The West Bengal Authority of Advance Ruling (AAR) ruled that the Damodar Valley Corporation is a ‘Government Entity for the purpose of GST.
The applicant, Damodar Valley Corporation is stated to be a statutory body set up under the Damodar Valley Corporation Act, 1948 and is engaged in the following three major activities namely generation, transmission and distribution of electricity, flood control and irrigation, and some connected activities like soil conservation, afforestation etc.
The applicant submitted that the DVC Act was passed by the Central Legislature, requiring the three Governments namely the Central Government and the State Government of West Bengal and Bihar (now Jharkhand) to participate jointly for the purpose of building a Damodar Valley Corporation with the aim of development of Damodar valley falling within the state of West Bengal and Jharkhand. ―Participating Governments‖, according to clause (4) of section 2 of the DVC Act means the Central Government, the Provincial Government of Bihar, and the Provincial Government of West Bengal.
The applicant has sought the advance ruling on the issue Whether Damodar Valley Corporation‖ is covered under the definition of the term “Government Entity” as per Notification No. 31/2017- Central Tax (Rate) dated October 13, 2017.
The coram of members Susmita Bhattacharya and Joyjit Banik clarified that the term ‘Government entity as it has been defined in the notifications evidently denotes that in order to qualify for a Government Entity, the applicant must have been set up by an Act of Parliament or by an Act of State Legislature or it must have been established by any of the Governments i.e. either by the Union Government or by the State Government with 90 percent or more participation by way of equity or control. Further, the applicant is to carry out a function entrusted by the Central Government, State Government, Union Territory, or local authority.
The AAR observed that the Damodar Valley Corporation has been set up under the Damodar Valley Corporation Act, 1948 which was passed by the Central Legislature. Therefore, appears that Damodar Valley Corporation fulfills the criteria laid down for “Government entity” as per Notification No. 31/2017 –Central Tax (Rate)/32/2017- Central Tax (Rate) both dated 13.10.2017 since it has been set up by an Act of Parliament with 100% control to carry out the function entrusted by the Government.
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