Page 159 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : KARNATAKA SOLAR POWER DEVELOPMENT CORPORATION LTD. 485
both, such as sale, transfer, barter, exchange, licence, rental,
lease or disposal made or agreed to be made.
(ii) The transaction must be for a consideration by a person.
(iii) The transaction must be in the course or furtherance of busi-
ness.
11.2 In the instant case, the applicant, collects and accounts the
amounts collected towards Local Area Development, which form part of value of
lease/rental services provided by the applicant to the SPDs. The said Committee
merely decides the usage of said fund for the specific intended purpose and the
applicant makes the payments accordingly.
11.3 It is observed in the instant case that the Committee merely gives
direction to the applicant which is not a transaction involving a supply of goods
or services or both, such as sale, transfer, barter, exchange, licence, rental, lease or
disposal made or agreed to be made. Further the committee is not in receipt of
any consideration for the said directions and is not in the course or furtherance of
business. Therefore the activity of giving direction by the Committee does not
amount to in terms of Section 7(1)(a) of the CGST Act, 2017.
Therefore utilization of the LAD fund amount, under the direction of Commit-
tee, for the intended purposes does not involve in supply of any service by the Committee.
Further, the Committee is formed under the orders of Government of Karnataka,
only for utilization of the LAD fund for local area development. The Committee
is not involved in any activity but only decides the utilization of the said fund
and hence there is no service involved. Therefore the Entry Number 5 of the noti-
fication supra is not applicable to the instant case.
12. In view of the foregoing, we pass the following :
RULING
(1) The amount collected by the applicant towards LAD fund forms
part of value of supply of rental/leasing service and hence is taxa-
ble under forward charge mechanism.
(2) The applicable SAC for the impugned activity is 9972 12.
(3) The exemption under Sl. No. 3 or 3A of Notification 12/2017-
Central Tax (Rate), dated 28-6-2017 is not applicable in the im-
pugned activity, as it is not qualify to be a pure service, provided to
Central Government, State Government or Union territory or Local
Authority or a Government Entity by way of any activity in relation
to any function under Article 243G or 243W of the Constitution of
India.
(4) Payment of GST, under Reverse Charge Mechanism (RCM), under
Entry No. 5 of Notification No. 13/2017-Central Tax (Rate), dated
28-6-2017, on the payments made at the direction of the Committee
formed for Local Area Development be considered as service ren-
dered by Government to Applicant, is not applicable to the instant
case, as the Government of Karnataka/Local Authority are not in-
volved in provision of any service.

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GST LAW TIMES  23rd April 2020  279