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2020 (2) TMI 1469 - AAR - GSTActivity 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 - Project Management Consultancy services (PMC) under the contract for PMAY - pure services or not - exemption 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 - 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. Pure services or not - exemption 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 - HELD THAT - The services mentioned in the contract would 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 Service 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.
Issues Involved:
1. Qualification of Project Development Service and Project Management Consultancy services as activities related to functions entrusted to Panchayat or Municipality under Article 243G or 243W of the Constitution of India. 2. Eligibility of these services as "Pure services" under Notification No. 12/2017-Central Tax (Rate) for exemption from GST. Issue-wise Detailed Analysis: 1. Qualification of Services under Article 243G or 243W: The applicant, M/s. Saryu Babu Engineers For Resource Development, sought an advance ruling on whether the Project Development Service (Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided to the State Urban Development Authority (SUDA) and under the Pradhan Mantri Awas Yojna (PMAY) qualify as activities related to functions entrusted to Panchayat or Municipality under Article 243G or 243W of the Constitution of India. The Authority examined the purpose and scope of work under the contracts with SUDA and PMAY. SUDA, as a state-level nodal agency, is involved in urban poverty alleviation, which includes identifying urban poor, formulating and implementing schemes for their benefit, and reviewing the progress of these activities. PMAY aims to provide central assistance for urban housing and slum rehabilitation, which aligns with functions listed in the 11th and 12th schedules of the Constitution, such as urban planning, poverty alleviation, and slum improvement. The scope of work for the applicant under these contracts includes detailed project reporting, physical verification, data collection, and project management, which are in direct relation to the functions entrusted to Panchayats and Municipalities. Thus, the services provided by the applicant under these contracts qualify as activities related to functions entrusted to Panchayat or Municipality under Article 243G or 243W. 2. Eligibility as "Pure Services" for GST Exemption: Given the affirmative ruling on the first question, the second issue addressed whether these services qualify as "Pure services" under Notification No. 12/2017-Central Tax (Rate), as amended by Notification No. 2/2018-Central Tax (Rate), and corresponding notifications under the UPGST Act, thus being eligible for exemption from GST. The Authority examined the sample contract and scope of work, concluding that the services provided by the applicant are indeed "Pure services" as they do not involve works contract services or composite supplies involving the supply of goods. The services include project management, data collection, and reporting, which are purely service-oriented activities without any supply of goods. Therefore, these services qualify for exemption from GST under serial number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017, as amended, and corresponding notifications under the UPGST Act. Rulings: 1. The services rendered under the contract with 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. 2. Such services qualify as "Pure services" and are accordingly exempt from the payment of GST under Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017, as amended, and corresponding notifications under the UPGST Act. Validity: This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.
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