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2021 (10) TMI 521 - AAR - GSTClassification of supply - Benefit of exemption from GST - supply of goods or supply of services - e-Procurement transaction fee collected on behalf of ITE C Department of Telangana State Government towards online tenders - applicability of Entry No.6 of exemption of N/N. 12/2017- Central Tax (Rate) Dated 28th June, 2017 - HELD THAT - The applicant is providing service to various departments of Telangana Government in the field of Information technology and related services. These services include e-procurement of various goods services for these Government departments. It is the opinion of the applicant that such services provided by him fall under Entry 6 of Notification No. 12/2017 dated 28.06.2017 and therefore are exempt from any tax under GST. A careful reading of the said Entry in the Notification reveals that this entry pertains to services provided by the Government and not services provided to the Government. The applicant is providing services to the Government. Therefore the services provided by the applicant to the Government are not exempt under this Notification. Further the services provided by the applicant on behalf of the Government to business entities is covered by the exception to the above entry, therefore such services also are not exempt. Application disposed off.
Issues Involved:
1. Clarification on whether e-Procurement transaction fee collected on behalf of ITE&C Department of Telangana State Government results in supply of goods or services or both. 2. Determination of tax liability on e-procurement transaction fee collected on behalf of State Government Department. 3. Analysis of whether services made by State Government Department fall under Entry No. 6 of exemption of Notification No. 12/2017 - Central Tax (Rate) Dated 28th June, 2017. Analysis: Issue 1: The applicant, a service agency to the Telangana Government in the field of Information Technology, sought clarification on whether the e-Procurement transaction fee collected on behalf of the ITE&C Department of Telangana State Government results in the supply of goods or services or both. The applicant believed that acting as a pure agent for the government in online tenders might not attract tax under the CGST Act, 2017. Issue 2: The Advance Ruling Authority determined that the e-Procurement transaction fee collected on behalf of the State Government Department does fall within the meaning of supply as defined in the CGST Act, 2017. Consequently, the tax liability arises on such fees collected on behalf of the IT E&C department. Issue 3: The applicant contended that the services provided by them to various departments of the Telangana Government, including e-procurement services, should be exempt from tax under Entry 6 of Notification No. 12/2017 dated 28th June, 2017. However, the Authority clarified that the exemption under this entry applies to services provided by the government itself and not to services provided to the government. As the applicant was providing services to the government and not by the government, the services provided were not exempt under this Notification. Additionally, services provided by the applicant on behalf of the government to business entities were not exempt either. In conclusion, the ruling provided by the Authority under Section 98(4) of the Central Goods and Services Tax Act, 2017 and under Section 98(4) of the Telangana Goods and Services Tax Act, 2017, determined that the e-Procurement transaction fee collected on behalf of the ITE&C Department of Telangana State Government does result in the supply of goods or services, tax liability arises on such fees, and the services provided by the State Government Department do not fall under the exemption of Notification No. 12/2017 - Central Tax (Rate) Dated 28th June, 2017.
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