In re Bangalore Metro Rail Corporation Limited (GST AAR Karnataka)
The Karnataka Authority for Advance Ruling (AAR) has ruled that Bangalore Metro Rail Corporation Limited (BMRCL) is not a “Governmental Authority” and is therefore ineligible for a GST exemption on certain concession activities. This ruling, in the case of In re Bangalore Metro Rail Corporation Limited (GST AAR Karnataka), stemmed from an application filed by BMRCL seeking clarification on its GST liability. The corporation, a joint venture between the Government of India and the Government of Karnataka, had entered into a Memorandum of Understanding (MOU) with a private entity, M/s Embassy Property Developments Private Limited (EPDPL), to construct the Kadubeesanahalli Metro Station. As part of the agreement, EPDPL was granted specific concessions, including naming rights, advertising space, and commercial development area, in exchange for a fee of ₹100 crores. BMRCL contended that these concession activities should be exempt from GST under Notification No. 12/2017-CT (Rate) because it qualified as a governmental authority performing functions related to a municipality.
BMRCL argued that it met the definition of a “Governmental Authority” as defined in Paragraph-2(zf) of the notification, citing that it was an “other body” established by the government with 90% or more participation by way of equity or control. The corporation highlighted its 50% equity stake from both the Central and State governments. It further argued that its activities, such as urban planning, construction of buildings, and providing public amenities, were “in relation to any function entrusted to a municipality” under Article 243W of the Constitution and the Twelfth Schedule. To support its claim, BMRCL referenced the ruling in In Re: Amaravathi Metro Rail Corporation Ltd., where the Andhra Pradesh AAR had held that a similar metro rail corporation was a governmental authority and that urban transportation was a part of urban planning.
