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2022 (1) TMI 47 - AAR - GSTExemption from GST - composite supply or not - pure services - business of providing accommodation and services - in the course of the business they have supplied the services of boarding and lodging facility for the officials of Greater Hyderabad Municipal Corporation - Sl.No.3 of Notification No.12/2017 - HELD THAT - Under serial no. 3 of Notification No. 12/2017 pure services provided in relation to any function entrusted to a municipality under Article 243W of the Constitution of India is eligible for exemption from GST. Clearly the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed under 12th schedule - Hon ble Supreme Court of India in the case of HH. MAHARAJADHIRAJA MADHAV RAO JIWAJI RAOSCINDIA BAHADUR VERSUS UNION OF INDIA 1970 (12) TMI 87 - SUPREME COURT observed that the expression relating to means to bring into relation or establish a relation. It was further clarified that there should be a direct and immediate link with a covenant and that there cannot be any independent existence outside such covenant. By his own admission in the application, the applicant provided accommodation services to GHMC in relation to conduction General Elections to the Legislative Assembly of Telangana State. Thus there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017.
Issues:
1. Application for advance ruling under Section 97(1) of TGST Act, 2017. 2. Clarification on the exemption of services provided to GHMC under Notification No.12/2017. Analysis: 1. The applicant, a hospitality services provider, sought an advance ruling regarding the exemption of services provided to GHMC during the 2018 State Elections. The applicant contended that the services were exempt under Sl.No.3 of Notification No.12/2017, which needed clarification. The application was admitted after the applicant fulfilled the necessary requirements, including payment of the prescribed fee. 2. During the personal hearing, the authorized representative reiterated the nature of services provided to GHMC and the basis for claiming exemption under Article 243W of the Constitution of India. The applicant argued that the services fell under the purview of functions entrusted to municipalities and hence should be exempt from GST. 3. The Authority for Advance Ruling delved into the constitutional provisions under Article 243W and Schedule 12, which outline the functions and schemes to be performed by municipalities. The exemption under Notification No. 12/2017 applies to pure services directly related to the functions enumerated in Article 243W. The ruling referenced judicial interpretations to clarify the meaning of the expression "in relation to," emphasizing the necessity of a direct and immediate link between the services provided and the functions of the municipality. 4. The ruling concluded that the services provided by the applicant to GHMC for the 2018 State Elections did not qualify for exemption under Sl.No.3 of Notification No.12/2017. The decision was based on the lack of a direct connection between the services rendered and the functions discharged by GHMC as outlined in Article 243W read with Schedule 12 of the Constitution of India. In summary, the advance ruling clarified that the services provided by the applicant to GHMC were not exempt under Sl.No.3 of Notification No.12/2017 based on the interpretation of relevant constitutional provisions and judicial precedents regarding the scope of exemption for services related to municipal functions.
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