2019 (6) TMI 1013 - AAR - GST

Supply of services - Pure services or not - composite supply of goods and services - supply of providing labour services for setting up fire lines in forests to protect forest from catching fire which cause damages to forest, labour services for plantation of trees in forests, labour services for rill / river maintenance (rill bank protection by using rill stones), labour services of clearing the truck path in forests - exemption under N/N. 12/2017- Central Tax (Rate) dated 28-06-2017. HELD THAT - As per the Serial Number 3A in the exemption Notification, composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply 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 Panchayath under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution, is exempted from Goods and Services Tax vide Notification No.12/2017-Central Tax (Rate) dated 28-06-2017 as amended by Notification No.02/2018 Central Tax (Rate) dated 25-01-2018. The functions like construction of roads, fire services, urban forestry, protection of environment etc. come within the scope and ambit of Article 243W of the Constitution. The services for setting up fire lines, plantation of trees in forest, river maintenance in forest, clearing of truck path in forest are pure services that are clearly falling within the purview of the term Protection of Environment 'Road' / 'Fire Services ' as covered in 12 th Schedule under Article 243W of the Constitution. Therefore, these services are exempted as per Sl.No.3 of the Notification No.12/2017-CentraI Tax (Rate) dated 28-06-2017 (SRO.No.371/2017).

Summary

Issues:
1. Whether the supply of providing labor services for various activities in forests is included in exempted services under Notification No. 12/2017-Central Tax (Rate) or any related notification.
2. If the services are not exempted, what is the applicable rate of Goods and Services Tax (GST) for such services.

Issue 1:
The applicant sought an advance ruling on whether the labor services provided for setting up fire lines, plantation of trees, river maintenance, and clearing truck paths in forests fall under exempted services as per Notification No. 12/2017-Central Tax (Rate) or any related notification. The applicant's representative clarified that these services are pure labor works without involving any goods or materials and are directly provided to the Kerala Forest Department.

The ruling authority analyzed the definition of "pure services" as services without the supply of goods. It referred to Notification No. 12/2017-Central Tax (Rate) exempting pure services provided to government entities for activities related to functions entrusted to Panchayats or Municipalities under the Constitution. The exemption also covers composite supplies with goods not exceeding 25% of the total value. The functions entrusted to Municipalities under Article 243W of the Constitution include urban planning, roads, fire services, protection of the environment, among others.

The ruling concluded that the services of setting up fire lines, tree plantation, river maintenance, and clearing truck paths in forests are exempted under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) as they fall within the scope of "Protection of Environment 'Road' / 'Fire Services'" under the 12th Schedule of Article 243W of the Constitution.

Issue 2:
The second issue raised was regarding the applicable GST rate if the services were not exempted under any notification. However, since the services were found to be exempted under the aforementioned notification, a specific ruling on the GST rate for these services was not required.

In conclusion, the ruling authority determined that the labor services provided for various activities in forests are exempted under Notification No. 12/2017-Central Tax (Rate) as they align with the functions entrusted to Municipalities under the Constitution, specifically related to the protection of the environment and fire services.