2019 (10) TMI 756 - AAR - GST

Government Authority - pure services or not - Project Management services provided by applicant to recipient - function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively - supervision fees received towards such services provided by the applicant - HELD THAT - The applicant shall be responsible for overall management of all components of the project on technical, financial and contractual matters during implementation of the sewerage projects. The services shall include deployment of team of experts, Engineers and other support staff which shall remain involved till execution of the projects. The scope would broadly include appointments of contractors and consultants, review and finalisation of contractor's and consultant's submissions in relation to project planning and execution, periodic review of progress report, rendering advice on counter measures/corrective actions required for overcoming bottlenecks/problems encountered during the execution of the project. The services provided by the applicant appears to fall in the list of services enumerated under serial no. 6 of the 12th Schedule of Article 243 W of the Indian Constitution, thus qualifying the admissibility criteria. Any 'Pure Services are provided to a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India and that 'Governmental Authority' is an Authority or a board set up by an Act of Parliament or a State Legislature or established by the Government with 90 percent or more participation by way of equity or control to carry out any function entrusted to a Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India, then the same is exempted vide SI. No. 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017.

Summary

Issues:
1. Qualification of Project Management services as activities related to Panchayat or Municipality under the Constitution of India.
2. Classification of supervision fees as "Pure services" for exemption under relevant notifications.
3. Determination of whether the applicant falls under the definition of governmental authority or Government entity.

Issue 1:
The case involved an application under section 97 of the Goa Goods and Services Tax Act, 2017, seeking an advance ruling on whether Project Management services provided by the applicant to a recipient would qualify as activities related to functions entrusted to Panchayat or Municipality under the Constitution of India. The applicant, a corporation in Goa, was responsible for various aspects of sewerage projects, including project planning, construction supervision, and detailed design. The ruling determined that the services provided fell under the 12th Schedule of Article 243W of the Indian Constitution, specifically under public health, sanitation, conservancy, and solid waste management, thus meeting the admissibility criteria.

Issue 2:
The second issue addressed in the judgment was the classification of supervision fees received by the applicant. The question was whether these fees qualified as "Pure services" under relevant notifications for exemption from CGST and SGST. The ruling concluded that supervision fees received for services provided to a Governmental Authority in relation to functions entrusted to a Panchayat or Municipality were considered "Pure services" and exempted from CGST and SGST under specific notifications.

Issue 3:
Lastly, the judgment analyzed whether the applicant fell under the definition of a governmental authority or Government entity as per the Integrated Goods and Services Tax Act, 2017. The definition of "governmental authority" was scrutinized, and it was established that the applicant met the criteria outlined in the Act and subsequent amendments, thereby confirming the applicant's classification as a Governmental Authority or Government Entity.

In conclusion, the ruling provided clarity on the qualification of Project Management services, the classification of supervision fees, and the applicant's status as a governmental authority or Government entity under the relevant tax laws and constitutional provisions.