TMI Blog2022 (5) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions contained in the Act. The appellant fulfills the first condition mentioned above. Further, Section 4 of GID Act defines the constitution of the appellant wherein it has been stated that the appellant consists of 12(twelve) directors out of which 3(three) shall be nominated by the State Government. Further, 6(six) directors would be nominated by State Government from amongst persons appearing to it. As per Section 4(2) of GID Act, the State Government shall appoint one director as Chairman and one as Vice-Chairman - the appellant is wholly owned corporation of the State Government and the State Government controls the function of appellant directly or indirectly. Thus, the second condition which is 90% or more participation of Government, by way of equity or control is fulfilled by the appellant. The activities viz. upliftment of oppressed people by providing them proper shelters, easy loans for business, encouraging their children for study by providing them scholarships etc are covered in planning for economic and social development . We are of view that the activity of appellant i.e. establishment, organization and development of industries and industrial areas an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n industrial areas and estates as well as establishing commercial centers in connection with the establishment and organization of such industries in the State of Gujarat. Referring to various provisions and sections of CGST Act, 2017, GID Act, the appellant submitted that their activity in question is not to be considered as supply under Section 7 of CGST Act as the same does not fall under the definition of business under Section 2(17) of CGST Act, 2017. The appellant also submitted that as per their interpretation of law, their activities are exempted by the virtue of Sr.No. 04 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended) which exempts the services by government authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the Constitution. In support of their claim, appellant refers to various case laws viz. CIT Vs GIDC-2017-TIOL-HC AHM-IT, CCE Vs Maharashtra Industrial Development Corporation 2017-TIOL-2629HC-MUM-ST, Karnataka Industrial Area Development Board [2020(6) TMI 227 CESTAT Banglore] etc. 5. The Gujarat Authority for Advance Ruling (herein after referred to as the GAAR ), v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to set aside. 8. The appellant has submitted that as per Section 7(1)(a) of CGST Act, 2017, all forms of supply of goods or services or both should be in course of furtherance of business. The phrase furtherance of business is not defined under CGST Act, 2017 but the term business is defined under Section 2(17) of CGST Act. To determine whether the facilities provided by the appellant to the plot holders amounts to business in terms of Section 2(17) of the CGST Act, it is essential to understand the object and purpose for which appellant is established by the State of Gujarat. The appellant submitted that they have been established under Section 3 of the GID Act for the purpose of orderly establishment and organization of industrial areas and estates in Gujarat. Section 13 of GID Act prescribes various functions to be performed by the appellant. Section 14 of GID Act states powers entrusted to the appellant viz. provision of amenities and common facilities in industrial estates, construction and maintenance of building including road, supply of water, electricity, street lighting, drainage, sewerage etc. Section 37 of GID Act, empowers the appellant to lay down maintain, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sovereign function. The appellant also referred to CESTAT s order in case of Karnataka Industrial Area Development Board Vs CCT [2020 (6) TMI 227-CESTAT, Banglore] wherein it was held that Karnataka Industrial Area Development Board is not liable to pay service tax on their statutory activities performed under the act. The appellant submitted that GAAR has wrongly based its reasoning on only one interpretation that appellant falls under the category of state government, the activities carried out by them amounts to supply under Section 7 of CGST Act, 2017 and liable to GST without considering the nature of activities carried out by them. 11. The appellant submitted that their activity does not fall under sub-clause (a) of sub-section 17 of section 2 of CGST Act, 2017, hence, sub-clause (b) cannot be invoked as the activity is not in connection with or incidental or ancillary to sub-clause (a) of section 2(17) and once the activity does not fall under the category of business under subclause (a), the test of in connection with and or incidental or ancillary to clause (a) does not hold any relevance. The appellant referred to judgement of Supreme Court in case of CST V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e account of appellant, dissolution of the appellant etc vested with State Government under various provisions/sections of GID Act and hence State Government controls the function of the appellant either directly or indirectly. 13. The appellant submitted that as per section 3 and 13 of GID Act, they have been established for securing and assisting in the rapid and orderly establishment and organization of industries in industrial areas/estates in order to increase number of industries and upon conjoint reading with Article 243W of constitution of India, it is clear that appellant has to prepare and execute plans for economic development as it is directly proportional to growth in number of industries. The appellant referred to their own GIDC Vs CIT AIR 1997 SC 3275, wherein it was held that industrial development is enveloped within the expression planning, development or improvement of cities, towns and village or for both in section 10(20A) of Income Tax Act, 1961. The appellant is also entrusted to provisions of common amenities as road, supply of water or electricity, street lighting, drainage, sewerage, conservancy etc and to lay down, maintain, alter, remove or repa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t submitted that their activity can be covered under Sr.No. 2, 3 and 17 of Schedule XII which reads as 2. Regulation of land-use and construction of buildings, 3. Planning for economic and social development and 17. Public amenities including street lighting parking lots, bus stops and public conveniences. and hence they are eligible for exemption from payment of GST. 17. During the course of personal hearing held on 22.03.2022, the appellant reiterated the submissions made in the appeal dated 04.12.2020. 18. Time limit for filing appeal 18.1 The impugned Ruling has been passed by the GAAR on 17.09.2020. In the Form GST ARA-02 regarding Appeal to the Appellate Authority for Advance Ruling, at Sr.No.2, the appellant has shown the date of communication of the Advance Ruling as 05.10.2020 . We observe that the present appeal filed on 04.12.2020 has been filed after the prescribed time limit of 30 days from the date of communication of Ruling, which expired on 04/11/2020, as prescribed under Section 100(2) of the CGST Act, 2017. There has been a delay of 30 days. In the application for condonation of delay filed by the appellant alongwith the appeal, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s; (b) import of services for a 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), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject and purpose for which the appellant is established by State of Gujarat is essential and that Gujarat Government is in control the function of the appellant directly or indirectly. We are of view that the words object and purpose are neither directly nor indirectly related to the definition of business provided in CGST Act, 2017. Further, provision (i) of Section 2(17) defines the activity or transaction related to Central/State Government or public authority as business. The activities in which the appellant is engaged are undertaken as public authority, therefore clause (i) of section 2(17) of CGST Act, 2017 covers the activities of the appellant. The provisions of sections 7(1) and 7(1A) of CGST Act, 2017 read with clause (i) of section 2(17) of CGST Act, 2017 indicates that the activities of the appellant would fall under the definition of supply. 24. The appellant has relied upon the Judgment of Supreme Court in their own case reported at 227 ITR 414 wherein it was held that the appellant is not trading corporation and also in the case of Shri Ramtanu Cooperative Housing Society Ltd and another Vs State of Maharashtra and other 1970 (3) SCC 323 wherein it was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 28.06.2017 (as amended), we need to refer to the abovementioned entry of said notification: Sr.No. Type of activities Classification Rate of GST Condition 4. Services by Central Government, State Government, Union territory, local authorities or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the constitution Chapter 99 Nil Nil The above notification was amended vide Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018 (effective from 27.07.2018) which reads as under: Sr.No. Type of activities Classification Rate of GST Condition 4. Services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the constitution Chapter 99 Nil Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 16 and 46 of GID Act empowers the State Government to notify any area as notified area and to withdraw the same respectively. Section 25 of GID Act states that the appellant has to prepare and submit annual financial statement (budget) and program of work for the succeeding financial year to the State Government for approval. Section 27 of GID Act empowers State Government to conduct concurrent and specific audit of the accounts of the appellant. Section 48 of GID Act empowers State Government to dissolve the appellant if the State Government is satisfied that the purpose of the appellant is substantially achieved. From the foregoing, it is amply clear that the appellant is wholly owned corporation of the State Government and the State Government controls the function of appellant directly or indirectly. Thus, we are of the view that the second condition which is 90% or more participation of Government, by way of equity or control is fulfilled by the appellant. 29. To examine whether the appellant fulfills third condition, to carry out function entrusted to a municipality under Article 243W of the Constitution, we refer to Article 243W of the Constitution of India: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant submitted that they have been established for securing and assisting in the rapid and orderly establishment and organization of industries in industrial area and estates in order to increase the number of industries established in the state of Gujarat. The appellant submitted that their activity falls under the entry at Sr.No. 3 of XII Schedule which reads as planning for economic and social development as growth in the number of industries is directly proportional to economic development. Economic development is different from economic growth; whereas economic development is policy intervention aiming to improve the well-being of people, economic growth is a phenomenon of market productivity and increased GDP. Economic development is broadly based and sustainable increase in the overall standard of living for individuals within a community. Further, in view and furtherance of above, it can be stated that activities viz. upliftment of oppressed people by providing them proper shelters, easy loans for business, encouraging their children for study by providing them scholarships etc are covered in planning for economic and social development . We are of view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction entrusted by the Central Government, State Government, Union Territory or a local authority. . The appellant fulfills the conditions of being a Government Entity . To the above extent we disagree with the findings of GAAR which concluded that GIDC falls under the category of State Government . 33. In view of forgoing discussion, we hold that the appellant is not eligible to claim exemption under Sr.No.4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended) as they are not a governmental authority carrying out function entrusted to a municipality under article 243 W of the Constitution. 34. The appellant in their additional submissions have submitted that they are eligible for exemption under the provisions of Notification No. 14/2017-Central Tax (Rate) dated 28.06.2017 as amended. The said notification is reproduced below: Government of India Ministry of Finance (Department of Revenue) Notification No. 14/2017-Central Tax (Rate) New Delhi, the 28th June, 2017 G.S.R......(E).- In exercise of the powers conferred by sub-section (2) of section 7 of the Central Goods and Services Tax Act, 2017 (12 of 2017) ..... 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