The AAR, Rajasthan in the matter of M/s. Rajasthan Housing Board [Advance Ruling No. RAJ/AAR/2022-23/20 dated December 14, 2022] has ruled that Rajasthan Housing Board (“RHB”) is covered under the definition of “Governmental Authority” as defined in clause (zf) Paragraph 2 vide Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017 (“the Services Exemption Notification”) and services provided by them in relation to any function entrusted to a municipality under Article 243 W of the Constitution will be nil rated Goods and Services Tax (“GST”) and exempted vide Sl. No. 4 of the Services Exemption Notification.
Facts:
M/s Rajasthan Housing Board (“the Applicant”) was established vide an ordinance and later on notified under Section 4 of the Rajasthan Housing Board Act, 1970 (“the RHB Act”). The administrative cost of the Applicant is borne by the State Government by making grant and it is directly controlled by the State Government. The RHB Act empowers the State Government to dissolve the Applicant by publishing a notification to give effect to such dissolution.
The Applicant submitted that it is a “Government Authority” and the services provided by them are exempt in GST vide Sl. No. 4 of the Services Exemption Notification, which has two parts i.e. service must be by a ‘Government Authority’ and it should be in relation to any function entrusted to a municipality under Article 243 W of the Constitution. As the Applicant is established by the State Government with 100% control of Government and to ensure affordable housing in environmentally invigorating habitats with inclusive facilities especially for the economically weaker sections of the society, it is covered under the Article 243 W of the Constitution.
Issues:
- Whether the Applicant is covered under the definition of “Government Authority”?
- Whether the services provided by the Applicant as governmental authority are exempt under entry S. No. 4 of the Services Exemption Notification?
Held:
The AAR, Rajasthan in Advance Ruling No. RAJ/AAR/2022-23/20 held as under:
- Observed that, the Applicant is constituted by State Government under RHB Act and are fully controlled by State Government. Thus, it is a ‘Government Authority’ under the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
- Observed that, the services provided by the Applicant fall in the list of services enumerated under Twelfth Schedule of Article 243W of the Indian Constitution, thus qualifying the admissibility criteria.
- Held that, the Applicant is covered under the definition of “Governmental Authority” as defined in clause (zf) Paragraph 2 of the Services Exemption Notification”.
- Further held that, the services provided by the Applicant in relation to any function entrusted to a municipality under Article 243 W of the Constitution will be nil rated GST exempted vide S. No. 4 of the Services Exemption Notification.
Relevant Provisions:
Sl. No. 4 of the Services Exemption Notification:
|
“Sl. No. |
Chapter, Section, Heading, Group or Service Code (Tariff) |
Description of Services |
Rate (per cent.) |
Condition |
|
4 |
Chapter 99 |
Services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. |
Nil |
Nil” |
Clause (zf) Paragraph 2 of the Services Exemption Notification:
“Governmental Authority” means an authority or a board or any other body, –
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with 90 per cent or more participation by way of equity or control, to carry out any function entrusted to a Municipality under Article 243W of the Constitution or to a Panchayat under Article 243G of the Constitution.”
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