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2019 (3) TMI 1852 - AAR - GSTLocal Authority - pure services - NIT, Kurukshetra - Government Entity or not - scope of Serial No. 17, Schedule XI to the Constitution of India - applicability of Serial No. 3 of Notification No. 12/2017 Central Tax (rate) dated 28.06.2017 - whether the pure services supplied to the applicant institute such as manpower supply services, security services, horticulture services, civil maintenance and electrical maintenance services etc. shall be liable to tax under GST or exempt from payment of tax vide Entry 3 of Notification 12/2017- Central Tax (rate) as amended from time to time? HELD THAT - Although Pure services have not been defined under the Goods and Services Tax Act, 2017, but it is meant to mean supply of services without involving any supply of goods. Entry No. 3 of Notification 12/2017- Central Tax (rate) dated 28.06.2017 lends weight to this definition, whereby the works contract services and composite supplies involving supply of any goods are excluded from pure services - Since the NIT, Kurukshetra has been established by an Act of Parliament and as per the Department of Secondary and Higher Education, Minister of Human Resource Development, Government of India Notification dated 14th May, 2003, the Central Government took over total control of NIT, Kurukshetra, it qualifies to be a Government Entity as defined under Section 2(zfa) of the Notification No. 12/2017 Central Tax (rate) dated 28.06.2017 The National Institute of Technology, Kurukshetra is an institute of higher education whereas, Entry No. 17 of Schedule XI, Article 243G of the Constitution of India incorporates Education, including Primary and Secondary Schools. It suggests that the term education used in this Entry includes only school education and that too imparted in Primary and Secondary Schools. Had that not been the case, the subject Technical training and vocational education would not have found mention at Entry No. 18 of Schedule XI. Whereas, NIT provides higher education and as such it cannot be said to be covered under Entry No. 17 of Schedule XI of Constitution of India - The pure services received by the NIT includes services such as manpower supply services, security services, horticulture services, civil maintenance and electrical maintenance etc. Whereas, Entry No. 3 of exemption Notification 12/2017- Central Tax (rate) mentions Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or Local Authority or a Governmental Authority, or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. The higher education imparted by NIT, Kurukshetra neither falls under the subjects assigned to Panchayats under Article 243G nor does it fall under those assigned to Municipalities under Article 243W Indian Constitution. Moreover, Panchayats (Gram Panchayats, Block Panchayats and Zila Panchayats) have no connection whatsoever with these services received by NIT, Kurukshetra. Neither the tender for services are floated by Panchayats nor is the payment being made by them. The Panchayats have been created for rural areas whereas Municipalities look after urban affairs. The NIT, Kurukshetra, located within the Municipal boundaries of Kurukshetra, does not even have the remotest link with the Panchayats. In this manner, the provisions of Entry No. 3 of exemption notification does not apply in case of the applicant.
Issues Involved:
Determining whether pure services supplied to an institute are liable to tax under GST or exempt based on specific provisions. Analysis: 1. Definition of Local Authority: - The term "Local Authority" is defined under Section 2(69) of the CGST/HGST Act, 2017, encompassing various bodies legally entrusted with municipal or local fund management. 2. Understanding Pure Services: - Although not explicitly defined, pure services refer to service supply without involving goods, as per Notification 12/2017. Works contract services and composite supplies with goods are excluded. 3. Identification of Government Entity: - NIT, Kurukshetra qualifies as a Government Entity under Section 2(zfa) of Notification 12/2017 due to its establishment by an Act of Parliament and total control by the Central Government. 4. Relevance to Constitutional Provisions: - NIT's higher education provision does not align with subjects assigned to Panchayats or Municipalities under the Indian Constitution. Hence, it does not fall under the exemption criteria. 5. Application of Exemption Notification: - The services received by NIT, including manpower supply, security, and maintenance, do not meet the criteria for exemption under Entry No. 3 of Notification 12/2017 due to the institute's nature and operations. 6. Final Decision: - The Authority for Advance Ruling unanimously concludes that the pure services provided to the institute are taxable under the CGST/HGST Act, 2017, based on the statutory provisions and the lack of alignment with exemption criteria. This detailed analysis highlights the key legal considerations and interpretations made by the Authority for Advance Ruling in the given judgment, providing a comprehensive understanding of the decision regarding the tax liability of the services supplied to the institute.
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