Whether Jaipur Development Authority (JDA) Qualifies As A Government Entity Or Governmental
Authority Or Local Authority
Advance Ruling No. RAJ/AAR/2023-24/09
(Rajasthan AAR)
Applicant: M/s Ramesh Kumar Jorasia (Muskan
Construction)
Date of Ruling: 31.08.2023
Ruling Authority: Rajasthan Authority For
Advance Ruling
Main
Question:
Whether Jaipur
Development Authority (JDA) can be considered a “State Government” for
the purposes of Entry 3A of Notification No. 12/2017–Central Tax (Rate) dated
28.06.2017?
Background
of the Case:
The applicant was awarded
a contract by Jaipur Development Authority (JDA) for operation and
maintenance of a water supply scheme in JDA's jurisdiction.
The nature of the contract is:
- Composite supply
involving goods and services;
- Value of goods does not exceed 25%
of the total value;
- The contract is largely labour-intensive.
The applicant contended
that since the project is:
- Executed for JDA, a body
constituted under an Act of the State Legislature;
- Relates to a function entrusted to
a Municipality under Article 243W of the Constitution;
It should qualify for NIL GST rate under Entry 3A of
Notification 12/2017-CT (Rate).
Relevant
GST Provision:
Entry 3A of Notification
No. 12/2017-CT (Rate) dated 28.06.2017 reads:
“Composite supply of
goods and services in which the value of supply of goods constitutes not more
than 25% of the value of the said composite supply provided to the Central
Government, State Government, Union Territory, local authority or a
Governmental authority or Government Entity by way of any activity in relation
to any function entrusted to a Panchayat under Article 243G or to a
Municipality under Article 243W of the Constitution.”
Tax rate: NIL
Submission
by Applicant
1. JDA
is a State Government authority, as it was constituted
under the Jaipur Development Authority Act, 1982.
2. The
contract relates to municipal functions such as water supply—falling
under Article 243W.
3. The
value of goods is less than 25%, qualifying the contract under Entry
3A.
4. Therefore,
the supply should be exempt from GST.
AAR
Findings & Conclusion:
1. Definition
of "Government":
o As
per Section 2(53) of the CGST Act – "Government" refers to the
Central Government.
o As
per Section 2(53) of the RGST Act – "Government" means the Government
of Rajasthan.
2. A
detailed reference was made to the General Clauses Act, Articles 53,
154, and 166 of the Constitution of India to explain the meaning of
"State Government".
3. Jaipur
Development Authority (JDA):
o Constituted
under Jaipur Development Authority Act, 1982.
o An
autonomous statutory authority created by the Government of Rajasthan.
o However,
JDA is not the "State Government" per se.
o It
is not the Governor or his direct subordinates exercising executive
powers in the name of the Governor, but an independent statutory body.
Final
Ruling:
Jaipur Development
Authority (JDA) cannot be considered as “State Government”
for the purpose of Entry 3A of Notification No. 12/2017-CT (Rate) dated
28.06.2017.
Implication
of the Ruling:
- Since JDA is not State Government,
Entry 3A exemption is not available.
- The applicant’s composite supply
contract is taxable under GST, and the applicable rate of
tax must be paid.
- Contractors working for JDA cannot
claim the NIL-rated GST benefit under Entry 3A unless JDA
qualifies as a “Government Entity” or “Governmental Authority”
under the GST notifications (which wasn't raised or considered in this
ruling).
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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