The Hon'ble High Court of Gujarat in [Nepra Resources Management (P.) Ltd. v. State Of Gujarat [2024] R/SPECIAL CIVIL APPLICATION NO. 17719 OF 2021 Dated APRIL 24, 2024] held that the Notified Area Authority, Vapi is neither a "local authority" nor a "Governmental Authority" carrying out any activity in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W of the Constitution.
Facts of the case:
The Petitioner No.1, Nepra Resources Management (P.) Ltd., is engaged in the business of Solid Waste Management and recycling services. The Notified Area Authority, Vapi floated a Tender inviting applications for a Request for Proposal for providing services of collection, sorting and recovery of waste and set up material recovery facility in accordance with various rules, norms and regulations at the notified area, GIDC, Vapi.
The Notified Area Authority, Vapi is constituted by the State of Gujarat by virtue of Notification No.GHU 75/45/GID 1974/4084(x)-Ch dated May 6, 1975 issued under Section 16 of the Gujarat Industrial Development Act, 1962. Under the Gujarat Industrial Development (Notified Areas) Rules, 2007, the Notified Area Authority, Vapi has constituted the Board of Management and appointed the Chief Officer with certain functions as otherwise entrusted to the municipality.
The Petitioner No.1 participated in the bidding process and was granted the Tender vide letter dated January 22, 2019 for providing services to the Notified Area Authority, Vapi. An agreement was executed on February 4, 2019 between the Petitioner No.1 and the Notified Area Authority, Vapi.
The Petitioner claimed that the services provided are exempted from payment of GST under Serial No.3 of Notification No.12/2017-Central Tax (Rate) and Notification No.12/2017-State Tax (Rate). The Advance Ruling Authority held that the services are not exempted as they include supply of goods. The Appellate Authority rejected the Petitioner's appeal, holding that the Notified Area Authority, Vapi is neither a "local authority" nor a "Governmental Authority."
Aggrieved by the Appellate Authority's order dated February 17, 2021, the Petitioner filed the present petition.
Issue:
Whether the solid waste management services provided by the Petitioner to the Notified Area Authority, Vapi are exempt from GST under Notification No. 12/2017?
Held by the Court
The Hon'ble High Court of Gujarat in held as under
The contention of the Petitioner that the Notified Area Authority, Vapi is discharging functions akin to a municipality is not acceptable in view of the Supreme Court's decision in New Okhla Industrial Development Authority v. Chief Commissioner of Income Tax and others (2018) 9 SCC 351.
In view of the law laid down by the Supreme Court in New Okhla Industrial Development Authority, the Area Development Authority is not akin to a municipality constituted under Article 243Q(1) of the Constitution of India.
The Supreme Court in Saij Gram Panchayat v. State of Gujarat reported in 1992 (2) SCC 366 held that the Gujarat Industrial Development Act operates in a totally different sphere from Parts IX and IXA of the Constitution and the Gujarat Panchayats Act, 1961.
The Notified Area Authority, Vapi cannot be considered a "local authority" under Section 2(69) of the GST Act as it does not fall under any of the clauses defining "local authority."
The Notified Area Authority, Vapi cannot be considered a "Governmental Authority" under Clause (zf) of Notification No. 12/2017 as it is not an authority set up by an Act of Parliament or State Legislature to carry out functions entrusted to a Municipality under Article 243W of the Constitution.
Therefore, the Notified Area Authority, Vapi is neither a "local authority" nor a "Governmental Authority" carrying out any activity in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W of the Constitution. Consequently, the Petitioner is not entitled to the exemption under Notification No. 12/2017.
Relevant Sections:
"Section 11 of Central Goods and Services Tax Act, 2017 /Gujarat Goods and Services Tax Act, 2017"
"Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017, Notification No.12/2017-State Tax (Rate) dated 30-06-2017"
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