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CGST : Company if established by government notification, is liable to deduct tax at source under section 51(1) read with Notification No. 1344-FT dated 13-9-2018, being a company controlled by Central and State Governments
• The applicant, stated to be a joint venture company formed by West Bengal Industrial Development Corporation (WBIDC) – a Govt. of West Bengal undertaking, and the group of companies of Andrew Yule & Co Ltd (a Central Govt. under taking), wants a ruling on applicability of Notification No. 1344 – FT dated 13-9-2018 under the WBGST Act, 2017 (50/2018 – CT dated 13-9-2018 under the CGST Act, 2017).
• The applicant was incorporated as a limited company on 25-3-1988 after reconstitution of the erstwhile West Bengal Filaments and Lamp Ltd. From the available materials it appears that neither the Central Government nor the State Government has any direct equity participation. But the 'Government Companies', as defined under section 2(45) of the Companies Act, 2013, together hold 62.29 per cent of the paid up share capital and majority of the directors in the Board. WBIDC alone holds 49.46 per cent of the shares, and enjoys four votes (including the casting vote of the Chairman) in a nine member Board. The Central and the State Governments, therefore, acting through the government companies, are in a position to indirectly control the management or policy decisions of the applicant. The Central and the State Governments, therefore, 'control' the applicant within the meaning of section 2(27) of the Companies Act, 2013. Clause a (ii) of the Notification is, therefore, applicable for the applicant if he is established by government notification.
• Thus, it is ruled that the applicant, if established by government notification, is liable to deduct tax at source under section 51(1) read with Notification No. 1344-FT dated 13-9-2018, being a company controlled by the Central and the State Governments