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TMI Blog2024 (9) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... and registered with GSTIN 05AAACT7905Q1ZW under the CGST Act, 2017 read with the provisions of the UKGST Act, 2017. 2. 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. 3. 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 be undertaken by the applicant. 4. As per the said sub-section (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of: (a) Classification of any goods or services or both (b) Applicability of a notification 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) D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore proceeding in the present case, we have to first go through the submissions made by the applicant which are as under: 6.2 That as per as per the URL https://thdc.co.in/en/content/company-thdcil "The Equity of Company was earlier shared between Gout, of India and Go UP in the ratio of 75:25.Pursuant to Strategic Sale, the Share Purchase Agreement was executed between NTPC Limited and President of India on 25th March, 2020, for acquisition of legal and beneficial ownership of equity held by the President of India in THDC India Limited. After Strategic Sale, Equity in THDC India Limited is shared between NTPC Limited and Government of UP in a ratio of 74.496% and 25.504%." 6.3 That in the AAR of Uttarakhand State vide Application No. 11/2018-19 the authority had treated NHPC Limited as Government Entity and had interpreted the definition of Government Entity i.e. "Government Entity means an authority or a board or any other body including a society, trust, corporation, (i) setup by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90 per cent or more participation by way of equity or control, to carry out a function entrusted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above AAR, if the applicant i.e. THDCIL is treated as Government Entity then the provisions of Entry No. 45 of the Notification No. 12/2017-CT(R) Dt. 28/06/2017 shall be attracted and therefore, THDCIL shall be exempted from paying GST under RCM on the Legal Services provided by the advocates including Senior Advocate or firm of Advocate. 6.6 Accordingly opportunity of personal hearing was granted to the applicant on 07.06.2024. Sh. Rakesh Varshney and Sh. Rajat Varshney both Advocates, on behalf of the applicant, appeared for personal hearing on the said date and re-iterated the submission already made in their application. Smt. Maneesha Saini, Deputy Commissioner, Concerned Officer from the State was also present during the hearing proceedings. She presented the facts and requested the authority to decide the case on merits. DISCUSSION AND FINDINGS: 7. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which were filed by the applicant for our consideration. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made by applicant and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the applicant that the equity of the Company was earlier shared between Govt, of India and Govt, of Uttar Pradesh in the ratio of 75:25 and hence taking cognizance of the above cited AAR, the applicant i.e. THDCIL shall also be treated as Government entity, because at the time of inception of the Corporation, the Government participation in the equity or by way of control was more than 90% and therefore, the provisions of Entry No. 45 of the Notification No. 12/2017-CT(R) Dt. 28/06/2017 shall be attracted and hence THDCIL shall be exempted from paying GST under RCM on the Legal Services provided by the advocates including Senior Advocate or firm of Advocate. We note that moot point to decide in the present proceedings is whether the applicant i.e. THDCIL can be treated as a "Government Entity" in terms of definition as provided in the Notification No. 11 /2017-Central Tax (Rate), dated the 28th as amended by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017. Hence we have to examine as to whether the "THDCIL" is a 'Governmental Entity' or not? It is relevant to note that the term "Governmental Entity" is not defined in the CGST Act, 2017. We find that the Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity", by interpreting the definition as Government Entity means an authority or a board or any other body including a society, trust, corporation, established by any Government, with 90 per cent, or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. From the perusal of the definition as provided in the above referred notification, it is apparent that in the first part of the definition, a comma/ the mark (,) has been placed after the word, "corporation", and likewise in the third part of the definition, a comma/ the mark (,) has been placed after the phrase/group of words, "established by any Government", and also a comma/ the mark (,) has been placed after the phrase/group of words, "with 90per cent, or more participation by way of equity or control". We find that as per https://www.collinsdictionary.com/dictionary/english/comma, "comma" has been defined as "the punctuation mark (,) indicating a slight pause in the spoken sentence and used where there is a listing of items or to separate a non-restrictive clause or phrase from a main clause and that as per the https ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this reduction in equity or control, happened pursuant to strategic sale by the Government of India through President of India and a Share Purchase Agreement was executed between NTPC Limited and President of India on 25th March, 2020, for acquisition of legal and beneficial ownership of equity held by the President of India in THDC India Limited and hence after the Strategic Sale, the Equity in THDC India Limited is shared between NTPC Limited and Government of UP in a ratio of 74.496 % and 25.504 %. This shows that the status of the applicant i.e. the Company with respect to equity or control of the Government did not remained same and got reduced to 25.504 %, which is less than the stipulated 90 % or more. We opine that in the present economic scenario, the Government of India and or State Governments are exploring and considering Strategic Sale of the their holdings/ equity in the Companies (owned by them) for disinvestment purpose, the reduction in equity or control would led to comical situation viz.-a-viz. the conditions enumerated in the definition of "Government Entity", if the equity holding of the Government is reduced to 0% (ZERO). In such a situation whether the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t present the equity or control of the Government is less than the stipulated 90% and hence cannot be categorized and considered as "Governmental Entity" in terms of Notification No 11/2017-Central Tax (Rate), dated 28 June'2017, as amended by the Notification No. 31/2017-Central Tax (Rate), dated 13 October' 2017. And hence the provisions of Entry No. 45 of the Notification No. 12/2017-Central Tax (Rate), dated 28 June'2017, shall not be applicable in the case of the applicant. 9. In view of the discussions held above, we rule as under: RULING 1. Whether the Applicant i.e. the THDCIL is a Government Entity or not? Answer - Answer is in negative. The equity or control of the Government is less than the stipulated 90% and hence cannot be categorized and considered as "Governmental Entity" in terms of Notification No 11/2017-Central Tax (Rate), dated 28 June'2017, as amended by the Notification No. 31/2017-Central Tax (Rate), dated 13 October'2017. 2. If yes, can Legal Services provided by the advocates including Senior Advocate or firm of Advocate is exempt from GST for THDCIL i.e. THDCIL does not need to pay tax under RCM? Answer- Answer is in negative. Since the applicant is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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