2019 (10) TMI 483 - AAR - GST

Exemption from GST - work for Operating Citizen Facilitation Centre (CFC) at various Locations of MCGM on per transaction/ receipt basis - Sr. No.3 3A of amended NN/N. 12/2017 - Central (Rate) as on 31st Dec, 2018 - HELD THAT - From a perusal of the contract submitted by the applicant, we do not agree with the applicant that the supply by them to MCGM is a composite supply of service. The contract very clearly states that the agreement between Mr. Anil Katoch of M/s. VFS Global Services Private Limited and Shri Sitaram Kunte, Municipal Commissioner, is for the work of Operating Citizen Facilitation Centres Collection Centres at various Locations of MCGM for 5 years on per transactions basis at ₹ 29.45 per transaction for pilot period of two months and thereafter for five years. The contract nowhere specifies separately for supply of goods, namely, computers, other consumables, etc. - Therefore the computers, other consumables, etc are being used by the applicant on their own account and that too for the purpose of providing services for the work of Operating Citizen Facilitation Centres / Collection Centres at various Locations of MCGM. Thus, their supply is of services only and are in the nature of pure services. However we agree to their submission that their role starts only after MCGM has provided services to citizens for which periodical bills/invoices are issued by MCGM. The role of the applicant starts only after the supply of goods/services are rendered by MCGM and hence it cannot be said that they are rendering service by way of any activity in relation to any function entrusted to a Municipality under article 243 W of the Constitution. Applicability of Sr.No. 3A of the Notification to their activity - HELD THAT - Since we have found that the supply in the subject case is in the nature of pure services, in such a case provisions of Sr. No. 3A will not be applicable.

Summary

Issues Involved:
1. Classification of services provided by the applicant.
2. Determination of the liability to pay tax on services provided by the applicant.
3. Applicability of GST exemption under Sr. No. 3 & 3A of Notification No. 12/2017 - Central (Rate).

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Applicant:
The applicant, M/s. VFS Global Services Pvt. Ltd., is engaged in operating Citizen Facilitation Centres (CFCs) at various locations for the Municipal Corporation of Greater Mumbai (MCGM). The services involve accepting cash from citizens for various municipal services, acknowledging receipts, and depositing collections in MCGM's bank account. The applicant contends that their services should be classified as "pure services" under Sr. No. 3 of Notification No. 12/2017 - Central (Rate), which exempts GST on pure services provided to the government or local authorities.

2. Determination of the Liability to Pay Tax on Services Provided by the Applicant:
The applicant argues that their services should be exempt from GST as they are providing pure services without any supply of goods. They reference Sr. No. 3 of Notification No. 12/2017 - Central (Rate), which exempts pure services provided to local authorities in relation to functions entrusted to a Municipality under Article 243W of the Constitution. The applicant asserts that their role starts after MCGM has provided services to citizens, and their task is limited to collecting payments on behalf of MCGM.

3. Applicability of GST Exemption under Sr. No. 3 & 3A of Notification No. 12/2017 - Central (Rate):
The authority examined whether the applicant's services qualify for exemption under Sr. No. 3 & 3A of Notification No. 12/2017 - Central (Rate). Sr. No. 3 exempts pure services provided to the government or local authorities related to functions under Article 243W of the Constitution. Sr. No. 3A exempts composite supplies where the value of goods does not exceed 25% of the total value. The authority determined that the applicant's services do not qualify as pure services since they involve the use of consumables and equipment, which are not separately specified in the contract. The services provided by the applicant start only after MCGM has rendered its services, and thus, they are not directly related to functions under Article 243W.

Conclusion:
The authority concluded that the services provided by the applicant do not qualify for GST exemption under Sr. No. 3 & 3A of Notification No. 12/2017 - Central (Rate). The services are taxable, and the applicant is liable to pay GST at the applicable rate.

Order:
The question of whether the work for "Operating Citizen Facilitation Centre (CFC) at various Locations of MCGM on a per transaction/receipt basis" would be exempt from GST vide Sr. No. 3 & 3A of Notification No. 12/2017 - Central (Rate) was answered in the negative. The applicant's services are subject to GST.