The issue to be decided was whether the applicant sought advance ruling as to whether the service recipient viz. M/s Jaipur Smart City Limited a Government Authority as defined in the explanation to clause (16) of Section 2 of the IGST Act?
M/s JSCL, despite its integral role in public projects, does not qualify as a “Governmental Authority” per the explanation to clause (16) of Section 2 of the IGST Act, 2017. The criteria for such classification necessitates 90% or more equity or control by the government, whereas the Government of Rajasthan holds only 50% shareholding in M/s JSCL. The remaining shares are owned by Jaipur Municipal Corporation, which is not a governmental entity. Consequently, M/s JSCL does not meet the criteria to be categorized as a “Governmental Authority.”
The appellant submitted that item (VI) in notification No. 11/2017 – Central Tax (Rate) applies to their case. They argue their services to M/s JSCL align with works contract services for government entities, covering construction, erection, commissioning, installation, maintenance, and more, excluding commercial use, as specified in clause (a) of item (vi).
The appellant argued that the Authority of Advance Ruling made a mistake by determining that M/s JSCL is not a “Governmental Authority” under the IGST Act, 2017. The appellant contends that the AAR’s decision solely based on the government’s 50% shareholding and JNN’s ownership overlooks the broader definition in the IGST Act, erroneously concluding that M/s JSCL does not meet the criteria for a “Governmental Authority.”
The appellant asserted that the State Government wields significant control in M/s JSCL by appointing Directors to the board directly and through officials from Jaipur Nagar Nigam, who are also state-appointed. The State Government’s influence extends to operational decisions, employee appointments, transfers, and postings, meeting the criteria of ninety percent or more control. The appellant further stated that this is evident in board meeting minutes where governing directors are State Government officials.
The two-member bench of Mahendra Ranga, (Central Tax) Member and Dr. Ravi Kumar (State Tax) Member observed that M/s Jaipur Smart City Limited is covered under Governmental Authority as defined in the explanation to clause (16) of Section 2 of the IGST Act, 2017.
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