Case Details:

Pushpa Rani Pabbi

Application No.:

Advance Ruling No. AAR/GST/PB/11

Ruling pronounced by:

GST AAR Punjab

Date of Ruling:

06-09-2019

The applicant has been appointed as a contractor for providing parking lot services at the place of the market committee at Jalandhar. The applicant is of the view that the Market Committee is a Government Authority as per the definition of Government Authority provided in the clause (zf) of the Notes appended to Notification No. 12/2017 as it is established by the State Government and the services provided by the Governmental Authority by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution is ‘Nil’ rated service notified under Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017.

The applicant sought advance ruling on the question that:

“Whether the parking lot services provided by the contractor appointed by the Market Committee, which is a Governmental Authority is exempt under the aforesaid Notification or not.”

The functions of Mandi Board are to establish markets for efficient marketing of agricultural produce by providing modern facilities in the mandis and to enforce the provisions of the Act, Rules Bye-laws framed thereunder. It also includes establishing a market therein providing such facilities for persons visiting it in connection with the purchase, sale, storage, weighment, and processing of agricultural produce concerned.

The Mandi Board may from time to time direct these market committees to control and regulate the admission to the markets. Market Committees are service rendering agencies and their main source of income is the market fees. Mandi Board has not been established by the State Government for providing parking lot services to the people. It is purely discretionary and optional on the part of the Mandi Board depending on their business requirements. It is pertinent to mention that functions entrusted to Mandi Board are not the functions entrusted to a Municipality as listed in the Twelfth Schedule to Article 243W of the Constitution.

Further, it has been consistently held that any statutory authority which works on business principles, the fees collected by it cannot be considered as statutory fees. Only in cases where the fee is collected towards sovereign functions and deposited with the Government revenue qualify to be outside the levy of any tax. Collection of parking fees by the Market Committee from the people entering their premises or area does not fall under the definition of sovereign functions. Sovereign functions of the State are those functions for which it is not answerable to any Court of Law. The other functions of the State including welfare activity of State could not be construed as “sovereign” exercise of power. Hence, every governmental function need not be ‘sovereign”.

Though Punjab State Agricultural Marketing Board has been established under Punjab Agricultural Produce Markets Act, 1961, its function cannot be considered as sovereign functions and accordingly the parking fees collected by them through the applicant does not acquire the nature of statutory fee so as to be outside the scope of any tax. The parking fees collected by the applicant are not in the nature of statutory fees.

Question

Ruling

Whether the parking lot services provided by the contractor appointed by the Market Committee which is a Government Authority is exempt under Notification No. 12/2017 as the parking lot activity is covered under Article 243W of the Constitution?

• The parking services provided by the contractor appointed by the Market Committee, are not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority.
• Marketing Committee (Mandi Board) does not qualify under the definition as provided in clause 2(zf) of the notes appended to Notification No. 12/2017.
• The activity/ services of parking provided by the applicant fall under heading 9967 and attracts GST @ 18% (CGST 9% + SGST 9%).