Ahmedabad Janmarg liable to pay GST on Security Services under RCM, rules AAR [Read Order]

The Gujarat Authority of Advance Ruling (AAR) ruled that the Ahmedabad Janmarg liable to pay GST on security services under Reverse Charge Mechanism (RCM).

The applicant, M/s. Ahmedabad Janmarg Limited has submitted that Ahmedabad Municipal Corporation (AMC) is 100% shareholder of AJL i.e. AJL is nothing but a mere offshoot of AMC and for all practical purposes, AJL is an inseparable part of AMC; that the applicant is an extended arm of the Municipal Corporation and does the activities as per the functions entrusted to Municipal Corporation.

The applicant has stated that the majority of the employees that work for AJL are sent on deputation by AMC; that the Deputy/Assistant Municipal Commissioner of AMC is in charge of the operation of AJL and in case he/she is posted to a different department of AMC, another Assistant Municipal Commissioner of AMC is given charge of the operations of AJL; that similarly, other AMC officers such as city engineers are deputed to AJL to carry out day to day activities; that since AJL is part of centrally funded scheme, various stakeholders are involved and the details of the key stakeholders are given; that the lead planning & implementing agency for all the practical purpose is AMC.

The applicant has sought the advance ruling on the issue of whether AJL would be qualified as ‘Local Authority’ under the Central Goods and Services Tax Act, 2017; and whether AJL is liable to pay GST on procurement of security services received from any person other than body corporate under reverse charge mechanism, considering the exemption granted in sl. no. 3 of Notification No. 12/2017–Central Tax (Rate) or sl. no. 3 of Notification No. 09/2017–IGST (Rate).

Yet another issue raised was whether AJL is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act and  If AJL does not qualify to be a local authority under Central Goods and Services Tax Act, 2017 in Part A, can be it construed to be a government entity or a governmental authority.

The Coram of Members Sanjay Saxena and Arun Richard ruled that Ahmedabad Janmarg Ltd. is not a Local Authority and it is not required to be registered as a Deductor under GST.

“Ahmedabad Janmarg Ltd is liable to pay GST on security services under RCM, as per relevant Notification,” the AAR added.

The AAR observed that Ahmedabad Janmarg Ltd is not a Government Entity/ Governmental Authority.

To Read the full text of the Order CLICK HERE

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