Punjab Authority for Advance Ruling: Navdeep Bhinder (Member, SGST) and Parul Garg (Member, CGST) addressed the following issue:
Whether the parking lot services provided by the Contractor appointed by the Market Committee, which is a Government Authority is exempt under Notification 12 of 2017 as the parking lot activity is covered under Article 243 of the Constitution of India?
Applicant was appointed as a contractor for providing parking lot services at the place of the market committee at Jalandhar.
Further, the applicant stated that,
“Market Committee” is a Government Authority as per the definition of Government Authority provided in the clause (zf) of the notes appended to Notification No. 12/2017 as it is established by the State Government and the services provided by the Governmental Authority by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution is NIL rated service under Notification No. 12/2017-Central Tax (Rate).
Adding to the above, the applicant stated that whenever the market committee provides parking lot services directly the same is exempt and whenever it provides through an agent the same is taxable.
Analysis
Bench at first examined whether the Market Committee is a Government Authority or not and it was observed that the Market Committee (Mandi Board) does not fall under the definition of the local authority.
A definition has to be read in its fulfillment and not in parts or out of context to suit a particular purpose.
Market Committees are service rendering agencies and their main source of income is the market fee. Mandi board is not established by the State Government for providing Parking Lot services to the people.
On perusal of the agreement between the applicant and the Mandi Board, it was established that the applicant had been appointed as a Contractor for providing parking lot services and the applicant would have recovered the said amount by charging the vehicles entering the market committee.
Hence the Market Committee was to earn revenue from the persons entering the parking area.
It has been consistently held that any statutory authority which works on business principles, the fees collected by it cannot be considered as statutory fee.
Only in case where the fee is collected towards sovereign functions and deposited with Government revenue qualify to be outside the levy of any tax.
Parking fees collected by the applicant are not in the nature of statutory fees.
Therefore, the Authority held that the parking lot services provided by the contractor appointed by the Market Committee, are not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority as per the definition in clause 2(zf) of the notes appended to Notification 12/2017.
The said activity/services of parking provided by the applicant fall under Heading 9967 and attract GST @18% (CGST 95 + SGST 9%).[Pushpa Rani Pabbi, In Re., AAR/GST/PB/011, decided on 06-09-2019]