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2019 (3) TMI 1703 - AAR - GSTConsultancy services - applicability of Sl. No. 3 of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 - services provided by them by way of providing engineering and consultancy services i.e. Project Management, Project Planning and Construction Supervision Services under the Contract - HELD THAT - The services supplied by the Consultant, Sheladia Associates, Inc. USA to the Client, Public Works Department, Government of Mizoram in terms of Appendix-A, Section 7 Terms of Reference, Para 1 are Construction Supervision and Contract Administration Consultancy Services for Works Contract for the upgradation of 81 KM length of State Highways and Major District Roads in the State of Mizoram. The Financial Assistance has been provided by International Development Association (IDA). Section-F relating to payments to the Consultant provides that all local identifiable 'indirect taxes' will be reimbursed to the Consultant or are paid by the Client on behalf of the Consultant. Hence, the Consultant i.e. the applicant in this case are within their right to charge and collect GST from the Service Recipient in this case. The services provided by the applicant in this case are not in relation to any function entrusted to any Panchayat or Municipality under Article 243G and Article 243W of the Constitution respectively. Hence, benefit of exemption from tax in terms of Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 286-2017 and the corresponding notification under MGST Act, 2017 is not available to the applicant - Thus, the applicant is within its rights under the CGST and SGST Acts for charging GST to the Service Recipient on the service value for the services provided under the Contract.
Issues Involved:
1. Whether the consultancy services provided are related to functions entrusted to Panchayat or Municipality under Article 243G or 243W of the Constitution of India. 2. Whether the consultancy services qualify as "Pure Services" exempt from CGST and Mizoram GST under Notification No. 12/2017-Central Tax (Rate). 3. If not exempt, whether the applicant can charge GST to the Service Recipient under the CGST and SGST Acts. Detailed Analysis: Issue 1: Relation to Functions Entrusted to Panchayat or Municipality - Question: Whether the consultancy services for upgrading state highways and district roads are activities related to functions entrusted to Panchayat or Municipality under Article 243G or 243W. - Findings: The services provided by the applicant involve Project Management, Project Planning, and Construction Supervision for state highways and district roads. Panchayats and Municipalities have defined territorial limits and are responsible for public infrastructure within those limits. State highways and district roads, however, extend beyond these limits and are the responsibility of state governments. Therefore, the services do not fall under functions entrusted to Panchayats or Municipalities as per Articles 243G and 243W of the Constitution. - Conclusion: The services are not related to functions entrusted to Panchayats or Municipalities. Issue 2: Qualification as "Pure Services" Exempt from GST - Question: Whether the consultancy services qualify as "Pure Services" exempt from GST under Notification No. 12/2017-Central Tax (Rate). - Findings: Notification No. 12/2017 exempts "pure services" provided to government entities if related to functions entrusted to Panchayats or Municipalities. The services provided by the applicant do not involve supply of goods, classifying them as "pure services." The recipient is the State Government of Mizoram, meeting the second criterion. However, the third criterion, which requires the services to be related to functions under Articles 243G or 243W, is not met as discussed in Issue 1. - Conclusion: The services do not qualify for exemption as they do not meet all criteria specified in Notification No. 12/2017. Issue 3: Charging GST to the Service Recipient - Question: If the services are not exempt, can the applicant charge GST to the Service Recipient? - Findings: The contract specifies that all local indirect taxes will be reimbursed by the client or paid on behalf of the consultant. Given that the services are taxable and do not qualify for exemption, the applicant is within its rights to charge and collect GST from the Service Recipient. - Conclusion: The applicant can charge GST to the Service Recipient for the services provided. Ruling: - The services provided by the applicant are not related to functions entrusted to Panchayats or Municipalities under Articles 243G and 243W. Therefore, the exemption under Notification No. 12/2017-Central Tax (Rate) is not applicable. The applicant is entitled to charge GST to the Service Recipient. Appeal Provision: - The applicant or jurisdictional officers, if aggrieved by this ruling, may appeal to the Mizoram State Appellate Authority for Advance Ruling within 30 days from the receipt of this ruling.
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