2021 (3) TMI 576 - AAR - GST

Scope of Advance Ruling application - functions entrusted to a municipality under article 243W of the Constitution - pure services or not - Exemption under Entry No. 3 of the Notification No. 12 / 2017 CT - HELD THAT - The Advance Ruling sought by the applicant is the determination of the liability to pay tax on services. After examining the kind of activities and services the applicant is engaged in, it is made clear that the applicant do not make any of the supplies in question, but is in fact the recipient of the various supplies made to him by the contractors as stated in his application. Thus the questions raised are on the liability to pay tax on the services supplied to them and not on the supplies made by them. As per section Section 95(a) of CGST and GGST Act, it is evident that an applicant can seek an advance ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant. Further, as per Section 103(1) of the CGST Act such an Advance Ruling is binding only on the applicant and on the Officer Concerned or the jurisdictional Officer in respect of the applicant. In the present case the applicant is recipient of the services and not supplier of such services. Accordingly, the application is not liable for admission and therefore rejected.

Summary

Issues Involved:
1. Applicability of GST exemption under Entry No. 3 of Notification No. 12/2017-CT.
2. Interpretation of "in relation to" functions entrusted to a municipality under Article 243W of the Constitution.
3. Eligibility of the applicant to seek an advance ruling under Section 97 of the CGST Act, 2017.

Issue-wise Detailed Analysis:

1. Applicability of GST exemption under Entry No. 3 of Notification No. 12/2017-CT:
The applicant, a Municipal Corporation, sought clarification on whether the supply made by M/s. INI Design Studio Pvt. Ltd. qualifies for exemption under Entry No. 3 of Notification No. 12/2017-CT as a "Pure Service" related to functions entrusted to a municipality under Article 243W of the Constitution. The applicant argued that the service provided was a "Pure Service" with no element of goods, thus falling under the exemption criteria.

2. Interpretation of "in relation to" functions entrusted to a municipality under Article 243W of the Constitution:
The applicant emphasized that the duties listed under Section 63(1) and 66 of the Gujarat Province Municipal Act, 1949 (GPMC Act) are obligatory and discretionary duties of the Municipal Corporation. They argued that the term "in relation to" should be interpreted broadly to include activities that promote public safety, health, convenience, or instruction, as well as the maintenance of municipal offices and public properties. The applicant cited legal precedents to support the expansive interpretation of "in relation to," asserting that the design and consultancy services for the new office building are in relation to the functions entrusted to the municipality.

3. Eligibility of the applicant to seek an advance ruling under Section 97 of the CGST Act, 2017:
The Authority for Advance Ruling (AAR) examined whether the applicant, as a recipient of services, could seek an advance ruling. Section 95(a) of the CGST Act defines "advance ruling" as a decision provided to an applicant on matters specified in Section 97 or 100, in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant. The AAR noted that the applicant is the recipient, not the supplier of the services in question. Consequently, the application was deemed non-maintainable and rejected without delving into the merits of the case.

Ruling:
The application filed by the Municipal Corporation was rejected under Section 98(2) of the CGST/GGST Act, 2017, as it was non-maintainable due to the applicant being the recipient rather than the supplier of the services.