In re National Dairy Development Board (GST AAAR Gujarat)
Member (Central) held that in absence of sufficient information, it cannot be determined whether M/s. NDDB is ‘Governmental Authority’. It is also held that exemption in not admissible to M/s NDDB for providing services of “Renting of Immovable property” Member (State) agreed with findings on first issue. As regarding second issue, it is held that it is not subject matter in this appeal hence the same can’t be decided in this appeal.
FULL TEXT OF ORDER OF BEFORE THE AUTHORITY OF ADVANCE RULING,GUJARAT
The appellant, M/s. National Dairy Development Board (herein after referred to as ‘M/s. NDDB’) is a statutory body constituted by an Act of Parliament, namely, the National Dairy Development Board Act, 1987. M/s. NDDB has created a trust in the name of ‘Anandalaya Educational Society’ and allowed it to occupy the property within its campus. The property is allowed to be used or leased at very nominal amount.
2. The appellant filed an application for Advance Ruling before the Gujarat Authority for Advance Ruling (herein after referred to as the ‘GAAR’) and sought ruling on following questions-
(i) Whether NDDB would be qualified as ‘governmental authority’ from GST perspective?
(ii) Whether renting of immovable property service provided by NDDB to an educational institute would be exempted under Sr. 4 of Notification No. 12/2017-Central Tax (Rate) ?
3.1 M/s. NDDB referred to the definition of ‘Governmental authority’ given under Section 2(16) of the Integrated Goods and Services Tax Act, 2017 and submitted that since it is set up by an Act of Parliament, it would be ‘Governmental authority’ from GST perspective as per clause (i) of the said definition. It submitted that the condition of ‘ ninety percent or more participation by way of equity or control, to carry out any function entrusted to municipality under Article 243W of the Constitution’ given below clause (ii) of the definition would not be applicable to clause (i) of the said definition. In support of this contention, it relied upon the decision of Hon’ble High Court of Patna in case of Shapoorji Paloonji & Company Ltd. Vs. CCE, Patna.
3.2 As regards the eligibility of exemption under Sr. 4 of Notification No. 12/2017-Central Tax (Rate), M/s. NDDB submitted that one of the function entrusted to municipality is ‘promotion of cultural, educational and aesthetic aspects’, the scope of which is very wide. It was submitted that services of renting of immovable property for educational institute would be covered within provision of above article.
4. The GAAR, vide Advance Ruling No. GUJ/GAAR/RULING/2019/2 dated 22.02.2019, ruled as follows :-
(i) National Dairy Development Board (24AADCN2029C1Z5) would be qualified as ‘government authority’ from Goods and Services Tax perspective, if it fulfils the condition namely ‘with ninety percent or more participation by way of equity or control to carry out any function entrusted to a municipality under article 243W of the Constitution”.
(ii) Renting of immovable property service provided by National Dairy Development Board (24AADCN2029C1Z5) to an educational institute would be exempted under Sr. No. 4 of Notification No. 12/2017-Central Tax (Rate) and corresponding State Tax Notification, if it qualifies as ‘governmental authority’.
5. Aggrieved by the aforesaid advance ruling, the appellant has filed the present appeal.
6.1 The appellant has submitted that the Advance Ruling is issued with ‘if condition i.e. the appellant would qualify as ‘Governmental Authority’ if it fulfils the condition of ninety percent or more participation by way of equity or control’, and such conditional ruling or ruling with ‘if condition is not proper and against legal provisions.
6.2 It has been submitted that the condition put forth in the ruling is limited to the fact whether the appellant fulfils the condition of ninety percent or more participation by way of equity or control. It has been submitted that the ruling has accepted the fact that the Appellant fulfils the criteria of carrying out any function as entrusted to a municipality under Article 243W of the Constitution. The appellant submitted that the appeal is preferred in order to determine requirement of fulfillment of condition of ninety percent or more participation by way of equity or control, in light of available facts.
7.1 The appellant has submitted that the GAAR has held that the decision in the case of Shapoorji Paloonji & Company Ltd. Vs. CCE, Patna is not binding only because the said judgement has been challenged before the Hon’ble Supreme Court and hence the same may not be considered as final. In this regard, the appellant relied upon the decision of Hon’ble Madras High Court in the case of Dr. T. Rajakumari and others vide W.P. No. 39022 and 36735 of 2015 wherein Hon’ble High Court stated that till the time decision of High Court is struck down by the Supreme Court or the Supreme Court stays the operation of the judgement, the decision of High Court would be applicable.
7.2 The appellant has submitted that the word used in the definition is ‘or’ between (i) & (ii) and both are separated by way of semi colons, which means the condition of 90% or more participation by way of equity or control, to carry out any function entrusted to municipality under Article 243W would be applicable to body which is established by the Government. Therefore, the board / body set up by an act of parliament is independent and is not bound by above condition. The Judgement of Hon’ble High Court of Patna in the case of Shapoorji Paloonji & Company Ltd. Vs. CCE, Patna has been relied upon in this regard. The Advance Ruling issued by the Uttarakhand Advance Ruling Authority in the case of NHPC Limited [2018-VIL-284-AAR] has also been referred. The appellant also referred to judgement of Hon’ble High Court of Punjab & Haryana in the case of Rajinder Singh Vs. Kultar Singh [ILR (1979) 2 P&H 486 (FB)] and judgement of Hon’ble Supreme Court in the case of State of Gujarat Vs. Reliance Industries Limited [2017-VIL-34-SC].
8.1 The appellant has submitted that in the Advance Ruling, it is stated that the appellant has not provided the details / evidence as to whether they fulfill the condition or not and if the appellant fulfills the condition, they would be eligible for the exemption.
8.2 In this regard, the appellant has submitted that it is totally controlled by the Central Government. The appellant has cited following provisions of NDDB Act.
(i) The Board of Directors of NDDB would be nominated by the Central Government. [Section 8],
(ii) The appointment of auditors for NDDB would be subject to approval of Central Government. [Section 28],
(iii) The Audit Report issued by the auditors would be laid before the Parliament by the Central Government. [Section 29],
(iv) In case NDDB wishes to form new company or acquire any company then the previous approval of Central Government is mandatory. Central Government may make any scheme and liquidation can be done by order of the Central Government. [Section 37].
In view of the above, the appellant has submitted that it is fully governed / controlled by the Central Government and hence it fulfills the condition of ninety percent or more participation by way of control in order to qualify as Governmental Authority.
9. Personal Hearing in this case was held on 14.06.2019, wherein in addition to reiterating their submission in the appeal memorandum, they submitted notification S.O. 1869(E) dated 09.06.2017 and notification S.O. 1140 (E) dated 06.03.2019 to buttress the point that their organization has been set up under the Act of Parliament and is fully controlled by Central Government.
FINDINGS (AS PER AJAY JAIN):-
10. We have considered the submissions made by the appellant in the appeal as well as at the time of personal hearing.
11. The main issue involved in this case is whether the exemption provided vide Sr. 4 of Notification No. 12/2017-Central Tax (Rate) is admissible to appellant for providing service of ‘Renting of Immovable Property’ to ‘Anandalaya Educational Society’. The said Sr. 4 of Notification No. 12/2017-Central Tax (Rate) reads as follows :-
TABLE
