In re Surat Municipal Corporation (SMC) (GST AAR Gujarat)
In the present case the applicant is recipient of the services and not supplier of such services. Accordingly, the application is not liable for admission and therefore rejected without going in to the merits of the case.
Instant application filed by M/s. Surat Municipal Corporation (SMC), Muglisara, Surat is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable in view of the above discussion.
Read AAAR Order : GST Advance ruling application by recipient of service not maintainable: AAAR
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,GUJARAT
M/s. Surat Municipal Corporation (SMC), Muglisara, Surat-395003 is a Municipal Corporation and having a GSTIN: 24AADCS3108B1Z2, has filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the GGST Act.
2. M/s. The SMC is a Local Self Government governed by the Gujarat Province Municipal Act, 1949 (GPMC Act). The GPMC Act has laid down the Statutory / Obligatory and Discretionary Duties to be undertaken by the SMC under Sec 63 (1) and 66 of the GPMC Act. As a part of their Obligatory Duty, they had entrusted the work of “Design and Comprehensive Consultancy Service from Concept to Completion of a State of Art Office Building at T. P. 6 (Majura-Khatodara), F. P. No. 235, Ring Road, Surat to M/s. INI Design Studio Pvt. Ltd. Now, there had been a dispute between said Contractor and the SMC about applicability of GST on the said Contract. SMC is of the opinion that it is exempted by virtue of Entry No. 3 of the Notification No. 12 / 2017 – CT. Hence, the SMC had preferred this Advance Ruling Aplication.
3. Accordingly, the applicant sought the Advance Ruling on the following question :
“Whether the Supply made by M/s. INI Studio Pvt. Ltd. would qualify for Exemption under Entry No. 3 of the Notification No. 12 / 2017 – CT as a “Service” in relation to any functions entrusted to a municipality under article 243W of the Constitution as a “Pure Service” having no element of goods so as to construe it as “Works Contract’ as defined under Section 2 (119) of the Central Goods and Services Act, 2017 (CGST Act, 2017)”?
APPLICANT’S INTERPRETATION OF LAW AND/OR FACTS
4. The applicant submitted that basically, the issue involved here is of applicability of Exemption of Notification No. 12 / 2017 – CT. There is no dispute that this is the “Supply”. Now, the question arises as to whether this will be termed as “in relation to Article 243W of the Constitution.”
5. The applicant submitted that SMC is a Local Self Government governed by the Gujarat Province Municipal Act, 1949 (GPMC Act). The GPMC Act has laid down the Statutory / Obligatory and Discretionary Duties to be undertaken by the SMC under Sec 63 (1) and 66 of the GPMC Act.
6. The applicant submitted that more specific duties had been laid down by GPMC Act, 1949. Article 243W, is the empowering Section to the State to pass any State Law or Legislation for formation of “Municipal Corporations” and assigning any Functions, Powers, Authorities, Responsibilities and Implementation of any Schemes etc. For ease of reference, the Article 243W of the Constitution is reproduced hereunder.
243W. Powers, Authority and Responsibilities of Municipalities, etc.
Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow
(a) the Municipalities with such Powers and Authority as may be necessary to enable them to function as institutions of Self-Government and such law may contain provisions for the devolution of Powers and Responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to
(i) the Preparation of Plans for Economic Development and Social Justice;
(ii) the Performance of Functions and the Implementation of Schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule;
(b) the Committees with such Powers and Authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the “Twelfth Schedule”.
From above text of the Article, it is quite evident that the State Law, subject to the provisions of this article, may endow any authority or responsibility to the Corporations. Thus, the Gujarat Province Municipal Act, 1949 (GPMC Act) came into existence. Now, detailed duties of Corporations have been given under Sec 63 (1) & 66 which are Obligatory in nature.
7. The applicant submitted that careful reading of the Article 243W (a) (ii) as mentioned hereinabove, it is noticed that the word “Including” has been used. Combined reading of above provisions gives an impression that the Corporations are bound to perform functions as mentioned in the State Law including those in relation to matters listed in the Twelfth Schedule.
8. The applicant further submitted that the thrust is given to both, the State Law Obligation and Matters listed in the Twelfth Schedule. Thus, it is not like that the Corporations are duty bound only to perform the functions which are mentioned in Twelfth Schedule only. The Corporations are equally duty bound to perform the functions as mentioned under the State Legislature i.e. GPMC Act (Section 63 (1) & 66). Thus, the duties mentioned Section 63 (1) & 66 of the GPMC Act is also indirectly mentioned under the Article 243W of the Constitution of India. Thus, the duties as mentioned in Article 243W are wide enough to include the duties of GPMC Act.
9. The applicant submitted that for ease of reference relevant entry No. 3 of Not. No. 12/2017-CT (Rate) dated 28.06.2017 is reproduced hereunder:
