Ahmedabad Municipal Transport Service qualifies as ‘Local Authority’ for the purpose of GST Acts: AAR [Read Order]

The Gujarat Authority of Advance Ruling (AAR) ruled that the Ahmedabad Municipal Transport Service qualifies as ‘Local Authority’.

The applicant, M/s. Ahmedabad Municipal Transport Service (AMTS) is engaged in rendering passenger transportation services and runs public buses in the city of Ahmedabad within the limits of the Municipal Corporation. The Constitution of Applicant is ‘local authority for GST registration as well as erstwhile Service Tax registration.

The applicant submitted that the roots of bus services in Ahmedabad dates back to the year 1940 wherein the very first resolution # 476 was passed by the Municipality on June 10, 1940, in the General Board meeting to begin transport services. The main purpose of the transport service was to avoid the population density in the city area and thereby to provide affordable means of transportation facility for the citizens staying far from the main city area. The profit motive was not there at all at any stage.

The applicant sought the Advance Ruling on the various issues.

Firstly, whether AMTS would be qualified as ‘Local Authority’ as defined under the Central Goods and Services Tax Act, 2017.

Secondly, whether AMTS 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).

Thirdly, whether AMTS is required to pay GST on advertisement services or the service recipient of AMTS is required to pay GST under reverse charge mechanism considering Notification No. 13/2017-Central tax (Rate) dated June 28, 2017.

Lastly, whether AMTS is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act.

The coram of Sanjay Saxena and Mohit Aggarwal held that the applicant merits qualification as “Local Authority” as defined under the Central Goods and Service Tax Act, 2017.

The AAR held that AMTS is not 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).

“The service recipients of AMTS are required to pay GST under reverse charge mechanism on advertisement service,” the AAR added.

The Authority further ruled that AMTS is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act.

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