TMI Blog2022 (10) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... aid act - in the calculation sheet and on the body of the said letters, 18% GST has been calculated, this clearly and evidently shows that GST is leviable on such demands raised for UK CAMPA by the Forest Department of State Government of Uttarakhand and that the applicant has been sanctioning the requisite funds - UK CAMPA falls under the category of State Government as defined in Section 2(103) of the CGST Act, 2017 which specifies that State includes a Union Territory with Legislature. Whether services rendered by UK CAMPA for which compensation is paid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017? - HELD THAT:- If grants are given freely in which the grantor does not receive any benefit in return, then they are not consideration for any supply and are therefore outside the scope of GST but if the grantor receives a benefit in return, then the grant is treated as a consideration for the supply and in the instant case the applicant has admitted that the amount paid is to compensate for loss of land by land' and 'trees by trees', which imply that although the assignment of the value has to be calculated for loss of lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge mechanism or normal forward charge rules? - HELD THAT:- The applicant being a business entity is liable and mandated to follow the provisions of the Notification No. 13/2017-Central Tax (Rate) dated 28th June, 2017 and is liable to pay due tax under reverse charge mechanism on the total assigned value for which demand is raised by the Forest Department of State Government of Uttarakhand, as per the provisions of the CAMPA Act. Whether compensation paid by PTCUL to DFO, the Government of Uttarakhand, is subject to levy of GST? - HELD THAT:- In the Section 7 of the CGST Act, 2017 it has been mandated that the expression - supply includes - 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 , and the consideration (although termed as compensation by the applicant) is actually Premium or Annual Lease as evident from the demand letters of the DFO, submitted by the applicant on 08.08.2022 - both of the two major elements i.e. Supply is done for a consideration and Supply is done in course of furthera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Electric Transmission Network within the state of Uttarakhand. In the application dated 29.06.2022, the applicant submitted that:- Uttarakhand CAMPA (hereinafter referred to as 'UK CAMPA') is a statutory body established by an act of Parliament namely Compensatory Afforestation Fund Act with primary objective of promoting afforestation and development activities in order to compensate for the felling of trees and re plantation thereof on the forest land that is intended to be diverted to non- forest use. UK CAMPA is a Fund/ entity registered under section 12AA of the Income Tax Act, 1961 (ITA) and is not for profit organisation. The Divisional Forest Officer (DFO) is an officer belonging to the Indian Forest Services and is an authority created directly under the State Government and is responsible for all work related to forest land, wildlife and its conservation, preservation, etc. PTCUL for the purpose of setting up the transmission network requires setting up of equipment, towers etc. in forest area for which it requires permission from the Ministry of Environment, Forest Climate Change, Gov of India. The Ministry of Environment, Forest and Climate C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the GST tariff shall the said supply of service be covered? 5. If the answer to Question No 3 above is in the negative, identify the person liable to deposit such GST with the Government authorities i.e. is such payment covered under the Reverse Charge mechanism or normal forward charge rules? 6. Whether compensation paid by PTCUL to DFO, the Government of Uttarakhand, is subject to levy of GST? 7. If the answer to Question No 6 above is in the positive, under which heading of the GST tariff shall the said supply of service be covered? 3. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act 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 the same provisions under the SGST Act. 4. The Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CGST Act, 2017, defines 'Government' as the Central Government and the official FAQ's on GST Sectoral Series- Government Services issued by Central Board of Indirect Taxes and Customs (CBIC) clarifies that A statutory body, corporation or an authority created by the Parliament or a State Legislature is neither 'Government' nor a 'local authority'. Such statutory bodies, corporations or authorities are normally created by the Parliament or a State Legislature in exercise of the powers conferred under article 53(3)(b) and article 154(2)(b) of the Constitution respectively. It is a settled position of law (Agarwal Vs. Hindustan Steel AIR 1970 Supreme Court 1150) that the manpower of such statutory authorities or bodies do not become officers subordinate to the President under article 53(1) of the Constitution and similarly to the Governor under article 154(1). Such a statutory body, corporation or an authority as a juridical entity is separate from the State and cannot be regarded as the Central or a State Government and also do not fall in the definition of 'local authority'. Thus, regulatory bodies and other autonomous entities would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apters, Sections, Headings and Sub headings, representing a broader class or types of goods and services. In the present case, services supplied by UK CAMPA, are charitable activities duly covered under Notification No 12/2017and therefore, consideration paid by PTCUL in the form of payments made to a section 12AA registered entity i.e. UK CAMPA are exempt from GST, nevertheless, even if it is concluded that GST is to be levied on such compensation, then the same can only be covered in Notification No 12/ 2017 under Serial No 6, Chapter 99 with NIL rate of taxation. 5. The CGST Act 2017 defines reverse charge under section 2(98) as the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act. It can be concluded that UK CAMPA is not a Government and further, the nature of services supplied by UK CAMPA do not fall in any of the above mentioned category. Hence, any GST if at all applicable on such payment is to be collected and deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed by taking up the issue: 8 .2 In the instant case there are various issues before us for decision. We take the same one by one. 8 .3 We find that under the provisions of the Compensatory Afforestation Fund Act, 2016, Compensatory Afforestation Fund Management and Planning Authority (CAMPA) was established as a National Advisory Council under the chairmanship of the Union Minister of Environment Forests for monitoring, technical assistance and evaluation of compensatory afforestation activities, with the objectives of promoting afforestation and regeneration activities as a way of compensating for forest land diverted to non-forest uses and has been constituted under an Act passed by the Parliament. To regulate the above act, Compensatory Afforestation Fund Rules, 2018 have been introduced. We observe that Compensatory Afforestation Fund Act, 2016 mandated that the Compensatory Afforestation Fund Management and Planning Authority (CAMPA)/ State CAMPA would receive funds collected from user agencies towards compensatory afforestation, additional compensatory afforestation, penal compensatory afforestation, Net Present Value (NPV) and all other amounts recovered from s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartments dealing with Environment, Finance, Planning, Rural Development, Revenue, Agriculture, Tribal Development, Panchayati Raj, Science and Technology, Principal Chief Conservator of Forests (HOFF), Principal Secretary, Forest and Environment, Government of Uttarakhand, Chief Wildlife Warden etc . (Exhaustive but not limited to) are the members of the said Governing Body. 8.3.4 From the above facts, we observe that there is no doubt that Forest (Conservation) Act, 1980 in the state of Uttarakhand is also implement and regulated by the Forest Department of State Government of Uttarakhand and the UK CAMPA is under the aegis of Forest Department of State Government of Uttarakhand, as they administer, manage and regulate the said act. 8.3.5 We also find that vide letter dated 08.08.2022, the applicant submitted sample demand letters raised on the applicant and perusal of the same reveals that all such demand letters have been raised by and observe that all these are Government officials working in the Forest Department of State Government of Uttarakhand and are governed by the rules and regulations of the Government of Uttarakhand. Admittedly, in the said demand letters valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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)] 17, 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 goods . 8.4.2 We find that sub-section 2 of the section ibid, clearly specify what shall be treated neither as a supply of goods nor a supply of services, which are as under:- (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 authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Uttaranchal Limited (PITCUL) in the instant case. The method applied for calculation i.e. for the assignment of the value and the components to be considered for the assigned value, being obligatory as per the provisions of a law, does not take away its character of being a consideration. For better perspective definition of consideration in relation to the supply of goods and services or both as provided in Section 2(31) of the Central Goods Service Tax (CGST) Act, 2017 is reproduced as under:- (31) - consideration! in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No. 12/2017-CT (Rate) dated 28.06.2017, the entry thereto states as under;- Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities. 8.5.3 We are of the opinion that charity means generosity and helpfulness especially toward the needy or suffering that is to say aid given to those in need. The list of activities given in the above said notification are the activities which are eligible for exemption but for the exemption to come into picture the act of charity has to be fulfilled and in the instant case, the money is being charged and collected for specific purposes, which evidently does not constitute charity' and hence services rendered through the Forest Department of State Government of Uttarakhand, is not covered under Entry No 1 (Chapter 99) of Notification No 12/2017 - Central Tax (Rate) dated 28th June 2017 read with section 11 of the CGST Act 2017. 8.6 Now we take up the fourth issue for decision. 8.6.2 we find that at Heading 9997 under the head of Description of Service , Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Department of State Government of Uttarakhand, as per the provisions of the CAMPA Act. 8.8 Now we take up the sixth issue for decision. 8.8.2 We find that at Para 8.3 above the issue has already been discussed and concluded that the Forest Department of State Government of Uttarakhand, through the Principal Chief Conservator of Forests, an officer belonging to the Indian Forest Services, is responsible for all work related to forest land, wildlife and its conservation, preservation and there is no doubt that Forest (Conservation) Act, 1980 in the state of Uttarakhand is also administered, implement and regulated by the Forest Department of State Government of Uttarakhand and that as per the provisions of the law the DFO, Government of Uttarakhand, is raising demands for Premium and Annual Lease Rent and the said lease rent is in lieu for the right to use of the said land area falling under the jurisprudence of the Forest Department, Government of Uttarakhand. 8.8.3 We also find that at Para 8.4 above, it has been discussed and concluded that the amount of money paid to the Forest Department is neither a subsidy given by the Central Government or a State Government nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12, does not figure in the Notification No. 12/ 2017 and hence is liable to tax. 9. In view of the discussions held above, we rule as under: RULING 1. UK CAMPA falls under the category of State Government as per the provisions of the CGST Act, 2017. 2. Services rendered through the Forest Department of State Government of Uttarakhand, for which compensation is paid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017. 3. Services rendered through the Forest Department of State Government of Uttarakhand, is not covered under Entry No 1 (Chapter 99) of Notification No 12/2017 - Central Tax (Rate) dated 28th June 2017 read with section 11 of the CGST Act 2017. 4. Services fall under the Heading 999799 - Other services nowhere else classified in the Group 99979- Other miscellaneous services. 5. The applicant being a business entity is liable to follow the provisions of the Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017 and is liable to pay due tax under reverse charge mechanism on the total assigned value for which demand is raised by the Forest Department of State Government of Uttarakhand, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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