the CGST Act, 2017, it is observed that Section 98(6) of the CGST Act, 2017 mentions: "The Authority shall pronounce its advance ruling in writing within ninety days from the date of receipt of application." This provision mentions a time frame for pronouncement of the ruling but does not prescribe any consequence (such as invalidation or nullity) for failure to meet the time limit. There is no express provision under the CGST Act that declares an advance ruling to be null or void if not pronounced within 90 days. Hence, the nature of Section 98(6) is directory in nature and it is not mandatory provision. 10.2 Here, it is worth to understand the difference between directory vs mandatory provisions. It is a settled legal position that merely usage of words "shall" do not make provisions mandatory. Its context, legislative intent and consequences of failure are major factors....