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TMI Blog2025 (4) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... entation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 1. At the outset, we would like to make it clear that the provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act are in pari materia and have the same provisions in like matters and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act, 2017. 2. M/s. Tiruppur City Municipal Corporation (hereinafter 'the Applicant') submitted a copy of Ledger making a debit entry vide reference No. DC3310230030813 on 09-10-2023 evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. The online application form for advance ruling was filed on 9th Oct, 2023 and the physical application was 14th Dec, 2023 as mandated under Rule 107A. 3. Statement of relevant facts as narrated by the applicant: * M/s Tiruppur Municipal Corporation is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. * As per Notification No. 14/2017-CT (Rate) dated 28th Jun, 2017, "Services by way of any activity in relation to a function entrusted to a Panchayat under Article 243G of the Constitution (or to a Municipality under Article 243W of the Constitution, is not a service". * The activity of the applicant will fall under the functions entrusted to a municipality under the Twelfth Schedule to Article 243W of the constitution under (c) Planning for economic and Social development and (q) Public amenities including street light, parking lots, bus stops and public conveniences' out of 18 functions listed under the schedule. * Similarly, the functions entrusted to a Panchayat under the Eleventh Schedule (Article 243G) of the Constitution include '(22) Markets and fairs'. * The applicant quoted some of the Sections of The Tamilnadu District Municipaliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR ruled that the 'transaction between the Corporation and the contractor to be an activity/transaction in relation to activity/transaction undertaken by the appellant engaged as public authority and the same are covered under Notification No. 14/2017-CT (Rate) as amended. AAAR has held that the collection of Market fees daily/weekly collected for an open area through the contractors is treated as activity/transaction in relation to activity/transaction undertaken by the appellant engaged as public authority and the same is covered under Notification No. 14/2017-CT (Rate) as amended. * On the same analogy, it is opined that the same will hold good on activity of leasing of onion mandis (constructed shop/godown) to the tender contractors for the purpose of collection of fee on daily basis from the merchants/farmers/public for usage of the shops on a daily basis used for selling onions. * Joint Commissioner further stated that the questions raised in the Advance Ruling application are not pending or decided in any proceedings as per their records. 6. PERSONAL HEARING Personal hearing was held first on 25-09-2024 and subsequently on 28-01-2025 due to change in the Advance Ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem in the capacity of a 'Municipality', the Appellate Authority of Advance Ruling has overruled the decision of AAR and held that the collection of daily Market fees for an open area through the contractors is treated as activity/transaction in relation to activity/transaction undertaken by the appellant engaged as public authority and the same are covered under Notification No. 14/2017-CT(Rate) as amended. 7.4. In the present application, the applicant had sought ruling on the 'right given to the contractors to collect entry fee for daily market of 19 onion mandis constructed for use by the vendors/farmers/public'. Based on the tender process, the successful bidder/contractor was awarded the contract of 'right to collect fees' by the Municipality for a period of three years, where, the contractor is allowed to collect daily entrance fees from vendors/ farmers/public for using the 19 constructed onion mandis. 7.5. As per the conditions of the contract, the fee collected from the public/onion merchant/farmers by the tender contractor is prescribed by the Municipality and the receipt for such entry fee issued by the contractor, to the vendors/farmers/public', will be in the name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 16/2018-CT(Rate) dated 26th July, 2018 the Government had made certain amendment to the above notification to include 'Municipality' also, as below. 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), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 14/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 693(E), dated the 28th June, 2017, namely :- In the said notification, in the first paragraph,- (i) after the words "State Government", the words "or Union territory" shall be inserted; (ii) after the word "Constitution", the words "or to a Municipality under article 243W of the Constitution" shall be inserted. 2. This notification shall come into force with effect from 27th of July, 2018. 7.10 While Article 243G of the Constitution of India prescribes the powers, authority and responsibilities of Panchayats and lists the fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not allotted to any person permanently. (vi) After payment of entry fees, any farmer/person can use the 19 onion mandis till the disposal/sale of onions. (vii) Each mandi measures 20x16 feet and no monthly/weekly/daily rental are collected. Entry fees is collected as per the rates fixed by the municipal corporation and receipt for entry fee is issued in the name of the corporation by the contractor. Contractor cannot collect over and above the fee fixed by the Corporation as entry fee. (viii) The Onion Mandis is for daily market usage only and no GST on the contract amount is collected and paid to the Government. 9. Going by the facts presented to us, the primary difference with the one where appeal was decided by the appellate authority for the same applicant is that, earlier it was entry fee for daily open market and now it is an entry fee for constructed mandis. The activity of collection of entry fee for using Onion mandis by the vendors/farmers/public would fall within the ambit of functions entrusted under Article 243W of the Constitution. It cannot be said that the contractor is doing any other service or deviating from doing the contracted service not concerned with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actor) and hence as per Notification No. 12/2017-CT(Rate) dated 28-06-2017. Sl. No. 8 Chapter 99, 'Services provided by the Central Government, State Government, Union territory or local authority is not exempted from GST. Hence, opined that the contractor is liable to pay tax. On the same argument, AAR has rejected the eligibility of Notification claimed by the applicant stating that the contractor is business entity and is liable to pay tax. The appellate authority, on the appeal filed against the said ruling of AAR however, has overruled the AAR's ruling and stated that the benefit of notification is available to contractor also as long as the same are rendered as 'back to back' services to the applicant. 12. Based on the above discussion, we rule as under. RULING Based on the facts, records and evidences submitted along with the application, the queries are answered as follows. (i) The activity of leasing, to the tender contractor, the right to collect entry fees on a daily basis, from merchants/farmers/public for 19 constructed onion mandis (shops/Godowns) would be covered under the function entrusted to Municipality under Article 243W of the Constitution as a local author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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