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TMI Blog2024 (8) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... evan Mission which is a mission of Government of India which is performed & invoiced after 01.01.2022 but which is allotted before 01.01.2022? 3. What is the rate of tax in respect of work allotted by Maharashtra Jeevan Pradhikaran ('MJP') as a part of Jal Jeevan Mission which is a mission of Government of India allotted, performed & invoiced after 01.01.2022)? 4. Who is the service receiver within the meaning of Sec. 2 (93) of CGST/MGST Act in respect of amounts received as grants by MJP which are paid to the applicant on services provided before 01.01.2022? 5. Who is the service receiver within the meaning of Sec. 2 (93) of CGST/MGST Act in respect of amounts received as grants by MJP which are paid to the applicant on services provided after 01.01.2022? 6. Whether appointment of MJP as an agency to implement water supply schemes amounts to delegation of sovereign function enumerated in Sch. XI & XII within the framework of Constitution of India so as to hold that MJP has performed the function entrusted under Article 243G & 243W of the Constitution of India? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Jeevan Authority Act in 1976 virtue of which all water by supply/drainage/sanitation/storm water schemes are implemented through the said authority. The said authority is wholly controlled by the Govt. & receives funds from consolidated funds as per budget allocations from the respective Government for execution of any new water supply/sanitation scheme. Please see page no 20 of the paper book that shows that the amounts received by the applicant are out of budget allocations. 1.5 By virtue of amendment dated 01.01.2022 referred to in para 4 above, there is a perception in trade that the activity of the applicant is no longer exempted but is chargeable to full rate of tax i.e., 18%. However, there is no uniformity in understanding the exact legal position of tax eligibility on the applicant's activity, for some of the Zilla Parishad's, some State Governments add GST payable @ 18% to the invoice payable in respect of pure service activity performed, by tax Persons identically situated, to that performed, by the applicant. Therefore, this present application is preferred in order to officially clarify the rate of tax applicable to the activity performed by the applicant viz. "pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties established by the State Government under a legislation or government order are provided to a "Government Authority" within the meaning of Notification 25/2012. b. Karad nagar parishad versus commissioner of C. Ex. & ST, Kolhapur (20 GSTL 288) Wherein it was held that regulatory fees charged by the Municipal Corporation come within the ambit of "sovereign functions" within the meaning of Article 243W and hence not exigible to service tax. c. Ganpati mega builders (1) Pvt. Ltd. (58 GSTL 324) Herein it was held that construction services falling within the purview of Article 243 G & W provided to JNNURM, Mandi Samiti & Mandi Parishad & other municipal bodies are not subject to service tax. d. Cuddalore Municipality (55 GSTL 397) Wherein it was reiterated that services provided to Municipalities with respect to functions specified in article 243 G & W are not chargeable to service tax. 2.1.2. The applicant provides technical management consultancy services to the MJP, these services are related to water supply, irrigation & sewage management. The aforesaid services have been entrusted to the State Governments, panchayats & municipalities under article 243G & W of the const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es undertaken which is outsourced to the applicants is being executed & controlled by the Central/State Government as a part of Jal Jeevan Mission:- a. Operational Guidelines issued by Government of India Ministry of Jal Shakti in December 2019. Specific attention is drawn to Financial Planning & Funding at Sr no 7 page no 44 to 53 of the document. b. Funds Allocation order no 682 dated 28-04-23 issued by State Water & Sanitation Mission Director allocating the funds to various districts for Project Management Consultancy under which the work of the applicant falls. c. Government of Maharashtra Resolution of Water Supply & Sanitation Department dated 17-06-2021 appointing Under Secretary as the Drawing & Disbursing Officer & Deputy Secretary as the controlling officer. 2.1.3 Thus, even in case of services rendered post 01.01.2022, the applicant submits that the services rendered, though apparently rendered to MJP, become services rendered to State Government/Central Government because the MJP in the instant case is working as an agent of the Government in execution of a constitutional duty/function. Therefore, the Applicant /submits that even after the deletion of the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply & disposal schemes through their agent MJP. The payments made by MJP, in fulfilment of the constitutional of duties the State/Central/Municipality Governments must be construed as payment by an agent on behalf of the respective principal. The principle of common law that payment by agent amounts to payment by principal applies with full force in the facts & circumstances of the presently impugned transaction & therefore the respective Government's become the service recipient under Section 2 (93) of GST Act. 2.4 As specified before now, water supply, irrigation, canaling, drainage and other related functions are responsibilities of the Centre & State Governments, as per Entry 56 of List I & Entry 17 of List II, respectively, of the Indian Constitution. The applicant submits that where the makers of the constitution have assigned a certain responsibility upon the government. The government cannot, by enacting a legislation or otherwise, further delegate the same to any other authority & even when such activity is delegated it remains to be the responsibility of the respective Government as per the scheme of the Constitution. The aforesaid law was laid down by the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant documents in support of the averments. If the Hon'ble Authority for Advance Ruling desires certain more information &/or documents, the applicant is ready & willing to supply the same. 2.6 Additional Submission dated 26.06.2024 Kindly find below common additional argument points on facts & law in respect of all the four applicants: - 2.6.1. Water is a State Subject. Entry 17 of List II VII Schedule lays down Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of entry 56 of List I. List I entry 56 deals with interstate rivers. As regards supply of water, the Water policy has defined major projects & minor projects. The former are those that have an irrigation potential of more than 2000 hectares whereas less than 2000 hectares are minor projects. Schedule XI entry 3 mentions "Minor irrigation, water management and watershed development." As within the realm of panchayats. Thus, the major projects are within the realm of State Governments. 2.6.2. It is in discharge of this Constitutional function that the MJP Act 1976 was enacted. The duties were formerly discharged by MWSSB i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbly having the force of law. The above statement also applies with full force to the budgetary support by State Government. Section 2 (93) defines recipient of service as the person who is liable to pay the consideration where consideration is payable for the supply. In the present case where the payment is authorized through the Central/ State Budget, by virtue of the respective finance Act, the concerned Government is legally liable to pay the sum earmarked & appropriated to a given expenditure head & therefore they become the person liable to pay & consequently the service receiver is the Central/ State Government. The applicants herein say & submit that their bills are cleared only when the amounts are received from budgetary support. Kindly note that all the arguments are restricted & limited to schemes implemented through Jal Jeevan Mission which is a Central mission scheme. 2.6.6. The payments received by the applicants is through Public Finance Management System (PFMS). PFMS is a web based financial application developed & Implemented by Controller of Accounts. Department of Expenditure. Government of India. The payment at no point of time is under control of MJP. It is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of schemes implemented through Commercial Borrowings. 2.6.11. Therefore, given the fact that payment is made through a designated account not in control of MJP rather in full control of Central/ State Government, JJM as a scheme entails the responsibility of Central/ State Government in making the payments thus making them the person liable to pay within the meaning of Section 2 (93). 2.6.12. While interpreting the clause of payment, if one was to consider, the event of non-payment on the part of receiver, such scenario would lead to infringement of finance bill apart from the breach of contract. In such case the statutory liability to pay & incur the expenditure as per finance bill takes precedence over the contractual liability as per clause 5.5. of the empanelment agreement, while interpreting Section 2 (93), i.e. person liable to pay. 2.6.13. Section 2 (93) specifically includes an agent acting on behalf of principal as recipient, the present facts clearly point out that MJP who is acting as an agent of Central/ State Government thus making the latter recipient of service. 2.7 Further Additional Submission dated 26.06.2024 In continuation of the earlier additional s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government are making the payments being Constitutionally & legally liable to make payments for the water supply schemes. 2.7.4. The immediate issue that arises is then what is the impact of the Governments above lega1 duty to pay in the present matter where the contractual obligation is undertaken by MJP & then who is to be reckoned as the person liable to pay as per Section 2 (93) of GST Act. The applicant submits that the legal liability to pay overrides the contractual liability to pay. The above proposition may be supported by an example. Say the legal liability to pay GST is on supplier u/s 9 (1) in respect of transactions liable to forward charge. Suppose in a given case the above liability is contractually undertaken by the receiver or buyer. Even then the legal liability to pay overrides the contractual obligation undertaken & remains with the supplier. Similarly, it is submitted, that in the present case despite the fact that MJP has undertaken the contractual liability to pay, the same is overridden by the Governments Constitutional & Legal liability to pay. 2.7.5. Alternatively, in the earlier submission, the applicants had submitted that MJP is acting as an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the matter and all the questions raised by the applicant. Based upon these, submission from this office is as follows: 3.1 Questions raised by applicant revolves around entry at serial number 3 of notification Number 12/2017-Central Tax (Rate) dated 28/06/2017. Notification No. 31/2017-CT (R) which has amended certain clauses of notification 11/2017 has defined the terms "Government Authority" and "Government Entity" as under: - "(ix) "Governmental Authority" means an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90per cent, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution. 3.2 Aforesaid notification number 12/2017-Central Tax (Rate) was again amended on 18-November-2021by issuing Notification number 16/2021 Central Tax (Rate) in the following manner: "In the said notification, in the TABLE, - I) against serial numbers, in column (3), in the heading "Description of Services", the words "or a Governmental authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplied to the Central Government, State Government or Union territory or local authority or a Governmental authority [or a Government Entity]. In this regard Hon. Maharashtra Authority for Advance ruling has passed an order on 22-September-2021 in case of M/s. Mekorot Development & Enterprise Ltd wherein similar question was dealt and it was held that Maharashtra Jeevan Pradhikaran is clearly getting covered under the definition of "Government Entity". Thus as this issue has already been clarified, Maharashtra Jeevan Pradhikaran gets covered as "Government Entity" in this case also. 3.5 Third condition mentioned above is that such services should be provided by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. In this regard we need to pay attention to the fact that Maharashtra Water Supply and Sewerage Board (MWSSII) was established as per MWSSB Act 1976 for Rapid development and proper regularization of water supply and sewerage services in the State of Maharashtra, by the Government of Maharashtra, MWSSB was subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 01-01-2022. The services provided by applicant are professional in nature which is inferred from agreement between applicant and Maharashtra Jeevan Pradhikaran as submitted. Applicant has submitted sample invoices issued for services provided to Maharashtra Jeevan Pradhikaran. From the perusal of said invoices, it is found that Taxpayer has provided service of "Carrying out Reconnaissance Surveys and Preparation of Feasibility Report and Detailed Project Report". All these services are professional in nature and has to be provided by professional person having expertise in the field. These reports cannot be prepared by layman. In this regard entry at serial number 21 (ii) mentioned in notification number 11/2017-Central Tax (Rate) need to be perused. Sr.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 21 Heading 9983 (Other professional, technical and business services) (ii) Other professional, technical and business services other than (i) above. 9 - Thus, services provided by applicant to Maharashtra Jeevan Pradhikaran after 31-12-2021 will attract CGST at the rate of 9% and SGST at the rate of 9% as co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f service before 01-01-2022 and provision of service after 01-01-2022. Applicant has further asked that whether appointment of Maharashtra Jeevan Pradhikaran as an agency to implement water supply schemes amounts to delegation of sovereign function enumerated in Sch. XI & XII within the framework of Constitution of India so as to hold that Maharashtra Jeevan Pradhikaran has performed the function entrusted under the article 243G & 243W of the constitution of India? The aforesaid question posed by applicant does not have any direct correlation with CGST/SGST Act and is prima facie not being governed by provisions of CGST/SGST Act. Hence no submission is made in this regard. 4. HEARING Preliminary hearing in the matter was held on 09.05.2024. Mr. Amit Arun Sheode, Advocate appeared, and requested for admission of the application. Jurisdictional Officer Mr. Shendarkar, Deputy Commissioner of State Tax, PUN-LTU-512, LTU-2 also appeared. The application was admitted and called for final hearing on 26.06.2024. Mr. Mr. Amit Arun Sheode, Advocate, appeared made oral and written submissions. Jurisdictional Officer Mr. Shendarkar, Deputy Commissioner of State Tax, PUN-LTU-512, LTU-2 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under, (a) Page 54 - Clause -1.10 Taxes and duties: All duties, taxes and other levies as applicable on date of submission of Tender shall be payable by the Consultant in respect of the transaction between the Consultant and their consultation vendors/sub-suppliers is included in the Proposal's price i.e. in financial rate and 'Maharashtra Jeevan Pradhikaran' will entertain no claim on this behalf. All taxes, duties and levies in respect of the transaction between 'Maharashtra Jeevan Pradhikaran' and Consultant are included in the price as per financial rate. However, any increase in the statutory tax after submission of bid shall be on 'Maharashtra Jeevan Pradhikaran's account and shall be reimbursed on actual basis wherever there is any increase. (Emphasis supplied) (b) Page 63 Para 5.5 Payment- 5.5 Payment: In consideration of the Services performed by the Consultants under this Contract, the MJP shall make to the Consultants such payments and in such manner as is provided in schedule of Payments of this Contract as per scope of work. (c.) Page 64 Para 6.4-6. Contract price and payments to the Consultants 6.4. Terms and conditions of payment: The rates given in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of India allotted, and its HSN/ SAC Code and applicable entry in Notification No. 11/ 2017-Central Tax (Rate) dated 28th June 2017? 5.2.2 Services provided to MJP for the Constitutional function of State & Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies, are in fact made to the Central & State Government. 5.2.3 Applicability of entry No. 3 in Notification No. 12/ 2017-Central Tax (Rate) dated 28tf June 2017,.to Supply of services where Time of supply is on or before 31-12-2021 and rate of tax applicable. 5.2.4 Applicability of entry No. 3 in Notification No. 12/ 2017-Central Tax (Rate) dated 28th June 2017,.to Supply of services where Time of supply is on or after 01-01-2021 and rate of tax applicable. 5.3 What is the classification of the services supplied to Maharashtra Jeevan Pradhikaran ('MJP') as a part of Jal Jeevan Mission which is a mission of Government of India allotted, and its HSN/ SAC Code and applicable entry in Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017. The related entry is as under, Heading & Group Service Code (Tariff) Service De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassifiable under SAC code-998399-Other professional, technical and business services n.e.c., under the head Business and Production Services covered at Sr No 21 (ii) in the Notification No 11/2017-Central Tax (Rate)-dated 28th June 2017 and are taxable at rate of 18% (9% CGST & SGST each), wherever exemption is not applicable. Wherever exemption is not applicable. 5.4 Whether Services provided to MJP for the Constitutional function of State & Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies are in fact made to the Central & State Government. Hence, even after deletion of the word "Government Authorities "with effect from 01-01-2022, from the notification entry number 3, the services provided by the applicant shall be eligible for benefit of exemption. At the outset it is submitted by the applicant that, he has some alternate arguments to be submitted regarding the actual recipient of services in not "MJP", but as per provisions of GST Act, Finance Bills and Constitutional law, these are supplies to the Central and State Governments, for following reasons- In brief teach of the argumen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndings & Discussion- Being creature of GST Law this Authority cannot comment on the submission that setting up MJP is entirely unlawful and contrary to the constitutional prescriptions and procedure, this is not appropriate forum to discuss such issue. However, it is clear that, as per the Constitution it is the function/ duty or responsibility of State/Central Government or local Government, and hence setting up MJP which is a body corporate owned by Government is entrusted with the function, is not prohibited but entirely expected, for development, implementation and regulation of such function. a Discussion and provisions of the MJA Act, on this issue are as under, The Maharashtra Jeevan Authority Act, 1976, has set up the MJP. The MJA Act, does not mention that MJP is agent of the State Government. In fact the MJP has Authority to contract on its own (Refer Section 3 and 24) and entitled to sign contracts. Secondly, Government of Maharashtra has not given MJP any authority to sign contracts on its behalf. Refer provisions as under, (a) Section 2. In this Act, unless the context otherwise requires, - (i) "Authority" means the Maharashtra Jeevan Authority established under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Act-MJP and the State Government are related persons and not agents and principal. And supply by them to each other is treated as deemed supply. Under GST such agent Principal relation does not exist between MJP & State Government. Refer relevant provisions which are as under, (a) Section 15. Value of Taxable Supply. - "Explanation. - For the purposes of this Act,- (a) persons shall be deemed to be "related persons" if-......................... ............................................. (iv) any person directly or indirectly owns, controls or holds twenty-five per cent, or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; ......................................; (b) the term "person" also includes legal persons; (c) ........................., howsoever described, of the other, shall be deemed to be related." (b) Section 25. Procedure for registration. (4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by no stretch of imagination, it can create right for benefit of vendors and suppliers of implementing Agencies., as claimed by the Applicant. d. Provisions of Article 282 of the Constitution of India- 283. Custody, etc. of Consolidated Funds, Contingency Funds and moneys credited to the public accounts: (1) The custody of the Consolidated Fund of India and the Contingency Fund of India, the payment of moneys into such Funds, the withdrawal of moneys therefrom, the custody of public moneys other than those credited to such Funds received by or on behalf of the Government of India, their payment into the public account of India and the withdrawal of moneys from such account and all other matters connected with or ancillary to matters aforesaid shall be regulated by law made by Parliament, and, until provision in that behalf is so made, shall be regulated by rules made by the President. (2) The custody of the Consolidated Fund of a State and the Contingency Fund of a State, the payment of moneys into such Funds, the withdrawal of moneys therefrom, the custody-of public moneys other than those credited (o such Funds, received by or on behalf of the Government of the State, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant. 5.4.6 Findings, discussion & decision-The applicant did not produce any evidence in support of his argument, He did not show any part in Budget Speech or Finance Bill or Finance Act, where such liability to pay the amount to various suppliers or vendors of the implementing agencies for such Constitutional work for which grants are earmarked. We have gone through the interim Budget-2024 Speech of Hon'ble Finance Minister, Government of India, in Para 5 -Inclusive Development and Growth 5. Our humane and inclusive approach to development is a marked and deliberate departure from the earlier approach of 'provisioning up-to-village level'. Development programmes, in the last ten years, have targeted each and every household and individual, through 'housing for all', 'harghar jal', electricity for all, cooking gas for all, bank accounts and financial services for all, in record time. The book-let Budget at a Glance -of Hon'ble Finance Minister for 2024-to see any such content regarding Jal Jeevan Mission. Para 6 of the Budget Booklet is as under- "6. Total resources being transferred to the States including the devolution of State's share, Grants/Loans and releases und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res is not permissible and leaving the matter to the Legislative wing of the State, we are left with no option but to dismiss the writ petition. In view of lack of evidence in support of arguments by the applicant, the above Findings, discussion and provisions of Article 282 & Article 283 as explained by Hon'ble High Courts, we hold that the Supplies made by the Applicant to the MJP, are in fact supplies to the MJP itself and even by any stretch of imagination it can be treated as supply to the respective State or Central Government. 5.4.7 Under the "Jal Jivan Mission" or any work done for water supply Scheme, the whole work completed is property of the government and hence the services supplied by the applicant are services provided to the state government. 5.4.8 Jurisdictional Officers submission-The Officer stated that all these arguments are not based on evidence submitted by the applicant nor any binding precedent is cited by the applicant. Lastly, these arguments are vague and against express provisions of the GST Law and the contract submitted by the applicant. 5.4.9 Findings & observations- a. Provisions of vesting of property to MJP is laid down in section 18 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Entry No. 3 even after deletion of word "Government Authority" from the said entry. Section 2 (93) of GST Act is as under, (93) "recipient" of supply of goods or services or both, means- (a) where a consideration is ' payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b)........ (c )............, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied; (Emphasis supplied) 5.4.11 Jurisdictional Officers submission- Payment is not made by Governments directly to the applicant, but are made by the MJP. Secondly, even if for sake of arguments, it is accepted that, Governments have paid to the Applicant the consideration, will not prove that Governments are liable to pay consideration against supply of services provided by the Applicant, making payment and liability to pay are difference things. The Officer stated that all these arguments are not based on evidence submitted by the applicant nor any binding precedent is cited by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aharashtra" is liable for payment to the applicant. The applicant did not produce any document is support of his contention that Government of Maharashtra" is liable for payment to the applicant. (b) Secondly-Scope of supply under section 7 of the GST Act is as under, Section 7. Scope of supply. - "(1) For the purposes of this Act, the expression - "supply" includes- (a) 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;" The provision makes it very clear that supply has underlying contract between two persons to supply goods or services for consideration. In case of applicants' case, it is service provider and other party of contract liable to pay consideration for the supply of service is the MJP. Hence question of third party becoming liable to pay consideration does not arise, either under GST act or as per the terms of contract of this applicant. Last but not least, the applicant could not produce any clause of the Contract for provision of service which states that "The Government of Maharashtra" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is the State Water and Sanitation Mission (SWSM) at the level of "National Jal Jeevan Mission" (NJJM) at the second level. District Water and Sanitation Mission (DWSM) & Bar Rural Water Supply and Sanitation Committee (VWSC). Para-6.1-State Water and Sanitation Mission (SWSM)- 6.1.1-For implementation of Water supply and sanitation programs through this Department, State Water and Sanitation Mission is registered on 10-02-2010 under the Society Registration Act, 1860, under the Chairmanship of the Chief Secretary of Government of Maharashtra. The State Water and Sanitation Mission has full responsibility and authority for the planning, implementation and control of Jeevan Mission and sanitation programs in the state. The State Water and Sanitation Mission has full powers to function as per the guidelines of the Jal Jeevan Mission. The State Water and Sanitation Mission (SWSM) is being empowered to act as the implementing mechanism for Jal Jeevan Mission as per the guidelines of the Central Government Para-8 Financial Matters: Center and state share for this mission will be 50:50. Funds will be reserved according to the schedule caste/tribe population. A total estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and not MJP. As per operational guidelines of "Jal Jeevan mission by ministry of Jal Shakti. The applicant has received the payment through Public Financial Management System "PFMS" rules that the central government and state government have directly paid the consideration to the applicant for the services rendered by him and as both these governments are liable to make payment to the applicant. In view of provisions of subsection (93) of section 2, the supplies may of the services made by the applicant treated as supplies made to the central government and state government for their respective share. 5.4.16 Jurisdictional Officers submission-The Officer stated that all these arguments are not based on evidence submitted by the applicant nor any binding precedent is cited by the applicant. Lastly, these arguments are vague and against express provisions of the GST Law and the contract submitted by the applicant. Payment is not made by Governments to the applicant, but are made by the MJP. PFMS is just an 11 System for accounting of expenditure of Government grants. 5.4.17 Findings, Discussion & decision- a. For decision on this issue exact nature of Public Financial Managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other receipt. All the existing accounts for SBMG at District / Block/ GP levels will be closed after transferring the unspent balance of those accounts to the State nodal account. The details of the SSBMG nodal bank account have to be Communicated to DDWS along with the name of the bank, IFSC Code and Account Number, etc. and should not be changed during the implementation of the project without prior permission of the DDWS. The States/UTs may use the existing account at their SSBMG level as nodal account. The funds release / advance / transfer / expenditure under the programme at all levels shall be mandatory through the Public Financial Management System (PFMS) of Government of India. All the implementing agencies and below level agencies in the States / UTs will be registered in PFMS as parent-child agency and shall be mapped with Linked State scheme code for SBMG and to the State nodal account - it is also to be ensured that all the transactions shall be mandatorily made in PFMS. Utilization of funds and unspent balance will be monitored through the PFMS for the purpose of release of funds to the States / UTs. b. The procedure of Billing & Payment needs to be understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds flow from various governments to the various government authorities, various implementing agencies/ institutes which government schemes, Each such implementing agency has its own bank account one or many depending upon scheme etc. Government grants are transferred to such implementing agencies accounts, only when any bill is processed by the implementing agency. This the grants never flow from Government account to beneficiary accounts directly, but through implementing agencies. This it is far fetched argument that money received through PFMS is money paid by Government. 5.4.18 Findings, discussion & Decision-The argument of the applicant that services provided to MJP for the Constitutional function of State & Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies are in fact made to the Central & State Government. Hence, even after deletion of the word "Government Authorities" with effect from 01-01-2022, from the notification entry number 3, the services provided by the applicant shall be eligible for benefit of exemption services provided by it to MJP, is not based on evidence, far-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution; 5.5.2 Submission of the Applicant- In this regard also, the applicant has argued that Supply of Services by it, to the MJP for Jal Jeevan Mission, are in fact supplies to the Central Government, State Government for the aforesaid reasons. These arguments are found to be is not based on evidence, far-fetched and based on conjectures and surmises and very specious argument and hence rejected and are in fact supplies made to the MJP. 5.5.3 whether the services provided by the applicant as aforesaid are pure services (excluding works contract service or other composite supplies involving supply of any goods)? a. Submission of Applicant- It is submitted that the aforesaid services are pure services. b. Submission of Jurisdictional Officer- It is submitted that the aforesaid services are pure services. c. Findings and Decision on the issue- From the contract referred above, it is clear that the applicant has supplied only the "Technical Consultancy for Project Development an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion; As the MJP is set up by an Act of Legislature of Maharashtra State, it is "Governmental Authority", for the purpose of exemption entry at Sr No 3, before the omission of the words from the entry by Notification No. 16/2021-Central Tax (Rate) dated 18-11-2021 (W.e.f. 01 January 2022). We are supported by earlier advance ruling in case of M/s Mekorot Development and Enterprises Limited, order dated 22 September 2021 in GST Ara application number 71 dated 29th November 2019, rendered by Maharashtra Authority of advanced ruling. 5.5.6 Final decision - Supply of services where Time of supply is on or before 31-12-2021. After Considering all the aforesaid facts, provisions of Law, issues and decision therein, we have no hesitation in holding the "Technical Consultancy for Project Development and Management support services", provided by the applicant to the MJP for its Water supply schemes where time of supply is on or before 31-12-2021, are covered by the exemption entry at Sr No. 3 of the exemption notification No 12/2017-Central Tax (Rate), dated 28th June 2017. 5.6 Supply of services where Time of supply is on or after 01-01-2022. To decide applicability of the Exemption e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 10 (20A), and effect of its deletion on the levy of Income Tax is decided. The appellant-New Okhla Industrial Development Authority has been constituted under Section 3 of the U.P. Industrial Area Development Act, 1976. Earlier on 14-02-2000, High Court held that it is covered by the exemption under Section 10 (20A) of I.T. Act, 1961. However, sub-section (20A) is now deleted wef 01-04-2003. In brief provisions are as under, "Section 10 - In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (20). the income of a local authority which is chargeable under the head "Income from house property", "Capital gains" or "Income from other sources" or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area. **[Explanation.- For the purposes of this clause, the expression "local authority" means- (i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Constitution Bench of Hon'ble Supreme Court has in case of Commissioner of Central Excise, New Delhi Versus M/s Hari Chand Shri Gopal & Others etc. etc. in CIVIL APPEAL NOS. 1878-1880 OF 2004 decided on November 18, 2010, in para 22 has held as under, "22. A person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption". In our considered view the Applicant has failed to discharge the burden of proof to substantiate his claim of exemption. 5.6.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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