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2021 (1) TMI 597 - AAR - GSTGovernment entity or not - Rajkot Urban Development Authority (Accredited Department of Gujarat State Government) - whether the said authority falls under the definition of Government Authority or a Government entity as defined under para 2(zf) 2(zfa) of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? - Pure Service or not - exemption by virtue of Notification No.12/2017 - HELD THAT - Entry No.3 of aforementioned Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 exempts 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 or a Government Entity 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. Hence, three conditions are required to be satisfied for a service to be covered under subject entry of the notification which is as below (1) It must be pure service not involving any supply of goods. (2) It must be provided to the Central Government or State Government or Union Territory or Local Authority or a Governmental Authority or a Government Entity. (3) It must be an activity in relation to any function entrusted to a (i) Panchayat under Article 243G of the Constitution; or (ii) Municipality under Article 243W of the Constitution. The first condition to be verified is as to whether the services supplied by the applicant are pure services or otherwise. We, therefore, are of the opinion that if and only if, the first condition is satisfied, only then we will be required to look into the applicability of the other two conditions i.e. whether the other two conditions are also satisfied as per the current contract/agreement made by the applicant with Rajkot Urban Development Authority. So, the first condition to be discussed is as to what is meant by pure service? Since pure service has not been defined under GST, the same can be construed in general terms as any supply which is either deemed as services under Schedule II of CGST Act or which are not covered under the definition of goods shall be categorized as pure services. However, as per the notification, works contract services or other composite supplies involving supply of any goods are not covered in entry no.3 of aforementioned notification. In other words, if a person provides only service to any person without involvement of supply of goods along with supply of services, then the same would be termed as supply of pure service. Although the applicant has submitted that they are providing Professional and Technical service and have been allotted work of providing Project Management Consultancy Service(Heading 998339) in Relation to PM Awas Yojana by Rajkot Urban Development Authority and the service is Pure service and that Serial No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017, as amended from time to time exempts the 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 (or a Government Entity) 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, they have only submitted the letter of acceptance dated 19.02.2019 issued to them by the Rajkot Urban Development Authority. The primary condition for an applicant to be eligible for the exemption by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) is that the services supplied by them are pure i.e. services supplied/provided without any supply of goods and excluding Works Contract service or other composite supplies involving supply of any goods, and only if it is proved or established that the services provided by them are pure, will the applicability of the other conditions i.e. whether the recipient of the services is a Governmental Authority or Government Entity, whether the services supplied are in relation to functions entrusted to a municipality or a panchayat under Articles 243G or 243W of the Constitution etc. will be looked into. However, under the above circumstances, it would not be possible for us to decide whether the services supplied by the applicant are pure or otherwise merely on the basis of the letter of acceptance submitted by them. Further, in absence of the aforementioned agreement, and without going through the terms and conditions of the agreement, it would not be possible for us to decide whether the Services provided by the applicant are Pure or are a supply of services along with supply of goods since the work is connected to the project of Affordable Housing and could also involve Works Contract service.
Issues Involved:
1. Classification of services provided by the applicant. 2. Determination of whether the services provided are "Pure Services." 3. Examination of whether the Rajkot Urban Development Authority (RUDA) qualifies as a "Governmental Authority" or "Government Entity." 4. Applicability of GST exemption under Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. Issue-Wise Detailed Analysis: 1. Classification of Services Provided by the Applicant: The applicant, engaged in providing Professional and Technical services, has been allotted the work of Project Management Consultancy Service in relation to PM Awas Yojana by RUDA. The services are classified under Heading 9983 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, which includes "Other professional, technical and business services" and attracts a GST rate of 18% (9% CGST + 9% SGST). 2. Determination of Whether the Services Provided are "Pure Services": The applicant asserts that the services provided are "Pure Services" as defined under Serial No.3 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, which exempts pure services provided to the government or its entities. However, the applicant has not submitted the agreement with RUDA, which is crucial to verify if the services provided are indeed pure services without any involvement of goods. The definition of "pure services" implies services provided without the supply of goods, excluding works contract services or composite supplies involving goods. 3. Examination of Whether RUDA Qualifies as a "Governmental Authority" or "Government Entity": The applicant contends that RUDA qualifies as both a "Governmental Authority" and a "Government Entity" under Notification No.12/2017-Central Tax (Rate). RUDA is established under the Gujarat Town Planning and Urban Development Act, 1976, with 100% government participation, fulfilling the criteria of being set up by an Act of State Legislature and carrying out functions entrusted to a Municipality under Article 243W of the Constitution. The functions of RUDA align with those listed in the Twelfth Schedule of Article 243W, such as urban planning, regulation of land use, and provision of urban amenities. 4. Applicability of GST Exemption under Notification No.12/2017-Central Tax (Rate) Dated 28.06.2017: The exemption under Entry No.3 of Notification No.12/2017-Central Tax (Rate) requires three conditions to be met: - The service must be a pure service. - It must be provided to the Central Government, State Government, Union Territory, local authority, Governmental Authority, or Government Entity. - The service must be related to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. While RUDA's status as a Governmental Authority or Government Entity is supported by the applicant's submission, the primary condition of the service being a pure service is not substantiated due to the absence of the agreement detailing the nature of services provided. Consequently, the authority cannot ascertain the applicability of the GST exemption without the necessary documentation. Ruling: In the absence of proper documentation regarding the services provided by the applicant to RUDA, it is not possible to determine whether the services are pure or otherwise, and thus, whether the GST exemption under Notification No.12/2017-Central Tax (Rate) is applicable.
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