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2021 (11) TMI 885 - AAAR - GSTExemption under GST - Services provided by the applicant to the recipient i.e. The Greater Chennai Corporation - service provided to the local authority by way of activity in relation to functions entrusted to a Panchayat. under article 243G and Municipality under article 243W of the Constitution - pure services or not - composite supply or not - time of supply - benefit of Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Difference of opinion - HELD THAT - The issue is not answered and is deemed to be that no ruling is issued under Section 101(3) of the CGST/TNGST Act 2017 because of the divergence of opinion between both the Members.
Issues Involved:
1. Whether the services provided by the appellant to the Greater Chennai Corporation are considered "pure services" and eligible for exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 2. Whether the supply, installation, commissioning, and operation and maintenance (O&M) of the RO plant constitute a composite supply or separate supplies. 3. Whether the O&M services provided post-GST introduction are eligible for exemption as pure services. 4. Whether the supply of smart cards and treated water constitutes a transfer of goods, thus disqualifying the service as "pure services." Issue-wise Detailed Analysis: 1. Pure Services and Exemption Eligibility: The appellant argued that the services provided to the Greater Chennai Corporation (GCC) should be classified as "pure services" under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which exempts pure services provided to governmental bodies. The appellant maintained that the service involved only the operation and maintenance of the RO plant, without any supply of goods, thereby qualifying as pure services. 2. Composite Supply or Separate Supplies: The AAR ruled that the contract for supply, installation, commissioning, and O&M of the RO plant is a composite supply, not pure services. The appellant countered this by stating that the supply and installation were completed before the GST regime, and only the O&M services continued post-GST, thus they should be treated as separate supplies. The appellant emphasized that the O&M services do not involve any supply of goods and should be considered pure services. 3. O&M Services Post-GST: The appellant argued that the O&M services provided after the introduction of GST should be considered independently from the supply and installation services completed pre-GST. They claimed that the O&M services are pure services as they do not involve any transfer of goods. The appellant also noted that the supply of smart cards and treated water does not constitute a transfer of goods since the ownership of water remains with the GCC, and smart cards are part of the initial supply contract. 4. Transfer of Goods: The AAR contended that the issuance of smart cards and the supply of treated water involve the transfer of goods, thus disqualifying the services as pure services. The appellant refuted this, stating that smart cards remain their property and the treated water is owned by the GCC, hence there is no transfer of goods. Separate Judgments by Members: SGST Member's Findings: The SGST member concluded that the supply and installation completed pre-GST and the O&M services provided post-GST should be treated as distinct supplies. The O&M services, being pure services, fall within Serial No. 3 of Notification No. 12/2017 and are exempt from tax. CGST Member's Findings: The CGST member disagreed, stating that the contract for supply, installation, commissioning, and O&M is a composite supply. The member argued that the O&M services involve the maintenance of immovable property and the supply of RFID cards, which constitute a transfer of goods. Therefore, the services do not qualify as pure services and are not eligible for the exemption. Conclusion: Due to the divergence of opinions between the SGST and CGST members, the issue remains unresolved, and no ruling is issued under Section 101(3) of the CGST/TNGST Act 2017.
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