Case Law Details
In re Haryana State Warehousing Corporation (GST AAR Haryana)
Whether definition of Government Entity as defined in Para 2 (zfa) in Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 32/2017- Central Tax (Rate) dated 13.10.2017 is applicable on the applicant i.e. Haryana State Warehousing Corporation?
In order to qualify for a Government Entity the applicant must have been setup by an Act of the Legislature of the Union or of the State or it must have been established by any of the Governments i.e. the Union or of the State. It is a matter of fact that the Haryana Warehousing Corporation is established under Section 18 of the Warehousing Corporation Act, 1962 which is an Act of Parliament. But the definition also provides for 90% or more participation by way of equity or control of the respective Governments. It means that if the Authority or Board or any other body is established by an Act of Parliament, the Union Government must have 90% or more participation by way of equity or control. The condition applies to a State Government if such body is established by a State Legislature.
In this case, admittedly the equity share of Central Government is 55.02%. Therefore, the condition of 90% or more participation by way of equity is not fulfilled. Further, the applicant has submitted that as per Section 20 of the Warehousing Corporation Act 1962, five directors are nominated by Central Warehousing Corporation with the condition that one shall be nominated in consultation with the State Bank and at least one shall be non- official. Five directors are nominated by the State Government and a Managing Director is appointed by the State Government in consultation with the ten directors discussed above. Firstly, since out of ten directors, five are nominee of the State Government, the Central Government cannot be said to have more than 90% control. Secondly, even if the cumulative control of Central and State Government is considered, the same falls short of the condition of 90% control as stipulated in the definition discussed above. Reason being, at least one of the five directors nominated by the Central Warehousing Corporation is a non-official and one has to be appointed in consultation with the State Bank which has only 54% share of the Government of India. So, essentially at the maximum, eight out of the ten directors are purely Government nominees. The Managing Director is appointed by the State Government in consultation with the ten directors discussed above. In nutshell, the applicant fails to satisfy the condition of 90% control also.
4. Ruling:
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