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2022 (4) TMI 1132 - AAR - GSTExemption form GST or not - supply of labour services for collection of seeds from forest digging contour trenches chal-khal (water conservation pits in hills) for soil and moisture conservation clearing of fire lines in forest to protect forest from fire which causes damage to forest controlled burning of portion of forest to prevent spread of fire and damage to environment - applicability of N/N. 12/2017 Central Tax (Rate ) dated 28-06-2017 or not - rate of goods and service tax applicable to such supply of services - supply of services for raising seedlings in nursery is exempted services in Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 or any other related exemption notification? - supply of services for plantation in forest is exempted or not - supply of services for creation of check-dam for Soil and Moisture Conservation is exempted services or not - deduction of TDS. HELD THAT - Sl. No. 3 of the Notification No. 12/2017- Central Tax (Rate) dated 28th June 2017 under Chapter Head for the service code 99 exemption has been granted to 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 or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 2430 of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. To avail the benefit of the provisions of above said notification two conditions of the notification has to be fulfilled in letter and spirit first one being that the receiver Of services should be 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 and the second one being that the service provided should be either be a Pure services or Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. Of the value of the said composite supply . Thus exemption under Notification No. 12/2017- Central Tax (Rate) dated 28th June 2017 is available only to the provider of Pure services (excluding works contract service or other composite supplies involving supply of any goods) and Composite supply of goods and services in which the value of Supply of goods constitutes not more than 25 per cent. of the value of the said composite supply when the receiver of such services is Central Government State Government or Union territory or local authority or a Governmental authority or a Government Entity and also the services so provided should fall 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 - each and every contract for Composite supply of goods and services has to be examined individually for ascertaining the eligibility of exemption Notification No. 12/2017- Central Tax (Rate) dated 28th June 2017. Thus the benefit of exemption Notification No. 12/2017- Central Tax (Rate) dated 28th June 2017 is available only if the contract is either for pure service or for Composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply and on activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or to a Municipality under article 243W of the Constitution only and not in any other cases. Deduction of TDS under section 51 of the Central Goods and Services Tax Act 2017 - HELD THAT - In the instant case the applicant has declared that in most cases the value of total contract is less than 2.5 Lakhs and this appears to be a generalized statement and not a specific one - TDS is not required to be deducted on payment made to the supplier of taxable goods or services or both only when the value of such supply under a contract does not exceeds 2.5 Lakhs and in any other case the provisions of Section 51 of the Act has to be followed scrupulously.
Issues Involved:
1. Exemption of various labour services under Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017. 2. Applicable GST rate if the services are not exempted. 3. Applicability of TDS under Section 51 of the CGST Act, 2017. Issue-wise Detailed Analysis: 1. Exemption of Labour Services under Notification No. 12/2017-Central Tax (Rate): The applicant sought clarification on whether the supply of labour services for activities such as collection of seeds, digging contour trenches, chal-khal, clearing fire lines, controlled burning, raising seedlings, plantation, and creation of check-dams are exempt under Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017. The ruling clarified that exemption is available only if the services are either "pure services" or "composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply" and are related to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. The applicant's activities fall under the functions listed in these articles, but each contract must be individually examined to determine eligibility for exemption. 2. Applicable GST Rate if Services are Not Exempted: If the supply of services does not qualify for exemption under Notification No. 12/2017, the applicable GST rate must be determined. The ruling did not specify the exact rates but emphasized the need to analyze each contract individually to ascertain the rate of GST applicable based on the nature of the services and the proportion of goods involved. 3. Applicability of TDS under Section 51 of the CGST Act, 2017: The applicant questioned whether TDS should be deducted when the cumulative value of multiple contracts exceeds ?2.5 Lakhs, even if individual contracts are less than ?2.5 Lakhs. The ruling clarified that TDS is required to be deducted only when the value of a single contract exceeds ?2.5 Lakhs. If the value of the supply under a contract does not exceed ?2.5 Lakhs, TDS is not required to be deducted. Ruling: 1. The benefit of exemption under Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 is available only if the contract is for pure services or composite supply of goods and services where the value of goods does not exceed 25% of the total value and the services are related to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. 2. TDS is not required to be deducted on payments made to the supplier of taxable goods or services if the value of the supply under a contract does not exceed ?2.5 Lakhs.
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