Page 29 - GSTL_27th August 2020_Vol 39_Part 4

2020 ] GST ON ROC FILING FEE PAID BY COMPANIES/LLPS J85
Corporation which is virtually a wing of the State Government maintenance of
industrial area is a sovereign functions and hence, cannot be brought to tax.
In Karnataka Industrial Areas Development Board v. Commissioner of Central
Tax, Bangalore - 2020 (6) TMI 227, Tribunal held that maintenance of industrial
area by KIADB is a statutory function and not leviable to Service Tax.
Concept of ‘Public Authorities’
The scope of the term ‘public authorities’ came up before the CESTAT in
Employee Provident Fund Org. v. CST, Delhi - 2017 (4) TMI 902. The New Delhi
Bench of CESTAT held Employee Provident Fund Organisation to be a ‘public
authority’, observing as follows :
“…….. ‘Public’ includes a section of the public (Shri Venkataraman Devaru v.
State of Mysore - 1958 S.C.R. 895). The word ‘public’ is ordinarily used with
reference to a joint body of citizens. The term ‘authority’ is defined as “a pub-
lic administrative agency or corporation having quasi-governmental powers
and authorized to administer a revenue producing public enterprise”, (Web-
seter’s Third New International Dictionary); authority is a body having juris-
diction in certain matters of “public nature”. Therefore, the “ability” con-
ferred upon a person by the law to alter, by his own will directed to that end,
the rights, duties, liabilities or other legal relations either of himself or of other
persons must be present ab-extra to make a person “authority”. [Som Prakash
Rekky v. Union of India - 1981 (1) SCC 449]. When the person is an agent or in-
strument of function of the State, the power is ‘public’. The true test is func-
tional. Not how the legal person is born, but why it is created. There are vari-
ous factors which will suggest a body could be “a public authority” these are
(a) it is linked to the Government or its function could be described as gov-
ernmental (b) it provides a public service (c) the State regulates, supervises
and controls its performance (d) it is subject to judicial review or is publicly
accountable for its action (e) performs charitable objectives (f) vested with
statutory powers, with powers to enforce its order by punitive consequences,
(g) the legislature specifically intended by an Act to cover its functions and
responsibilities. In general, without any possible dispute, it can be stated that
a public authority is one which has a legal mandate to govern, or administer a
part some aspect of public life.”
The Hon’ble Supreme Court in Balmer Lawrie & Co. Ltd. v. Partha Sarathi Sen Roy -
(2013) 8 SCC 345 examined the scope of terms “State” or “other authorities” under
Article 12 of the Constitution of India. The observations of the Apex Court are :
“21. A public authority is a body which has public or statutory duties to
perform, and which performs such duties and carries out its transactions for
the benefit of the public, and not for private profit. Article 298 of the Constitu-
tion provides that the executive power of the Union and the State extends to
the carrying on of any business or trade. A public authority is not restricted to
the Government and the legislature alone, and it includes within its ambit,
various other instrumentalities of State action. The law may bestow upon
such organisation the power of eminent domain. The State in this context,
may be granted tax exemption, or given monopolistic status for certain pur-
poses. The “State” being an abstract entity, can only act through an instru-
mentality or an agency of natural or juridical persons. The concept of an in-
strumentality or agency of the Government is not limited to a corporation
created by a statute, but is equally applicable to a company, or to a society. In
a given case, the court must decide, whether such a company or society is an
instrumentality or agency of the Government, so as to determine whether the
same falls within the meaning of the expression “authority”, as mentioned in
Article 12 of the Constitution, upon consideration of all relevant fac-
tors.…………………..”

GST LAW TIMES  27th August 2020  29