Page 174 - GSTL_23rd July 2020_Vol 38_Part 4

540 GST LAW TIMES [ Vol. 38
51. In this regard, we completely agree with the submissions and con-
tention put forth by the Appellant, wherein they have claimed themselves as the
Central Government, as it is evident that they are fulfilling all the conditions
stipulated for the Central Government, provided under clause (8) of Section 3 of
the General Clauses Act, 1897 read with Article 53 & Article 77 of the Constitu-
tion of India. Since, the Appellant is functioning under the Department of the
Defence Production, Ministry of Defence, Government of India, and all its activi-
ties including administrative, executive, etc. are carried out for and on behalf of
the President of India, the facts which have been established by the various doc-
uments like the Appointment letter of the Group A Gazetted Officer of the Ord-
nance Factory, OFB Procurement Manual. OFB Procurement Manual clearly
shows that all defence contracts are in the name and on behalf of the President of
India only. Further, the signatures on the supply order placed to the Vendors, the
Acceptance of the Tender, etc., clearly exhibits that all these executive works are
being carried out in the name, and on behalf of the President of India. Thus, it is
adequately evident that the Ordnance Factory Bhandara, the Appellant, is noth-
ing but ‘the Central Government’ in accordance with the provision of Section
2(53) of the CGST Act, 2017 read with clause (8) of Section 3 of the General
Clauses Act, 1897 read with Article 53 & Article 77 of the Constitution of India.
We also agree with the Appellant’s contention, wherein they averred that no-
where under law was it mentioned that “Government” cannot undertake activi-
ties relating to “research, development, production, testing, marketing and logis-
tics of a comprehensive product range in the areas of air, land and sea systems”;
and that “Having an industrial status” was the result of the nature of activities
carried out by Ordnance Factory Bhandara, and “functioning under the Ministry
of Defence and being controlled by an apex body (Ordnance Factory Board)” is a
result of the organizational structure put in place to govern the functioning of
Ordnance Factories. Further, the PAN i.e. “AAAGG0001Q”, wherein the 4th let-
ter, which signifies the status of the PAN Holder, is “G”, which stands for “Gov-
ernment” is expressly indicating the constitution and legal status of the Appel-
lant as the “Government”.
52. Hence, in view of the above discussions, we are of the opinion that
the observation made by the AAR on account of these aspects is erroneous and
arbitrary, and hence the same warrants to be set aside.
53. Now, that it has been established that the Appellant can be con-
strued as Central Government, we will examine the applicability of GST on the
various transactions/activities carried out by the Appellant as described under
Question 1 of the Advance Ruling application, earlier filed by the Appellant.
54. As regards the questions 1(a) and 1(b) asked by the Appellant,
wherein the Appellant had asked as to (a) whether Liquidated damages deduct-
ed from the payments to be made to suppliers in case of delayed delivery of
goods or services, and (b) Whether Amount of Security deposit forfeited by the
suppliers due to non-fulfillment of certain contract conditions, it is observed that
the aforementioned transactions/activities carried out by the Appellant would
squarely get covered under the scope of Sr. No. 62 (Heading 9991 or 9997) of No-
tification No. 12/2017-Central Tax (Rate), dated 28th June, 2017, which stipulates
that “Services provided by the Central Government, State Government, Union territory
or local authority by way of tolerating non-performance of a contract for which considera-
tion in the form of fines or liquidated damages is payable to the Central Government,
State Government, Union territory or local authority under such contract” shall attract
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