Page 155 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : KARNATAKA SOLAR POWER DEVELOPMENT CORPORATION LTD. 481
power generated by SPDs (Solar Power Developer) under plug &
play model.
(c) The solar park development is not carried out with an intent of
profit making objective, but to facilitate the SPDs to establish solar
power generating units and enable such supply of electricity for
general public at reasonable cost.
(d) The MNRE mandates, through its direction, under its guidelines for
SPPDs (applicant), as per its Rehabilitation and Resettlement Policy
for Solar Parks, to collect the amounts towards Local Area Devel-
opment Fund from Solar Power Developers (SPDs). Accordingly the
applicant collected the fund from SPDs, kept the same in a separate
account. Unutilised amounts of the said fund, if any, are kept in
Fixed Deposit and the interest is also used for the objectives of the
said fund.
(e) The MNRE vide its communication, in reply to the query raised by
the applicant, dated 27-9-2019, confirmed that the amounts for the
said LAD fund should be collected only from the SPDs. Further the
applicant in their financial statement under Note 17 has disclosed
that the fund & interest earned on FDs are set aside and shown sep-
arately.
(f) Para 8.10 of the Implementation & Support Agreement (ISA), en-
tered by the applicant with the SPDs, stipulates that the Local Area
Development Fund amount should be paid by the SPDs, for the
purpose of development of village panchayats and other areas; a
committee headed by District Collector, Tumkur will be constituted
to utilize the fund for achieving its objectives.
(g) The Government of Karnataka issued a G.O. dated 17-10-2019, for
formation of committee meant for the purpose of utilization of the
Local Area Development Fund. Consequently meeting of the com-
mittee, so formed, was held on 25-10-2019 and finalized the area of
work to be executed under the said scheme. Accordingly the appli-
cant sought estimate for programmes for disbursal of funds.
(h) In view of the above activities and communications, it is clear that
the Applicant is just acting as a custodian of the funds collected
from the SPDs and to hand over the same to the committee for dis-
bursement to various projects under the said LAD scheme.
(i) Supply of goods or services or both, as per the provisions of the
CGST Act, 2017, is a pre-requisite to levy the tax under Section 9(1)
of the said Act. All the supplies made to the SPDs by the applicant
are covered under para 6 of the ISA and the applicant is discharging
GST on all the said supplies.
(j) The activity of collection of amounts towards LAD fund is not in
furtherance of business and also the collection of said amounts is in
terms of para 8.10 of the ISA for the specified and intended purpose.
Therefore it is clear that the applicant does not render any service of
Local Area Development to the SPDs, but acts as a custodian of the
funds. Hence the said activity of collection of amounts is not to-
wards any supply, in terms of Section 7 of the CGST Act, 2017 and
accordingly there can’t be any levy of GST in terms of Section 9 of
GST LAW TIMES  23rd April 2020  275