Bangalore Metro Rail Corporation not qualified to be a ‘Government Authority’ under GST: AAR [Read Order]

The Karnataka Authority for Advance Ruling (AAR) has held that Bangalore Metro Rail Corporation Limited (BMRCL) does not qualify as a “Government Authority” under Paragraph 2(zf) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017. Consequently, the activity of granting concession rights to private developers for metro station development is not exempt from Goods and Services Tax (GST).

BMRCL, a joint venture between the Government of India and Government of Karnataka with equal shareholding, had approached the AAR seeking clarity on two issues. First, whether it could be considered a Government Authority under the notification, and second, whether the concession agreement with Embassy Property Developments Pvt Ltd (later novated to Vikas Telecom Pvt Ltd) for the Kadubeesanahalli Metro Station on Bengaluru’s Outer Ring Road qualified for exemption from GST.

The applicant argued that as a body incorporated with 100% government equity participation, its activities fell squarely within the scope of “governmental authority.” It submitted that construction and operation of metro projects constituted urban planning, land-use regulation, and provision of public amenities—all functions entrusted to municipalities under Article 243W of the Constitution, thus covered under the Twelfth Schedule.

BMRCL further contended that the ₹100 crore concession arrangement with the developer was part of urban infrastructure creation and aligned with public functions, making it exempt under Serial No. 4 of Notification No. 12/2017.

Rejecting this contention, the AAR observed that BMRCL was set up to carry on its commercial business of constructing and operating metro stations, which are owned exclusively by it.

The Authority further noted that public amenities envisaged under municipal functions become property of local governments such as the Bruhat Bengaluru Mahanagara Palike (BBMP), not of a corporate entity. Since no functions had been entrusted to BMRCL by the BBMP, it could not claim to be a governmental authority.

The AAR bench of Members Prathap Kumar S and Kalyanam Rajesh Rama Rao concluded that since BMRCL failed to meet the fundamental condition of being a Government Authority, the question of GST exemption on concession fees did not arise. Accordingly, it ruled that GST would apply to the ₹100 crore concession paid by the concessionaire.

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