TMI Blog2021 (1) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... een from the website of the applicant that the Managing Director as well as the Joint Managing Director are officers from the cadre of Indian Administrative Service(IAS) whereas the Executive Director is an officer belonging to the cadre of Gujarat Administrative Service (GAS). Also, on going through the various sections of the GID Act mentioned hereinabove, it appears that the said Corporation is totally governed by the State Government and functions just like any other Department of the State Government i.e. State of Gujarat. Further, on perusal of the Audit Report and Annual Accounts of Gujarat Industrial Development Corporation for the financial year 2013-14(available online), it is specifically mentioned therein at Point No.4(Related Party Disclosure) that Gujarat Industrial Development Corporation is a wholly owned corporation of Government of Gujarat. Hence it is a state controlled enterprise as defined in Para-9 of Accounting Standard AS 18 Related Party Disclosure issued by the Institute of Chartered Accountants of India. Thus no disclosure is required, keeping the spirit of the accounting standard in mind. Thus, Gujarat Industrial Development Corporation is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services covered under entries (a) to (c) above, provided to business entities would be exempted from GST. It is seen that the services supplied/provided by the applicant is to the various industries located in the Industrial area. All the industries as we know, are undoubtedly business entities i.e. entities built or created for the purpose of carrying on business only with the motive of earning profit and are covered under the definition of business as defined in Section2(17) of the CGST Act, 2017 - in view of the item(d) of Entry No.6 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) no exemption will be available to the applicant - it can be concluded that the various activities carried out by the Applicant to the plot holders in terms of provisions of GIDC Act, 1962 and charges collected for the same as may be notified from time to time amounts to supply under Section 7 of the Central Goods and Services Act, 2017 and are liable to tax under GST. - GUJ/GAAR/R/88/2020 - - - Dated:- 17-9-2020 - SANJAY SAXENA AND MOHIT AGRAWAL MEMBER Present for the applicant : Shri Jigar Shah, Advocate. BRIEF FACTS The applicant M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d water supply, drainage etc. within the industrial areas or estates. Further, the maintenance and upgradation of the existing infrastructure is also a primary responsibility of the Applicant, in view of section 37(1) of the Act. 3. The applicant has submitted that Section 14(a) of the Act, empowers the applicant to acquire and hold such property, both movable and immovable as the applicant may deem necessary for the performance of any of its activities, and to lease, sell, exchange or otherwise transfer any property held by it on such conditions as may be deemed proper by the applicant. Further, section 14(d) of the Act, empowers the applicant to make available buildings on hire or sale to industrialists or persons intending to start industrial undertakings or commercial establishments or both the industrial undertakings and commercial establishments; that the applicant and plot holder have lessor - lessee relationship and annual rent is collected by the applicant from the plot holders; that the lease agreement between the applicant and allottees is generally for 99 years (long term lease);that various financial institutions provide finance on the plots considering the allottee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious activities carried out by the Applicant to the plot holders in terms of provisions of GIDC Act, 1962 and charges collected for the same as may be notified from time to time amounts to supply under Section 7 of the Central Goods and Services Act, 2017 ( CGST Act )? 5. The applicant s statement containing their interpretation of law and/or facts, as the case may be, in respect of the Question on which Advance Ruling is sought is as under: In order to file an application in relation to supply of goods or services before the Authority of Advance Ruling, the applicant must satisfy the conditions prescribed under the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as IGST Act ), Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act ) and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as GGST Act ). (i) Section 95 to 106 of the CGST Act, 2017 enunciated under Chapter XVII cover Advance Ruling and its appeals. The definitions and questions on which advance ruling is sought is provided under section 95 and 97 respectively. The relevant sections are extracted below: Section 95. Definitions: In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; ( g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term; (iii) From the afore-mentioned provisions of the CGST Act and GGST Act relating to Advance Ruling, it can be concluded that in respect of determination of whether particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term is eligible to seek an advance ruling. The Applicant, as stated earlier, whether the facilities provided by the Applicant to the plot holders in terms of provisions of GID Act, 1962 amounts to supply under Section 7 of CGST, 2017, forms the subject matter of the present application. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities mentioned under Schedule II. A supply of goods or service can be intra-state supply (i.e. supply within a state) or inter-state supply (supply between two or more states). The prime requisite under Section 7(1)(a) is that all forms of supply of goods or services or both mentioned in the section should be in the course or furtherance of business. To qualify any act as supply under Section 7(1)(a) of CGST Act, 2017, the phrase in the course or furtherance of business needs to be satisfied. In other words, if the activity is not in course or furtherance of business then the said activity would not be supply under the Act and therefore it would not be subject to levy of CGST and/or GGST. The phrase in the course of furtherance of business is not defined in the Act, however, term business is defined under Section 2(17) of the CGST Act, 2017 which reads as under:- (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; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establishing commercial centers in connection with establishment and organization of such industries. Section 13 of the GIDC Act prescribes the various functions to be performed by the Applicant which includes promotion and assistance in the rapid and orderly establishment; growth and development of Industries in the State of Gujarat; development of land on its own account or for the State Government for the purpose of facilitating the location of industries and commercial centers; financial assistance by loans to industries to move their factories into industrial estates or areas and undertaking schemes for providing units and commercial establishments with such structures as may be necessary for their orderly establishment, growth and development. Thus, the GIDC has been established for managing and developing the industrial areas and estates, in order to increase the number of industries established in State of Gujarat. (vii) Section 14 of the GID Act, lists out the general powers entrusted to the Applicant, which includes provision of amenities and common facilities in industrial estates, commercial centres and industrial areas and construction and maintenance of buildings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... niences . (xii) Section 45(1) of the Act states that the Applicant shall furnish to the State Government such returns, statistics, reports, accounts and other information with respect to its conduct of affairs, properties or activities or in regard to any proposed work or scheme as the State Government may from time to time require. Further, section 45(2) of the Act requires the Applicant to furnish an annual report on its working as soon as may be after the end of financial year in the form and manner prescribed by the State Government. (xiii) Moreover, section 46 of the Act empowers the State Government to withdraw any particular industrial area, estate or part thereof from the jurisdiction of the Applicant. If, the State Government is satisfied that in respect of any particular industrial estate or area, the purpose for which the Applicant was established has been substantially achieved, so as to render the continued existence of such industrial estate or area under the Applicant unnecessary. (xiv) Section 48 of the Act empowers the State Government to dissolve the Applicant, if the State Government is satisfied that the purposes for which the Applicant was establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or making profits. When profits are earned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds. In the present case, these attributes of a trading corporation are absent. The Corporation is established by the Act for carrying out the purposes of the Act. The purposes of the Act are development of industries in the State. The Corporation consists of nominees of the State Government, State Electricity Board and the Housing Board. The functions and powers of the Corporation indicate that the Corporation is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing buildings, allotting buildings, factory sheds to industrialists or industrial undertakings. It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties and also that the Corporation would receive rents and profits in appropriate cases. Receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries. 18. The Corporation has to provide amenities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re or sale, the acquisition and transfer of land in relation to establishment of industrial estate or development of industrial areas and of setting up of industries cannot be said to be dealing in land or buildings for the obvious reason that the State is carrying out the objects of the Act with the Corporation as an agent in setting up industries in the State. The Act aims at building an industrial town and the Corporation carries out the objects of the Act. The hard core of a trading Corporation is its commercial character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one. (xvi) The function performed by Applicant under GIDC Act is similar to role performed by MIDC under MIDC Act. It is submitted that the Applicant also develops the infrastructure like roads, sustained wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to any trade, commerce, or business for a Cess, or fee or any other consideration irrespective of the nature of use or application or retention of the income from such activities. The Hon ble HC negated the said contention and held as under: .A short question which is posed for consideration of this Court is whether the activities carried out by the assessee can be said to be in the nature of trade, commerce or business for a Cess or fee, or for any other consideration and/or carrying on any activities in the nature of trade, commerce or business so as to attract proviso to Section 2 [15] of the Act and to deny the exemption claimed under Section 11 of the I.T Act ? 14.As per the statement and object of GID Act, 1962, it has been enacted for securing the orderly establishment and organization of industries in industrial areas and industrial estates in the State of Gujarat and for the purpose of establishing commercial centres in connection with the establishment and organization of such industries and for that purpose, to establish an Industrial Development Corporation, and for purposes connected with the aforesaid matters. 15.It cannot be said that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples applied in case of Income Tax Act, 1961 can be applied to Central Excise Act, 1944 immaterial of the fact that latter Act was on manufacture of goods and not on persons. In the case of CCE v. Jawahar Mills Ltd., 2001 (132) E.L.T. 3 (S.C.), the Hon ble Supreme Court held that Stand of the Revenue that Tribunal should not have relied on those decisions is without any substance. Principle laid down by a decision of the Sales tax income tax decisions applicable to Central Excise cases. (xxi) On this ground, the ratio laid down by the Hon ble Supreme Court in case of MIDC and Hon ble High Court in Applicant s own case under Income Tax rulings is applicable in the Applicant s case to decide whether the amount collected from the plot holders is towards trade, commerce or similar activities. (xxii) Furthermore, in the case of CCE v. Maharashtra Industrial Development Corporation reported at 2017-TIOL-2629-HC-MUM-ST, the Hon ble High Court of Bombay decided on the issue whether service charges recovered by the MIDC from plot holders for providing various services to them and the activity of providing service attracts service tax liability under the category of manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial estates. The role of MIDC is not limited only to establishing industrial estates and allotting the plots or buildings or factory sheds to industrial undertakings. The function and obligation of the MIDC is also to manage and maintain the said industrial estates as provided in Section 14. Therefore, it is the statutory obligation of the MIDC to provide amenities as defined in clause (a) of Section 2 of the MID Act to the industrial estates established by it. Thus, it is the statutory obligation of MIDC to provide and maintain amenities in its Industrial estates such as roads, water supply, street lighting, drainage, etc. Thus, we find that the activities for which the demand was made are part of the statutory functions of the MIDC under MID Act. As stated earlier, the demand is in respect of service charges collected from plot holders for providing them various facilities including maintenance, management and repairs. As provided in the circular dated 18th December, 2006, for providing amenities to the plot holders, the service fees or service charges collected by MIDC are obviously in the nature of compulsory levy which is used by MIDC in discharging statutory obligations und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalysis, the primitive point, i.e., dictionary meaning as defined by Webster s New World College Dictionary, 4th Edition is provided as under:- In connection with 1. together with; in conjunction with 2. with reference to Incidental 1. happening as a result of or in connection with something more important; casual: incidental benefits 2. likely to happen as a result or concomitant Ancillary 1. Of secondary importance; subordinate 2. Auxiliary or accessory: an ancillary pump. (xxvii) The Hon ble Supreme Court of India in the case of CST v Sai Publication Fund [2002] 258 ITR 70/122 Taxman 437 in which the Supreme Court interpreting the word business under section 2(5A) of the Bombay Sales Tax Act, 1959 had clearly laid out that where main activity is not business , the connected incidental or ancillary activities of sales carried out in furtherance of and to accomplish their main objects would not, normally, amount to business, unless an independent intention to conduct business in these connected, incidental or ancillary activities is established by the revenue. Hon ble Supreme Court held as under:- No doubt, the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the present case. On this ground alone, it is concluded that no CGST is payable on various activities of applicant. For the reasons mentioned hereinabove, sub-clause (c) of Section 2(17) is not invokable in the facts of present case. Sub-clauses (d) to (h) deal with special situations which otherwise may not have been considered as business. To carry out any function entrusted to a municipality under Article 243W of the Constitution. Hence, clause (i) of Section 2(17) is also not applicable in the facts of present case. The said activities are exempted by virtue of Entry No. 4 of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 The Applicant submit that its activities are otherwise exempted by virtue of Sr. No. 4 of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 (as amended from time to time.) For ease of reference, the said entry is extracted below: Government of India Ministry of Finance (Department of Revenue) Notification No. 12/2017- Central Tax (Rate) New Delhi, the 28th June,2017. G.S.R. 691(E) .- In exercise of the powers conferred by 49[,sub-section (3) and sub-section (4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may entrusted to them including those in relation to the matters listed in the Twelfth Schedule; (b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule (underlining supplied) (xxxii) Further, Schedule XII of the Constitution of India, lists out the following functions to be performed by the municipalities: TWELFTH SCHEDULE (Article 243W) 1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation, conservancy and solid waste mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The Gujarat Act was enacted to make special provision for securing the orderly establishment of industries in industrial areas and industrial estates in the State of Gujarat, and to assist generally in the organisation thereof, and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the matters aforesaid as can be discerned from the preamble thereof. 10. Section 2(g) of the Act defines industrial area as any area declared to be an industrial area by the State Government by notification in the Official Gazette which is to be developed and where industries are to be accommodated. Section 2(n) defines industrial estate as any site selected by the State Government where the Corporation builds factories and other buildings and makes them available for any industries or class of industries. Section 13 of the Gujarat Act enumerates the function of the Corporation and they contain, inter alia, to promote and assist in the rapid and orderly establishment, growth and development of industries in the State of Gujarat . 11. We have no doubt that a proper planning is absolutely necessary for creation of an industrial area. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purview of the word development in the said Sub-section. There is no indication in the Act that development envisaged therein should confine to non-industrial activities. Development of a place can be accelerated through varieties of schemes and establishment of industries is one of the modes of developing an area. 15. One of the reasons for incorporating a specific provision of exemption from income-tax such as Section 10(20A) is to protect public bodies created under law for achieving the purpose of developing urban or rural areas for public good. When the object is such, an interpretation which would preserve it should be accepted even if the provision is capable of more than one interpretation. The principle of interpretation is very much applicable to fiscal statutes also, (vide State of Tamil Nadu v. M.K. Kandaswami [1976] 1 SCR 38. This Court has reiterated the said principle in Calcutta Jute Manufacturing Co: 1997 (93) ELT 657 (SC). 16. The position is, therefore, clear that authorities constituted by law for facilitating all kinds of development of cities, towns and villages for public purposes shall not be subjected to the liability to pay income-tax. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea as industrial area and the provisions of Gujarat Municipalities Act, 1963 shall not be in force, in such industrial area. (xxxviii)Further, the Hon ble Supreme Court in the case of Saij Gram Panchayat vs. The State of Gujarat Ors. AIR 1999 SC 826, has held that the area notified under section 16 of the Act qualifies as Industrial Township under Article 243Q. The relevant portion of the judgment is reproduced here in below: 10. The Gujarat Municipalities Act, 1962 was amended on 20.8.1993 in view of the insertion of Part IXA in the Constitution. Section 264A was substantially amended. It now provided that for the purpose of this chapter notified area means an urban area or part thereof specified to be an industrial township area under the proviso to Clause (1) to Article 243Q of the Constitution of India . Thus, as a result of this amendment in the Gujarat Municipalities Act, an industrial area under the Gujarat Industrial Development Act, which is notified under Section 16 of the Gujarat Industrial Development Act would become a notified area under the new section 264A of the Gujarat Municipalities Act and would mean an industrial township area under the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot see any violation of a constitutional provision in this scheme. 17. As held by this Court in Solapur MIDC Industries Association Etc. v. State of Maharashtra and Ors. AIR 1997 SC 8 , a Municipal Corporation Act and an Industrial Development Act have distinct fields of operation and there is no inter se conflict between the two. By reason of the notifications of 7.9,1993, the industrial area developed under the Gujarat Industrial Development Act is also deemed to be an industrial township for the purposes of local self Government. Any possible conflict is also removed by the second notification of 7.9.1993 removing this area from the ambit of the Gujarat Panchayats Act, 1961. The contention, therefore, that an area forming a part of a panchayat under the Gujarat Panchayats Act, 1961 cannot be a notified area under the Gujarat Municipalities Act loses all force. 18. It is next contended that the proviso to Clause (1) of Article 243Q applies only to urban areas. It does not apply to a transitional area. Since the industrial areas in question have been subsequently notified as transitional areas they cannot be equated with industrial townships. This contention also cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant does not fall under any of the clauses of Section 2(17) of the CGST Act, 2017 which defines the term business . Henceforth, the sub-clause (a) of Section 7(1) which includes activities performed in course of furtherance of business is not satisfied in the facts of present case. Sub-clause (b), (c) and (d) of Section 7(1) has no application to the facts of present case. For sake of brevity, the provisions of SGST Act, 2017 are not referred in the content of above-mentioned application. 6. The applicant has made some additional submissions which were received by email on 24.08.2020. The applicant has stated that during the course of hearing , the authorities have referred to the definition of business as defined in Section 2(17) of the CGST Act, 2017. The Applicant has submitted that the activities carried out by the Applicants is not falling within the definition of business as explained under. For ease of reference Section 2(17) of CGST Act, 2017 is reproduced below: (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; (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Business as defined in Section 2(17) of the CGST Act, 2017 is not applicable to them and in similar circumstances it is held that the activities of Applicant is not taxable; that during the course of hearing, the Applicants referred to the decision in their own case wherein Hon ble Gujarat High Court has held that the Applicants are not a business entity or the activities of the Applicants are not commercial in nature in the context of Income Tax Act, 1961; that the decision in Applicants own case is reported at 2017 (7) TMI 811 Gujarat High Court; that the Applicants referred to the recent decision of CESTAT Bangalore (in context of service tax) wherein in case of Karnataka Industrial Area Development Board reported in 2020 (6) TMI 227 CESTAT Bangalore has held that the activities of the assessee is not taxable; that the facts of the case before CESTAT Bangalore and before the Advance Ruling Authorities is identical and therefore, the ratio of the decision referred supra is having great persuasive value in the present case. Further, in number of cases, the authorities have held that so far as taxation of services under GST is concerned there is no change in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provident Fund Organisation vs. CST [2017 (4) GSTL 294 (Tri. Del.)] to submit that the statutory authorities performing statutory functions as per the statute are not liable to pay service tax. He also submitted that the Revenue s appeal against the above decision was dismissed by the Hon ble Supreme Court on grounds of delay as well as on merits. We have gone through the judgment of the Tribunal. The Tribunal in that case, after considering the judgment of the Supreme Court as well as Kerala High Court, has held that appellants are not liable to pay service tax on their statutory activities performed under the act. In this case, the Tribunal has also considered the argument of the Revenue that the appellant is providing taxable services as a corporate body / trust by managing funds and the activities carried out are not in the statutory functions but are in the nature of services of social nature as per the directive principles of the State Government policy. Here it is pertinent to reproduce the observation of the Tribunal in paras 7, 11, 12, 13, 15, 16, 17, 20: - Further it is seen that the above said case has been upheld by the Apex Court as reported in 2018(18) GSTL J2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith respect to its pre-dissolution turnover. After analyzing the East Punjab General Sales Tax Act, this Court held :- The scheme of the Act is a simple one. A firm is a dealer; the said dealer is assessable to tax on its turnover, if its turnover exceeds the prescribed limit. It cannot do business while being liable to pay tax under the Act without getting itself registered and possessing a registration certificate. It is assessed to tax under Section 11 of the Act in the manner prescribed thereunder. If it discontinues its business, it shall within the specified time inform the prescribed authority accordingly. A dealer and its partners are jointly and severally responsible to pay the tax assessed on the dealer. But there is no provision expressly empowering the assessing authority to assess a dissolved firm in respect of its turnover before its dissolution. The question is whether such a power can be gathered by necessary implication from the other provisions of the Act. (at page 461) The Court went on to say : Though under the partnership law a firm is not a legal entity but only consists of individual partners for the time being, for tax law, income-tax as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined in Section 7 of CGST Act, 2017 and that therefore on the basis of the above, they are entitled to succeed in the application filed before Authorities of Advance Ruling. DISCUSSION FINDINGS: 12. We have considered the submissions made by the applicant in their application for advance ruling, additional submissions (received by email on 24.08.2020) as well as the arguments/discussions made by their representative Shri Jigar Shah, Advocate at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 13. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 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 similar provisions of the GGST Act. 14. As per the submission of the applicant, they were established under the provisions of Gujarat Industrial Development Act, 1962 (hereinafter referred as the Act ) by the State Government of Gujarat for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price on lease of plots, Sale of tender forms, Recovery of fines from contractors and others, Non Utilisation Penalty Hire charges of tools and plants, Annual rent of the land leased out by the Applicant, Forfeiture of Deposits, Scrutiny Fees, Service charges, Rent of buildings, Sale of grass, Water charges, NAA Charges, Sundries - Administrative charges, Agency Charges, Development charges, Drainage cess, Water and Drainage Connection Fees, Sub-Letting Fees, Sub-Division Fees, Amalgamation Fees, Collateral Charges, Penal interest, Interest on delayed payment of revenue charges, Plan Approval Fees, Right of Usage Charges, Grants and Subsidies from Government, Profit on sale of assets etc. Transfer fee, Dividend Profit, Interest received/accrued On Bank Fixed Deposits, Interest on deposit with Companies, Interest on plot/shed/housing quarters, Interest on investment and other deposits, Interest sundries Income Related Expenditure Service Charges (Maintenance and Repair Expenditure for Roads, Buildings, Street Lights etc), Water charges (maintenance expenditure on water supply), NA Charges Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment, State Government, Union territory, local authority or shall be omitted; After the said amendment, Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (effective from 27.07.2018) reads as under: Sr.No. Type of services Classification Rate of GST Conditions 04. Services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Chapter 99 NIL NIL 15.1. On going through the above provisions, we find that the aforementioned exemptions are available only to Central Government, State Government, Union Territory, Local authority or Governmental Authority (upto 26.07.2018) and Governmental Authority only(effective from 27.07.2018) in respect of the services provided by them by way of any function entrusted to a municipality under Article 243W of the Constitution. Therefore, we are required to find out as to whether Gujarat Industrial Development Corporation is cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities in industrial estates, commercial centres and industrial areas and construction and maintenance of buildings, amenities and common facilities. The amenities include road, supply of water or electricity, street lighting, drainage, sewerage, conservancy and such other convenience as the State Government may specify. Sub-section (3) of Section 23 states that the Applicant shall not utilize the funds as mentioned in sub-section (1) of Section 23 for any purpose other than that for which it was constituted, without previous approval of the State Government. Section 26 states that the accounts of the Applicant shall be audited by an auditor appointed by the State Government, in consultation with the Comptroller Auditor General of India. Sub-section (4) of Section 26 states that the State Government shall cause the accounts of the Corporation together with the audit report thereon forwarded to it under sub-section (3) to be laid annually before the State Legislature. 15.3 Thus, it can be seen from the above, that the entire top Management of the Corporation including the Chairman, vice-Chairman, Managing Director, Chief Accounts Officer as well as the Directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile examining issues relating to the validity of the Maharashtra Act a Division Bench of this Court has said in Shri Ramtanu Cooperative Housing Society Ltd. v. State of Maharashtra [1971] 1 SCR 719. The functions and powers of the Corporation indicates that the Corporation is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing building, allotting buildings, factory sheds to industrialists or industrial undertakings..... (ii) In the case of Shri Ramtanu Cooperative Housing Society Ltd. and another vs. State of Maharashtra and Others 1970(3) Supreme Court Cases 323, the constitutional validity of the Maharashtra Act was challenged before the Hon ble Supreme Court on the ground that the Corporation is a trading one. Some important portions of the judgement of the Hon ble Supreme Court stated with regard to Maharashtra Industrial Development Corporation(which is akin to the applicant) which are relevant to the issue in hand, are reproduced below:- .16. The petitioners contended that the Corporation was a trading one. The reasons given were..... The Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Development Corporation and has been created by virtue of the Gujarat Industrial Development Act is also a wing of the Government of Gujarat. We, therefore, need to refer to the meaning of wing as per the dictionary. As per dictionary, the meaning of wing is as under: (a) In Architectural terms, wing is a part of a large building, especially one that projects from the main part. (b) In political terms, wing is a group within a political party or other organization having particular views or a particular function. (c) In military terms, wing is the right or left flank of the main body of a battle formation. On going through the above, we find that in each and every aspect, the meaning of wing means a part . While referring to the meaning of part we find that it means an amount or section which, when combined with others, makes up the whole of something . Thus a part is something essential to make up the whole of something. In the instant case, we can say that Gujarat Industrial Development Corporation is a part of the Government of Gujarat. Further, while referring to the aforementioned judgements, we find that in reference to the Maharashtra Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II (2) Notwithstanding anything contained in sub-section (1), (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), 1(A) and (2), the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) activities of a race club including by way of totalisator or a license to bookmaker or activities of a licensed bookmaker in such club; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; 16.2 The term business as defined under sub-clause (a) of Section 2(17) of the Act includes trade, commerce, manufacture, vocation, profession as well as any other similar activity whether or not it is for a pecuniary benefit which means to state that the aforementioned activities would be covered under the term business irrespective of the fact as to whether it is for a pecuniary benefit or otherwise. A transaction which is incidental or ancillary to sub-clause (a) falls under the scope of sub-clause (b) of Section 2(17) of the CGST Act. Similarly, an isolated transaction which is in nature of trade, commerce, manufacture, profession, vocation or any other similar activity is covered under sub-clause (c) of Section 2(17). Sub-clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category of State Government as discussed earlier, the said exemption would be available to the applicant if the services supplied by them is by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution of India. We are therefore required to verify whether the services provided by the applicant are by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution of India. Schedule XII of the Constitution of India, lists out the following functions to be performed by the municipalities: TWELFTH SCHEDULE (Article 243W) 1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation, conservancy and solid waste management. 7. Fire services. 8. Urban forestry, protection of the environment and promotion of ecological aspects. 9. Safeguarding the interests of weaker sections of society, including the handicapped and mentall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or economic and social development . We do not find the said entry to pertain, in anyway, to the establishment of industries or industrial development and the applicant appears to have interpreted the said entry as per his whims and fancies to suit his contention. Further, there are many means to achieve economic development of a state/country i.e. construction of shopping malls, hospitals, schools, roads, highways, tunnels, construction of residential and commercial buildings, expansion of railways, construction of new Railway stations and new airports, etc. which would create a lot of jobs, thus, increasing employment opportunities, reducing unemployment and usher in economic development in the long run. Similarly, effective and long term policies of the Government such as good monetary and fiscal policies, regulation of financial institutions, trade and tax policies, programs that provide infrastructure and services such as highways, parks, crime prevention, good and quality educational institutions etc. would also result in economic development and can also be covered under the head planning for economic and social development . Does this mean to say that all these activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g services- (a) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory; (b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (c) transport of goods or passengers; or ( d) any service, other than services covered under entries (a) to (c) above, provided to business entities. Chapter 99 NIL NIL 17. It can be seen from the above entry i.e. Entry No.6 that the services supplied by the applicant who is providing or supplying the services as a public authority and falling under the category of State Government as discussed earlier, would be covered under item(d) above which provides that any service, other than services covered under entries (a) to (c) above, provided to business entities would be exempted from GST. It is seen that the services supplied/provided by the applicant is to the various industries located in the Industrial area. All the industries as we know, are undoubt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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