2021 (8) TMI 145 - AAR - GST

Classification of services - pure services - services to local authority - operation of water pump and safeguarding pumping machinery at various Pump Houses in different districts like South 24 Parganas, North 24 Parganas, Howrah, Nadia etc. for supply of drinking water to the public and hospitals upon receipt of work order from Directorate of Public Health Engineering - covered under entry serial number 3 of the N/N. 1136 F.T. dated 28.06.2017 or not HELD THAT - The term pure services has not been defined under the Act. However, a bare reading of the description of services as specified in entry serial number 3 of the Notification No. 1136 F.T. dated 28.06.2017 denotes supply of services which does not involve any supply of goods can be regarded as pure services. The said entry serial, therefore, specifically excludes works contract services or other composite supplies involving supply of any goods since works contract as defined in clause (119) of section 2 of the GST Act necessarily involves transfer of property in goods (whether as goods or in some other form) - the supply of services as pure services subject to the condition that the supply doesn t involve any supply of goods. The supply of services as undertaken by the applicant cannot be considered as any treatment or process on goods belonging to another registered person so as to qualify as job work as defined under clause (68) of section 2 of the Act ibid. Whether the said services are in relation to any functions entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution of India? - HELD THAT - The functions entrusted to a Panchayat or to a municipality as listed in the Eleventh and/or Twelfth Schedule includes the functions like drinking water or water supply for domestic, industrial and commercial purposes - the services as provided by the applicant for operation of water pump and safeguarding pumping machinery at various Pump Houses in different districts for supply of drinking water is found to be a matter as listed in the Eleventh and/or Twelfth Schedule in relation to functions entrusted to a Panchayat under article 243G and/or to a municipality under article 243W of the Constitution of India.

Summary

Issues Involved:
1. Whether the services provided by the applicant are pure services.
2. Whether the applicant provides services to the Central Government, State Government, Union Territory, local authority, or a Governmental authority.
3. Whether the services are related to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution of India.

Detailed Analysis:

1. Whether the services provided by the applicant are pure services:
The term 'pure services' is not explicitly defined under the GST Act. However, entry serial number 3 of Notification No. 1136 F.T. dated 28.06.2017 specifies that pure services exclude works contract services or other composite supplies involving the supply of goods. The applicant claims that their services, which include operating and guarding water pumps, do not involve the supply of goods and should thus be considered pure services. The Authority for Advance Ruling (AAR) noted that the applicant did not provide all necessary documentation to substantiate this claim but conditionally accepted the services as pure services, provided no goods are supplied.

2. Whether the applicant provides services to the Central Government, State Government, Union Territory, local authority, or a Governmental authority:
The AAR confirmed that the applicant provides services to the Directorate of Public Health Engineering, Government of West Bengal, which qualifies as a State Government department. This satisfies the requirement that the services be provided to a governmental authority.

3. Whether the services are related to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution of India:
The AAR examined the functions listed under Article 243G and Article 243W, as well as the Eleventh and Twelfth Schedules of the Constitution, which include functions like drinking water and water supply for domestic, industrial, and commercial purposes. The services provided by the applicant, which involve operating water pumps and safeguarding pumping machinery for the supply of drinking water, fall under these functions. Therefore, the services are related to the functions entrusted to Panchayats and Municipalities.

RULING:
The AAR ruled that the pure services provided by the applicant to the Directorate of Public Health Engineering, Government of West Bengal, are exempt from GST under entry serial number 3 of Notification No. 1136 F.T. dated 28.06.2017, as amended from time to time. This ruling is valid subject to the provisions under Section 103 and can be declared void under Section 104(1) of the GST Act.