2019 (2) TMI 1902 - AAR - GST

Taxable services or not - provision of services (Manpower Supply) of tube well operator for operation of tube well and booster of drinking and irrigation water supply in various villages - HELD THAT - As per perusal of the copy of contract, submitted by applicant along with his application, only manpower supply services are to be provided by the applicant and since, no supply of goods is involved, such services qualify as pure services. Further, the said services are being supplied by applicant to Union Territory of Chandigarh as the contract is awarded by Executive Engineer, Project P.H. Division No. 3, Chandigarh functioning under the Department of Engineering of Union Territory of Chandigarh. The functions entrusted to a panchayat under the Eleventh Schedule to Article 243G of the Constitution include Agriculture, Land Improvement, Minor irrigation, Water management, Drinking water, Rural housing, Fuel and Fodder etc and therefore the activities performed by applicant under the said contract are services supplied in relation to any function entrusted to a Panchayat under article 243G of the Constitution. The provision of services (Manpower Supply) of tube well operator for operation of tube well and booster of drinking and irrigation water supply in various villages covered under Panchayat are exempt being covered under entry at Sr. No. 3 of CGST Notification No. 12/2017-Centra1 Tax (Rate), dated 28th June, 2017.

Summary

Issues:
1. Clarification on whether the provision of services (Manpower Supply) of tube well operator for operation of tube well and booster of drinking and irrigation water supply in various villages covered under Panchayat are exempt or taxable.

Detailed Analysis:
The case involved an application for advance ruling by M/s. R.R. Enterprises regarding the taxability of their services supplied to the Public Health Department in Chandigarh. The applicant sought clarification on whether the services provided, specifically manpower supply for tube-well operators, were exempt or taxable under the GST regime. The applicant highlighted that initially, from April 2018 to September 2018, they invoiced the services without GST, which was accepted by the department. However, with the introduction of TDS provisions under section 51 of the CGST Act from October 2018, the department started insisting on GST invoicing for the services provided.

The applicant argued that the TDS provisions were applicable only to taxable supplies, and the services in question should be exempt. The applicant contended that the services fell under the exemption provided in CGST Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, specifically under entry at Sr. No. 3. This entry exempted pure services provided to government entities in relation to functions entrusted to a Panchayat under the Constitution.

Upon examination of the contract and the nature of services provided, it was established that the services qualified as pure services as no supply of goods was involved. The services were supplied to the Union Territory of Chandigarh, and the functions performed by the applicant aligned with those entrusted to a Panchayat under the Constitution. Therefore, the services provided were deemed to be in relation to functions entrusted to a Panchayat under the Constitution, falling under the exemption category.

After a detailed hearing and analysis, the Authority for Advance Ruling ruled that the provision of services (Manpower Supply) of tube well operators for operation of tube wells and boosters of drinking and irrigation water supply in various villages covered under Panchayat are exempt from taxation as per the relevant notification. The ruling was made in favor of the applicant, ordering that the services were exempt and should be communicated accordingly.