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2021 (12) TMI 215 - AAR - GSTClassification of services - preparation of Detailed Project Report (DPR) and providing Project Management Consultancy (PMC) services for projects under Beneficiary Led Construction in Lucknow Cluster under Pradhan Mantri Awas Yojna (Urban) under an agreement with State Urban Development Agency (SUDA) - whether the activity would fall under activities in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or otherwise? - pure services or not - serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017. HELD THAT - As per Sl. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution are exempt from tax - SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government. The Consultancy services rendered by the Applicant under the contract with SUDA, and for PMAY are in relation to functions entrusted to Municipalities / Panchayats under Article 243W / 243G of the Constitution of India. Pure services or not - HELD THAT - The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 issued under Central Goods and Services Tax Act, 2017 (CGST) and corresponding Notifications No. - KA.N.I.-2-843/X1-9 (47) / 17-UP. Act-1 - 2017 - Order - (10) 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act).
Issues Involved:
1. Whether preparation of Detailed Project Report (DPR) and providing Project Management Consultancy (PMC) services under Beneficiary Led Construction in Lucknow Cluster under Pradhan Mantri Awas Yojna (Urban) falls under activities related to functions entrusted to Panchayats or Municipalities under Article 243G or Article 243W of the Constitution of India. 2. Whether such services qualify as "Pure Services" and are exempt from GST under Notification No. 12/2017-Central Tax (Rate). Issue-wise Detailed Analysis: Issue 1: Classification under Article 243G/243W The applicant, a registered assessee under GST, sought an advance ruling on whether their services for preparing Detailed Project Reports (DPR) and providing Project Management Consultancy (PMC) under the Pradhan Mantri Awas Yojna (Urban) for the State Urban Development Agency (SUDA) fall under activities related to functions entrusted to Panchayats or Municipalities under Article 243G or 243W of the Constitution of India. The Authority for Advance Ruling (AAR) examined the role and establishment of SUDA, noting it was formed under the Societies Registration Act and is a governmental authority as defined under section 2(16) of the Integrated Goods & Service Tax Act, 2017. SUDA's main objectives include identifying urban poor, formulating and implementing schemes for their upliftment, and reviewing the progress and effectiveness of these schemes. Given these functions, the AAR concluded that SUDA's activities align with the functions entrusted to Panchayats and Municipalities under Articles 243G and 243W, such as urban planning, poverty alleviation, and slum improvement. Issue 2: Qualification as "Pure Services" and GST Exemption The second issue was whether the services provided by the applicant qualify as "Pure Services" and are thus exempt from GST under Notification No. 12/2017-Central Tax (Rate). The AAR reviewed the scope of work under the agreement, which included tasks such as physical verification, data collection, preparation of architectural designs, project structuring, and obtaining necessary approvals. The Project Management Consultancy (PMC) services involved coordinating and monitoring construction activities, ensuring quality control, and assisting beneficiaries at various stages of construction. The AAR determined that these services qualify as "Pure Services" since they exclude works contract services or other composite supplies involving goods. Therefore, these services are exempt from GST under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017, and the corresponding notifications under the Uttar Pradesh Goods and Services Tax Act, 2017. Ruling: 1. The services rendered under the contract with SUDA and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. 2. Such services qualify as "Pure Services" and are exempt from GST, covered under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017, and the corresponding notifications under the Uttar Pradesh Goods and Services Tax Act, 2017. Validity: This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to provisions under Section 103 (2) of the CGST Act, 2017, until declared void under Section 104 (1) of the Act.
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