In re Gujarat Industrial Development Corporation (GST AAR Gujarat)
As per the submission of the applicant, Gujarat Industrial Development Corporation (GIDC) was established under the provisions of Gujarat Industrial Development Act, 1962 by the State Government of Gujarat for the purpose of securing orderly establishment and organisation of industries in industrial areas and industrial estates in the State of Gujarat and establishing commercial centres in connection with the establishment and organisation of such industries and the GID Act and Gujarat Industrial Development Rules, 1962 govern the functioning of the Applicant. However, on going through the aforementioned list of functions entrusted to the municipality, we find that none of the entries pertain to the establishment or development of industries. As per the submission of the applicant, the activity carried out by them pertains to planning for economic development. It is observed that Sr.No.3 of the list states ‘Planning for economic and social development’. However, on going through the said entry, we find that it cannot be construed to pertain to establishment, development or organisation of industries since, establishment, organisation and development of industries, cannot, by any stretch of imagination, be a function entrusted to a municipality or cannot be covered under the list of functions to be carried out by a municipality. However, at the same time, upliftment of oppressed people or backward classes such as Scheduled Castes, Schedule Tribes, Adivasis etc. (falling under the jurisdiction of the municipality) by providing them proper shelters, easy loans for business, encourage their children to study by giving them scholarships etc. could certainly be one of the functions of a municipality and would be covered under the head ‘planning for economic and social development’. We do not find the said entry to pertain, in anyway, to the establishment of industries or industrial development and the applicant appears to have interpreted the said entry as per his whims and fancies to suit his contention. Further, there are many means to achieve economic development of a state/country i.e. construction of shopping malls, hospitals, schools, roads, highways, tunnels, construction of residential and commercial buildings, expansion of railways, construction of new Railway stations and new airports, etc. which would create a lot of jobs, thus, increasing employment opportunities, reducing unemployment and usher in economic development in the long run. Similarly, effective and long term policies of the Government such as good monetary and fiscal policies, regulation of financial institutions, trade and tax policies, programs that provide infrastructure and services such as highways, parks, crime prevention, good and quality educational institutions etc. would also result in economic development and can also be covered under the head ‘planning for economic and social development’. Does this mean to say that all these activities would be covered under Entry of Sr.No.3 of the above list thereby meaning that all these activities are in relation to economic development and hence are covered under the functions entrusted to a municipality under Article 243 of the Constitution of India and therefore liable to exemption from GST under the provisions of Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? We, therefore, are of the opinion that unless and until there is a specific entry pertaining to the establishment or development of industries in the aforementioned list, it cannot, by any stretch of imagination, be construed that the applicant is a Corporation that has been established to carry out activities in relation to functions entrusted to the municipalities under Article 243W of the Constitution of India merely on the grounds that establishment, organisation and development of industries would lead to economic development and would thus be covered under the aforementioned Entry No.3 of the list. In view of the above facts, we conclude that the applicant namely Gujarat Industrial Development Corporation is not eligible for the exemption mentioned at Entry No.4 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time).
Read AAAR :- Gujarat Industrial Development Corporation is Government Entity
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, GUJARAT
BRIEF FACTS
The applicant M/s. Gujarat Industrial Development Corporation located at 1st floor, Block No.4, Udyog Bhavan, GH-4 Circle, Sector-11, Gandhinagar, Gujarat-382011(hereinafter referred to as the “Applicant”) was established under the provisions of Gujarat Industrial Development Act, 1962 (hereinafter referred as ‘the Act’) by the State Government of Gujarat for the purpose of securing orderly establishment and organisation of industries in industrial areas and industrial estates in the State of Gujarat and establishing commercial centers in connection with the establishment and organisation of such industries. The preamble of the Act reads as under:-
“An act to make special provision securing the orderly establishment and organization of industries in industrial areas and industrial estates in the State of Gujarat and for the purpose of establishing commercial centers in connection with the establishment and organization of such industries and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the matters aforesaid”
2. The applicant has stated that the GID Act and Gujarat Industrial Development Rules, 1962 (hereinafter referred as the ‘said Rules’) govern the functioning of the Applicant; that after the establishment of the Applicant, various areas in Gujarat where industries were clustered were declared as GIDC zones and new industrial zones were also created and plots of land were allotted to willing industries (hereinafter referred to as “plot holders” or “allottees”) on very economical terms so that overall industrial development could take place in a structured and planned manner; that Section 13 of the Act stipulates various functions to be performed by the applicant which includes promotion and assistance in the rapid and orderly establishment; growth and development of Industries in the State of Gujarat; development of land on its own account or for the State Government for the purpose of facilitating the location of industries and commercial centres; financial assistance by loans to industries to move their factories into industrial estates or areas and undertaking schemes for providing units and commercial establishments with such structures as may be necessary for their orderly establishment, growth and development; that the Applicant also develops and provides infrastructure facilities like roads, sustained water supply, drainage etc. within the industrial areas or estates. Further, the maintenance and upgradation of the existing infrastructure is also a primary responsibility of the Applicant, in view of section 37(1) of the Act.
3. The applicant has submitted that Section 14(a) of the Act, empowers the applicant to acquire and hold such property, both movable and immovable as the applicant may deem necessary for the performance of any of its activities, and to lease, sell, exchange or otherwise transfer any property held by it on such conditions as may be deemed proper by the applicant. Further, section 14(d) of the Act, empowers the applicant to make available buildings on hire or sale to industrialists or persons intending to start industrial undertakings or commercial establishments or both the industrial undertakings and commercial establishments; that the applicant and plot holder have lessor – lessee relationship and annual rent is collected by the applicant from the plot holders; that the lease agreement between the applicant and allottees is generally for 99 years (long term lease);that various financial institutions provide finance on the plots considering the allottees as deemed owners on account of long term lease; that the common road, street lights and other amenities are the property of applicant and are maintained by the Applicant for the allottees; that every year the applicant incurs expenditure to maintain the common facilities such as road, streetlights, water supply etc. and collects maintenance charges from plot holders on annual basis depending upon the size of plot and levy for the maintenance charges is collected in next year on the basis of actual expenditure incurred by the applicant during the preceding year; that the applicant earns income on the following activities: –
