Case Details: Bagalkot Nirmithi Kendra vs. Union of India (2025) 37 Centax 103 (Kar.)
Judiciary and Counsel Details
- M. Nagaprasanna, J.
- Shri Girish A.Yadawad, Advocate, for the Petitioner.
- Shri M.B. Kanavi, CGSC, Shri Girish S. Hulmani, Advocate & Smt. Kirtilata R. Patil, HCGP, for the Respondent.
Facts of the Case
The petitioner a society registered under the Karnataka Societies Registration Act, 1960, was constituted in 1990 pursuant to a Government Order under the Building Centres Scheme and executed civil construction works exclusively for the State and Union Governments; it functioned under State-approved rules, was governed by a body chaired by the Deputy Commissioner with senior district officers as members, and was substantially funded through State grants. For the period July 2017 to March 2018, GST authorities denied exemption under Notification Nos. 12/2017-C.T. (Rate) and 32/2017, contending that the petitioner did not qualify as a “Government Entity” under clause (zfa) on the ground that ex-officio government members did not constitute 90% of the governing body, and issued a communication dated 07.07.2021 demanding GST, prompting the writ petition.
High Court Held
The High Court held that the petitioner was established by the State Government, was under complete administrative and functional control of State-appointed officers, and was substantially funded by State grants, thereby satisfying the definition of “Government Entity” under clause (zfa) of Notification No. 32/2017 read with Notification No. 12/2017-C.T. (Rate); it ruled that predominant governmental control, and not a mechanical numerical test of membership, was determinative, that tax liability could not arise merely because other Nirmithi Kendras paid GST, and accordingly quashed the impugned communication dated 07.07.2021 and held the petitioner entitled to GST exemption under Entry 9B, deciding the matter in favour of the assessee.
List of Cases Cited
- Commissioner v. Shapoorji Pallonji & Co. Pvt. Ltd. — (2023) 11 Centax 180 (S.C.) = 2023 (79) G.S.T.L. 145 (S.C.) — Followed [Paras 12, 14]
- G. Krishnegowda v. State of Karnataka — 2021 SCC OnLine Kar 15332 — Followed [Paras 13, 14]
- Pio & the Project Director Nirmiti Kendra v. State Information Commissioner — 2025 SCC Online Kar 17662 — Followed [Paras 13, 14]
- Shapoorji Paloonji & Company Pvt. Ltd. v. Commissioner — 2016 (42) S.T.R. 681 (Pat.) — Followed [Paras 12, 14]
- V. Krishnareddy v. State — Crl. P. No. 685 of 2022, decided on 2-8-2022 by Karnataka High Court — Followed [Paras 13, 14]
List of Notifications Cited
- Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 [Para 11]
- Notification No. (32/2017) [No.FD 48 CSL 2017], dated 13-10-2017 [Paras 1, 4, 6, 10, 11]
