TMI Blog2022 (12) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... ate having perpetual succession and a common seal and capable of suing and being sued in its name. It has power to acquire, hold and dispose of the property - the definition of local authority in the CGST Act includes within its ambit any other authority legally entitled to or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund. Thus, for the purpose of the GST Laws, any authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund qualifies as a local authority. The Apex court in the RC Jain case [ 1981 (2) TMI 200 - SUPREME COURT] has held that that the authority should be elected by the inhabitants of the area. As per Section 4 of the UPWSS Act, the UPJN shall consist of Chairman and members appointed by the state government. As such, the UPJN is not elected by the inhabitants of the area but the same is established by the state. Therefore, the said is not satisfied in the case of UPJN - In case of UPJN, there is no local fund entrusted by the Government with UPJN. A perusal of the UPWSS Act would reveal that no municipal or local fund has been entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 11/2017- Central Tax (Rate) dated June 28, 2017. - UP ADRG 12/2022, - - - Dated:- 23-9-2022 - SHRI RAJENDRA KUMAR AND SHRI VIVEK ARYA, MEMBER Represented by : Shri Manish R Goel, C.A. ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98(4) OF THE UPGST ACT, 2017 1. M/s Indian Hume Pipe Company Ltd., Gwalior Road, Karari, Jhansi, Uttar Pradesh, 284003 (here in after referred to as the applicant) is a registered assessee under GST having GSTIN: 09AAACT4063D1ZK. 2. The Applicant has submitted application for Advance Ruling dated 28-06-2022 enclosing duly filled Form ARA-01 (the application form for Advance Ruling) along with certain annexure. 3. The Applicant in his application sought Advance Ruling as follows:- a. Whether the supply of Services by the Applicant to M/s. UTTAR PRADESH JAL NIGAM is covered by Notification No. 15/2021 Central Tax (Rate), dated 18th November, 2021 r/w. Notification No.22/2021- Central Tax (Rate), dated 31st December, 2021. b. If the supplies as per Question a are covered by Notification No. 15/2021- Central Tax (Rate), dated 18th November, 2021, r/w. Notification No. 22/2021- Central Tax (Rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby implying total GST at 18% (CGST - 9% + SGST -9%). (8) Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017 was subsequently amended vide Notification No. 20/2017-Central Tax (Rate) dated 22nd August. 2017; whereby in Serial No. 3 of the fable therein item (iii) was inserted viz - (iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a)...., (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. to be taxed at 6% under CGST Act; thereby implying total GST at 12% (CGST 6% + SGST - 6%). (9) Subsequently Notification No. 31/2017 dated 13th October, 2017 was issued to amend Serial No. 3(iii) viz - Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity . Further, this Notification also clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 now issued seeks to amend at Sr. No. 3 (iii) as - Union territory or a local authority thereby deleting the words - a Governmental Authority or a Government Entity. 6. The applicant has submitted their interpretation of law as under- (1) The Contractee's of the Applicant in question are holding PAN AAALU0256C. 4th character in PAN denotes the Status of the PAN holder and as the 4th character in the case under consideration is L it denotes Local Authority. (2) Further, the Contractee's of the Applicant in question are holding GSTIN 09AAALU0256C320 and the Registration Certificate as issued by the GST Department classifies the Contractee under Local Authority. (3) As the Contractee's of the Applicant are classified as Local Authority as per the GST Authorities, they are of the opinion that- (a) The said transaction is covered by Notification. No. 15/2021 Central Tax (Rate) dated 18th November, 2021 r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021; which after amendment now reads as (iii) Composite supply of works contract as defined in clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017, suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be mentioned as being under the 'CGST Act'. 10. We have gone through the submissions made by the applicant and have examined the explanation submitted by them. The applicant has ticked following issues in column no. 13 of Form GST ARA-01- (1) determination of the liability to pay tax on any goods or services or both. We find that the issue raised in the application is squarely covered under Section 97(2) of the CGST Act 2017. We therefore, admit the application for consideration on merits. 11. We observe that the questions on which advance ruling is sought by the applicant are as under- a. Whether the supply of Services by the Applicant to M/s. UTTAR PRADESH JAL NIGAM is covered by Notification No. 15/2021 Central Tax (Rate), dated 18th November, 2021 r/w. Notification No.22/2021- Central Tax (Rate), dated 31st December, 2021. b. If the supplies as per Question a are covered by Notification No.15/2021- Central Tax (Rate), dated 18th November. 2021. r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021. then what is the applicable rate of Tax under the Goods and Services Tax Act, 2017 on such Supplies made w.ef. 01-01-2022; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rate (percent) ''(iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act; 2017, supplied to the Central Government, State Government, Union territory or a local authority, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of (a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act. 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. 6 14. The questions raised by the applicant require examination as to whether the Uttar Pradesh Jal Nigam (hereinafter referred to as the UPJN) is local authority or not. The applicant have arrived at conclusion that UPJN is local authority on the basis of 4th character of PAN of UPJN being 'L' and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006); (e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under article 371 8 [and article 371J] of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution: 17. The definition of local authority in the CGST Act includes within its ambit any other authority legally entitled to or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund . Thus, for the purpose of the GST Laws, any authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund qualifies as a local authority . 18. The definition of the 'local authority' is contained in Section 3(31) of the General Clauses Act, 1897 which is as under- local authority shall mean a municipal committee, district board, body of port Commissioners or other authority legally entitled to, or entrusted by the Government wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority. 20. The Apex Court in the case of Union of India and others v. R.C. Jain and others (supra) has laid down the following ingredients, which are required to be fulfilled cumulatively before an authority can be said to be a 'local authority', in the light of the definition of 'local authority' as given under Section 3(31) of the General Clauses Act.- (1) The authorities must have separate legal existence as corporate bodies. It must be legally independent entities. (2) The authority must function in a defined area and ordinarily, wholly or partly, directly or indirectly be elected by the inhabitants of the area. (3) The authority must enjoy a certain degree of autonomy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom time to time, with the previous sanction of the State Government and subject to the provisions of this Act and to such conditions as the State Government may, by general or special order determine, borrow any sum required for the purposes of this Act, whether by the issues of bonds or stock or otherwise or making arrangements with bankers or other bodies or institutions approved by the State Government for this purpose. (5) As per section 46(3) of the UPWSS Act, stock issued by the Nigam under the section shall be issued, transferred, dealt with and redeemed in such manner as the State Government may, general or special order, direct. (6) As per Section 50 of the UPWSS Act. the UPJN is obliged to submit a statement of programme of its activities to the State Govt, before the commencement of financial year and may at any time during financial year. Further, the accounts of UPJN shall be audited by such auditor as the State Govt, may direct. Moreover, the accounts of the Nigam and a Jal Sansthan, as certified by the Auditor together with the audit report thereon shall be forwarded annually to the State Government and the Nigam respectively, who may issue such directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plated under Section 3 (31) of the General Clauses Act. ...................... 75. The 1975 Act, does empower the State Government or the Jal Nigam to claim exemption from taxes only because the word, 'local authority' has been used in subsection (3) of Section 3 of the 1975 Act. Virtually this broader principle has been upheld by the Hon'ble Supreme Court in the case of CIT Vs. U.P. Forest Corporation, 230 ITR 945 (supra) while declining to treat it 'local authority' under the Act. The provisions contained in the Section 10 (20) of the Income Tax Act, shall prevail over and above the U.P. Water Supply and Sewerage Act, 1975. 76. After a close scrutiny of 1975 Act. the law settled by Hon'ble Supreme Court in the cases of Valjibhai Muljibhai Soneji (supra), R.C. Jain (supra). Commissioner of Income Tax. Vs. U.P. Forest Corporation (supra). Agricultural Produce Market Committee, Narela, Delhi (supra), read with Part IX and IXA of the Constitution and Section 3 (31) of General Clauses Act, the U.P. Jal Nigam does not seem to be the 'local authority' under Section 10 (20) of the Income Tax Ad, 1961 even prior to Finance Act, 2002. The word, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, Hon'ble the Chief Justice has referred the case to a Third Judge Hon'ble R.K. Agrawal, J. Opinion expressed is as follows In my considered opinion as both the Brother Judges have come to the same conclusion that Jal Nigam is not a local authority, the question formulated for opinion as to whether U.P. Jal Nigam is Local Authority or not does not arise. Let the papers be placed before Hon'ble Division Bench for passing appropriate order. In view of the opinion expressed by Hon'ble Third Judge, no further order is required. The appeal decided accordingly. 23. Although, the aforesaid order in Income Tax Appeal No. 128/2008 denying UP Jal Nigam the status of local authority is in respect of dispute of Income Tax,, the same is applicable to instant case as the order of the Hon'ble High Court has been passed after analyzing the definition of 'local authority' contained in General Clauses Act. It has already been discussed that the term 'local authority' has been similarly worded in CGST Act, 2017 as well as General Clauses Act, 1897. 24. Further, the relevant clarification contained in Service Tax Educational Guide published in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule of the Constitution of India, water supply for domestic, industrial and commercial purposes and public health, sanitation conservancy and solid waste management is a function of municipality. In view of the above, the requirement that the authority must be established to carry out any function entrusted to a Municipality under article 243 W of the Constitution has also been fulfilled in the present case. Thus, the UPJN is a governmental authority in our view. 29. As such, by way of Notification No. 22/2021-Central Tax (Rate) dated 31.12.2021, the lower rate of tax of 12% provided by Entry 3(iii) of Notification No.11/2017- Central Tax (Rate) dated June 28, 2017, was restricted to works contract supplied to Central Government, State Government, Union territory and a local authority only with effect from 01.01.2022. As the UPJN does not qualify as a 'local authority' and it qualifies as a governmental authority, tax rate of 18% is applicable on the works contract services provided to UPJN by way of Entry 3(xii) of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017. The said Entry 3(xii) of the Notification No. 11/2017 reads as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 18.07.2022, the said entry 3(iii) was existing and the questions raised by the applicant have been examined in the above paras. 33. Accordingly, we pass the following ruling. RULING Question a- Whether the supply of Services by the Applicant to M/s. UTTAR PRADESH JAL NIGAM is covered by Notification No. 15/2021 Central Tax (Rate), dated 18th November, 2021 r/w. Notification No.22/2021- Central Tax (Rate), dated 31st December, 2021. Answer a- Answered in negative. Question b- If the supplies as per Question a are covered by Notification No. 15/2021-Central Tax (Rate), dated 18th November, 2021, r/w. Notification No. 22/2021- Central Tax (Rate), dated 31st December, 2021, then what is the applicable rate of Tax under the Goods and Services Tax Act, 2017 on such Supplies made w.e.f. 01-01-2022. Answer b- Not answered as per reply of question a above. Question c- In case if the supplies as per Question a are not covered by the Notification supra then what is the applicable rate of tax on such supplies under the Goods and Services Tax Act, made w.e.f. 01-01-2022. Answer c- CGST 9% and SGST 9%. 34. This ruling is valid only within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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