Maharashtra Jeevan Authority is Service Receiver u/s 2(93) of CGST Act for Grant Amounts Received and later Paid to Technical Consultant: AAR [Read Order]

The Maharashtra Authority for Advance Ruling ( AAR ) recently ruled that the Maharashtra Jeevan Authority ( MJA ) is a Service Receiver under Section 2(93) of the Central Goods and Services Tax Act, 2017 ( CGST Act ) in respect of receiving grant amounts allocated by the Government, which are then paid to the Applicant, a hired technical consultant.

The Application was filed by M/s Fortress Infracon Limited and Yash Innovative Solutions LLP ( JV ), a partnership firm engaged in the business of providing technical consultancy to various Governments, Semi-Government, Government Corporations & Quasi-Government Institutions. The Maharashtra Jeevan Authority Act, 1976 (MJA Act) empowers the Government to initiate and implement supply/drainage/sanitation/stormwater schemes utilizing consolidated funds as per budget allocations from the Government.

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In light of the functions vested on the Government machinery by the Constitution of India, State Governments and Panchayat Raj Institutions are required to establish proper facilities of sewage and used water disposal for villages, towns and cities. The implementation of such schemes requires extensive planning, engineering, and designing and for the same consultants such as the Applicant are hired by the Government.

The present Application has been filed querying who the ‘service receiver’ is as per the meaning of Section 2(93) of the Central Goods and Services Tax Act, 2017 ( CGST Act ) with regards to grant amounts received by the MJA, formerly the Maharashtra Jeevan Pradhikaran and then paid to the Applicant on services provided before 01.01.2022.

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The Applicant submitted that the MJP pays due consideration to the Applicant as and when MJP received grants from the Government as specified in the Operation Guidelines for Jal Jeevan Mission issued by the ministry of Jal Shakti. In light of this arrangement, Applicant submitted that MJP acts as an agent of the Central/State Government, thus making the latter recipient of Service under Section 2(93) of the Central GST Act.

The two-member Bench of the Maharashtra Authority for Advance Ruling comprising Ajaykumar V. Bonde, State Tax Member and Priya Jadhav, Central Tax Member observed that the Agreement between the Applicant and MJP required the Applicant to provide services to MJP in lieu of consideration as and when payable under the provisions of Consultancy Agreement.

Both the State and Central Governments equally split the expenditure incurred in light of the work conducted by the Applicant, therefore the Governments become the recipients of the supplies.

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However, the Authority Bench further observed that MJP, being a branch of the Government machinery entrusted to carry out the subject work has employed the services of the Applicant and utilizes amounts received as grants to be paid as consideration to the Applicants, thereby MJP  becomes the ‘Service Receiver’ in respect of per Section 2(93) of the Central Goods and Services Tax Act, 2017 before the amendment to the MJA Act on 01.01.2022.

To Read the full text of the Order CLICK HERE

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