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2019 (6) TMI 486 - AAR - GSTClassification of supply of services - providing conservancy/solid waste management service to the Conservancy Department of the Howrah Municipal Corporation - pure services or composite supply - recipient of the service - whether government, local authority, governmental authority or a government entity - supply in relation to any function entrusted to a panchayat or a municipality under the Constitution or not? - Applicability of TDS notifications. HELD THAT - The recipient is a municipal corporation, which is a local authority as defined under section 2(69) of the GST Act - The vehicles used and the fuel consumed and the machinery used do not result in any transfer of property in goods to HMC. The consideration to be paid measures the work only in terms of the quantity of the garbage lifted and removed. Based on the documents, it may, therefore, be concluded that the Applicant s supply to HMC is a pure service. Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. SI No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant s supply to HMC is a function mentioned under SI No. 6 of the Twelfth Schedule - The Applicant s service to HMC, therefore, is exempt under SI No. 3 of the Exemption Notification Applicability of TDS notifications - HELD THAT - The TDS Notifications bring into force section 51 of the GST Act, specify the persons under section 51(1)(d) of the Act and have mandated and laid down the mechanism for deduction of TDS. These notifications, therefore, are applicable only if TDS is deductible on the Applicant s supply under section 51 of the GST Act. Section 51(1) of the Act provides that the Government may mandate inter alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both - As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply.
Issues:
1. Admissibility of the Application 2. Submissions of the Applicant Admissibility of the Application: The Applicant provides conservancy/solid waste management services to the Howrah Municipal Corporation (HMC) and questions the applicability of TDS deductions under specific notifications. The questions raised are deemed admissible under section 97(2)(b) of the GST Act, with no objections from the Revenue officer, leading to the admission of the application. Submissions of the Applicant: The Applicant argues that their services to HMC qualify for exemption under specific sections of the Exemption Notification, emphasizing the nature of the service provided and the recipient being a local authority. They present evidence to support their claim of providing pure services as per the Exemption Notification. Observations and findings of the Bench: The Bench examines the Circular issued by the Central Government, linking the previous service tax exemption to the current GST provisions regarding services provided to government entities like local authorities. The Circular clarifies that services related to public health, sanitation, conservancy, solid waste management, etc., are eligible for exemption under the Exemption Notification. The Bench emphasizes the importance of the phrase 'in relation to any function' in determining the eligibility for exemption under the Exemption Notification. The Bench concludes that the Applicant's services to HMC qualify as pure services based on the nature of work described in the documents provided. The services align with functions entrusted to municipalities under the Constitution, thus meeting the criteria for exemption under the Exemption Notification. The TDS Notifications are deemed inapplicable to the Applicant's exempt supplies, as per the provisions of the GST Act. Ruling: The Bench rules that the Applicant's supply to HMC is exempt from GST payment under the specific section of the Exemption Notification. As the Applicant's services are exempt, the TDS provisions outlined in the relevant notifications do not apply to their supply. The ruling remains valid unless declared void under the provisions of the GST Act. This detailed analysis of the judgment provides a comprehensive understanding of the issues addressed and the legal reasoning behind the ruling delivered by the Authority for Advance Ruling, West Bengal.
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