Weekly Market Fee Collection by Panchayat Falls Under Constitutional Local-Authority Functions, GST Not Applicable: Advance Ruling:

Muthur Town Panchayat in Tiruppur district had sought an advance ruling on the GST treatment of its weekly market. The Panchayat leases the right to collect fees from merchants, farmers and the public who use its open space to sell fruits, vegetables, domestic animals, birds and other items on weekly market days.

The Panchayat argued that the activity is part of the functions entrusted to local authorities under the Eleventh Schedule of Article 243G of the Constitution. It also sought clarity on whether GST would apply to the activity.

Questions raised before the Authority:

1. "Whether the activity of leasing of weekly market to the tender contractors for the purpose of collection of fees on the week market days basis from the merchants/farmers/public for usage of the open space for selling of fruits/vegetables/domestic animals/birds etc., is an activity covered under the functions entrusted to Panchayat under the [Eleventh Schedule] under Article 243G as a local authority in which they are engaged as public authority.

2. If so the above activity shall not be treated as a supply of service and in that case the same is covered as an activity which is not a service as per central tax Notification No 14/2017 Rate, dated 28.06.2017 as amended as well as under State tax Tamil Nadu GO (Ms.) No.75, dated 29.06.2017-GST as amended and as a result Central tax and state tax are not chargeable for the said activity."

   

The Authority for Advance Ruling held that the weekly market activity is covered under the functions entrusted to a Panchayat under the Eleventh Schedule of Article 243G. It further ruled that the activity is neither a supply of goods nor a supply of services.

As a result, the Panchayat can claim the benefit of Notification No. 14/2017-Rate dated June 28, 2017, as amended. Accordingly, the activity is not liable to Central GST and State GST under the applicable provisions.