9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (4) TMI 883 - AAR - GSTExemption form CGST - Pure services or not - services of water supply and sewerage schemes to urban and rural beneficiaries by TWAD Board - conducting Geological surveying and testing (Pure Services) to identify the water potentiality - Governmental Authority or not - exemption from CGST under SI.No.3 of the Notifications No. 12/2017 CT(Rate) dated 28.06.2017 as amended and exempted from SGST under SI.No.3 of the G.O(Ms) No.73 dated 29.06.2017 No.II/CTR/532(d-15)/2017 as amended. HELD THAT - The service of testing is being provided by the applicant which is a Government authority to (i) Local bodies, (ii) Government departments and (iii) contractors undertaking the projects executed by TWAD. It is seen from the copies of documents submitted by the applicant vide their letter dt. 15.02.2021 namely Format C-IlI- Collection of steel samples. Format C-I -collection of PVC Pipe samples that the tests have been conducted by the applicant to the individual contractors, on payment of the fixed fee towards charges of testing. Thus, it is clear that the applicant is the service provider and the service is provided to both governmental and non-governmental agencies. The services rendered to the contractors, though done as per the contract conditions, at the insistence of TWAD, the same cannot be termed as services provided to Government/Local authority because these tests are done by TWAD for the individual contractors in fulfillment of his contractual obligations for a specific charge. This proves that testing is a service done by the provider viz., TWAD to the receiver, any individual contractor for a consideration which is the fee charged. Hence the service so rendered by TWAD to their contractors is not exempted by the entry at SI.No. 3 above as the services are not provided to the class of service receivers specified in the said entry. The functions entrusted are clearly mentioned in the schedules and only those activities fall under the functions entrusted to Panchayat/ Municipality. The exemption entry under consideration exempts pure services by way of any activity in relation to any of the functions listed above when provided to the said class of service receivers. The services rendered by the Applicant which is the subject matter of the current proceedings, namely quality testing of materials used in the turnkey contracts is undertaken to assure the quality of materials used in the turnkey projects to maintain the international standards required of a project. It is seen that this is an independent activity and is not in relation to activities listed in the Eleventh and Twelfth Schedule of the Constitution - the word used in the notification is 'Provided' and in the case at hand, without doubt the applicant provides the testing service only to the Contractor, for fulfilling his contractual obligations. In respect of geophysical survey tests and reports, the applicant conducts the survey and reports on the nature of the site. The applicant has stated that they have not undertaken this service to 'Private agencies so far'. Further from the documents submitted it is seen that such survey has been done by the applicant to the Local Panchayat body of Soolalgiri, on their request to assess the geophysical nature of the land and availability of water. The Local authorities are constitutionally entrusted with the function of 'Water Supply' and TWAD has stated that they undertake the geophysical Investigations and provide the Local Authorities 'survey sketch' of the site. The services provided by the applicant, namely, Quality material testing works is not exempted from Goods and Services Tax in terms of entry no.3 of the Notification 12/2017- Central Tax (rate) dated 28.06.2017 as amended - The service of Geophysical survey investigation is exempted from Goods and service Tax terms of entry no.3 of the Notification 12/2017- Central Tax (rate) dated 28.06.2017 subject to conditions stated.
Issues Involved:
1. Applicability of Notification No. 12/2017-CT(Rate) for "Pure Services" (testing of materials for quality) by TWAD Board. 2. Applicability of Notification No. 12/2017-CT(Rate) for conducting Geological surveying and testing (Pure Services) by TWAD Board. Detailed Analysis: Issue 1: Applicability of Notification No. 12/2017-CT(Rate) for "Pure Services" (testing of materials for quality) by TWAD Board The applicant, a governmental authority executing water supply and sewerage works, sought a ruling on whether their material quality testing services are exempt from GST under SI.No.3 of Notification No. 12/2017-CT(Rate). The applicant argued that these services, being "Pure Services" related to water supply and sewerage schemes, should be exempt. The Authority examined the conditions of the notification, which exempts "Pure services" provided to the government or local authorities 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 Authority noted that the testing services were provided to contractors, not directly to the government or local authorities. Therefore, these services do not qualify for the exemption as they are not directly provided to the specified class of service receivers. The Authority concluded that the quality testing services do not meet the conditions of the notification and are not exempt from GST. Issue 2: Applicability of Notification No. 12/2017-CT(Rate) for conducting Geological surveying and testing (Pure Services) by TWAD Board The applicant also sought a ruling on whether their geological surveying and testing services, aimed at identifying water potentiality, are exempt from GST. These services are provided to various government departments and local authorities. The Authority examined the conditions of the notification and found that the geological surveying and testing services qualify as "Pure Services" provided to local authorities, which are entrusted with the function of water supply under Article 243G and 243W. The Authority noted that these services are directly related to the functions entrusted to the local authorities and therefore qualify for the exemption. The Authority ruled that the geological surveying and testing services are exempt from GST, subject to the conditions that the supply should be after 24.01.2018, should be pure services, and must be made to the specified class of service receivers. Ruling: 1. The services provided by the applicant, namely, Quality material testing works, are not exempted from Goods and Services Tax in terms of entry no.3 of the Notification 12/2017- Central Tax (rate) dated 28.06.2017 as amended. 2. The service of Geophysical survey investigation is exempted from Goods and Services Tax in terms of entry no.3 of the Notification 12/2017- Central Tax (rate) dated 28.06.2017, subject to the conditions stated in Para 9.7 above.
|
