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2019 (8) TMI 1220 - AAR - GSTClassification of supply of services - pure services or not - services provided to Local Authorities, Urban Development Authority, Dist. Panchayat R B Div. and other Government Departments which are entrusted with the functions mentioned under article 243G and 243W of the Constitution of India - exemption from CGST and Gujarat GST Act - HELD THAT - The services are exempted from the CGST and SGST Tax if they are Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. From the documents submitted by the applicant, it appears that the services provided by them do not involve any supply of goods and hence the services appear to be falling in the definition of Pure Services . However, the definition of pure services requires the verification of facts involves in the execution of contract. Similarly whether the contract is related to the function covered under the Article 243G and 243W is to be interpreted as to how the Local Authority is going to utilize the services provided under the contract, it is also therefor the question of interpretation of fact that the services provided by the applicant are actually utilized by the Local Authority for the function covered by Article 243G and 243W.
Issues Involved:
1. Definition and scope of "Pure Services." 2. Eligibility for exemption from Central Goods and Services Tax (CGST) under Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017. 3. Eligibility for exemption from Gujarat Goods and Services Tax (SGST) under Notification No. 12/2017-(Gujarat) State Tax (Rate) dated 30/06/2017. Issue-wise Detailed Analysis: 1. Definition and Scope of "Pure Services": The applicant sought clarification on whether his consultancy services, including structural designing, architectural planning, project management, and other related services, provided to various local authorities and government departments, could be classified as "Pure Services." The term "Pure Services" is not explicitly defined in the GST Act, Rules, or notifications. However, FAQ No. 25 on the CBEC website clarifies that "Pure Services" refers to services provided without involving any supply of goods. Examples include manpower supply for cleanliness, architect services, and consulting engineering services. The applicant's services do not involve any supply of goods, thus falling under the definition of "Pure Services." 2. Eligibility for Exemption from CGST: The applicant referenced Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017, which exempts intra-State supply of "Pure Services" provided to the Central Government, State Government, Union territory, local authority, or governmental authority, by way of any activity related to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. The Central Goods and Services Tax Deputy Commissioner, Surat, confirmed that the applicant's services do not involve any supply of goods, thereby qualifying as "Pure Services." However, the exemption applies only if the services are related to functions covered under Articles 243G and 243W. The applicant's services, such as architectural design and project management for housing projects, were not considered statutory functions under these articles, thus not eligible for exemption for certain projects. 3. Eligibility for Exemption from SGST: Similar to the CGST exemption, Notification No. 12/2017-(Gujarat) State Tax (Rate) dated 30/06/2017 provides exemption for "Pure Services" under the same conditions. The applicant's services qualify as "Pure Services" if they exclude works contract services and other composite supplies involving goods. The services must be provided to government entities and relate to functions under Articles 243G and 243W. The applicant's services are eligible for exemption from SGST provided they meet these criteria. Ruling: The Authority for Advance Ruling concluded that the services provided by the applicant could be termed as "Pure Services" if they: i) Exclude works contract services. ii) Exclude composite supplies involving any goods. iii) Are supplied without involving any goods. The services are eligible for exemption from both CGST and SGST under the respective notifications if they are "Pure Services" provided to government entities for activities related to functions under Articles 243G and 243W of the Constitution.
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