2019 (1) TMI 1857 - AAR - GST

Classification of services - activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided by the applicant to recipient under the contract for SUDA or not - Project Management Consultancy services (PMC) under the contract for PMAY - pure services or not. Whether the Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided by the applicant to recipient under the contract for SUDA and the Project Management Consultancy services ( PMC ) under the contract for PMAY would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India? - HELD THAT - SUDA has been established as a State level nodal agency, under the Department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government. This agency is registered under the Registration of Societies Act since 20th November, 1990. As per the website of SUDA the main objectives of Society shall be - (a) To identify the urban poor in the State, (b) To draw the plans and scheme for the upliftment of the urban poor in the State, (c) To implement schemes for the benefit of the urban poor either directly or through other agencies engaged in this direction, whether private, public or cooperative, (d) To review the progress of the execution of these activities as well as effectiveness of the benefits directed towards the urban poor, (e) To set up or establish any specific service such as training facilities, infrastructural etc. in furtherance of the economic interest of the urban poor. Further, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and Affordable Housing in Partnership. Scope of work awarded to the applicant under different contracts - HELD THAT - The Consultancy services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. Whether, such services provided by the applicant would qualify as Pure services (excluding works contract service or other composite supplies involving supply of any goods) as provided in Serial Number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018-Central Tax (Rate), dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST) and corresponding Notifications No. - KA.N.I.-2-843/X1-9 (47)/17-UP. Act-1 - 2017 - Order - (10) - 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively? - HELD THAT - The services being rendered by the applicant qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in Serial Number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018-Central Tax (Rate), dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 ( CGST ) and corresponding Notifications No. - KA.N.I.-2-843/X1-9 (47)/17-UP. Act-1 - 2017 - Order - (10) - 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Services Tax Act, 2017 ( 'UPGST Act ), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.

Summary

Issues:
1. Whether consultancy services provided by the applicant under specific contracts qualify as activities related to functions entrusted to Panchayat or Municipality as per the Constitution of India?
2. Whether the services provided qualify as "Pure services" exempt from tax under specific notifications of CGST and UPGST Acts?

Issue 1:
The applicant sought clarification on whether consultancy services provided to State Urban Development Agency (SUDA) and Pradhan Mantri Awas Yojana (PMAY) fall under functions entrusted to Panchayat or Municipality as per the Constitution of India. The Authority examined the purpose and scope of work under the contracts with SUDA and PMAY. The detailed analysis included the objectives of SUDA and PMAY, along with functions related to Panchayats and Municipalities as per the Constitution. The scope of work awarded to the applicant was thoroughly reviewed, confirming that the consultancy services rendered are indeed in relation to functions entrusted to Municipalities and Panchayats under the Constitution.

Issue 2:
The second question revolved around whether the services provided by the applicant qualify as "Pure services" exempt from tax under specific notifications of CGST and UPGST Acts. The Authority analyzed the contracts awarded by SUDA and the Government of Uttar Pradesh, focusing on the Detailed Project Report (DPR) preparation and Project Management Consultancy for PMAY. After examining the agreements and scope of work, it was concluded that the services rendered by the applicant indeed qualify as "Pure services" as per the relevant notifications of CGST and UPGST Acts. Therefore, the services are eligible for exemption from the levy of CGST and UPGST, respectively.

This detailed judgment by the Authority for Advance Ruling, Uttar Pradesh, provided a comprehensive analysis of the consultancy services provided by the applicant under specific contracts, ensuring alignment with constitutional functions and exemption criteria under the GST Acts. The ruling clarified the nature of services rendered and their eligibility for tax exemption, offering valuable insights into the interpretation of relevant legal provisions in the context of the specific case presented before the Authority.