2022 (7) TMI 499 - AAR - GST

Classification of services - pure services or not - Supply of Manpower for preparation and serving of spot Electricity Bills' services provided to Andhra Pradesh Central Power Distribution Corporation Limited for Andhra Pradesh Rural Electrification including distribution of electricity (APCPDCL) - APCPDCL is a 'Local Authority' or not - eligible for exemption from Central Goods and Service Tax and SI.No.3 (Chapter 99) of table mentioned in G.O.Ms.No.588 - (Andhra Pradesh) State Tax (Rate) Dated 12/12/2017 and accordingly eligible for exemption from Andhra Pradesh Goods and Service Tax or not. Whether the services of the applicant are 'Pure Service'? - HELD THAT - 'Pure services' are not defined in the Act, but as per common parlance they cover all the contracts where there is no supply of goods i.e., to say any supply which is either deemed as services under Schedule II of CGST Act or which are not covered under the definition of goods shall be categorized as pure services - In the instant case, the Scope of the supply as mentioned by the applicant includes supply of both goods and services. Thus the transaction covers the procurement of goods as well in addition to the services, disqualifying the present supply to be covered under the concept of 'pure services'. Hence the exemption clause under entry SI.No.3- (Chapter 99) of table mentioned in Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 is not applicable for the instant case. In view of the above, the rest of the issues like APCPDCL being a 'Local Authority' or the supply being one of the functions entrusted to panchayat under Article 243G of the Constitution, find no relevance to take up for further discussion.

Issues Involved:
1. Whether the services provided by the applicant can be termed as 'Pure Services' under Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.
2. Whether APCPDCL qualifies as a 'Local Authority'.
3. Whether the services provided are in relation to functions entrusted to a panchayat under Article 243G of the Constitution.

Issue-wise Detailed Analysis:

1. Whether the services provided by the applicant can be termed as 'Pure Services' under Notification No.12/2017-Central Tax (Rate) dated 28.06.2017:

The applicant, M/s Keshav Projects, is engaged in the supply of manpower for the preparation and serving of spot electricity bills to APCPDCL. The applicant argues that these services should be considered 'Pure Services' and thus be exempt from CGST and APGST under Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.

The notification exempts "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 Government 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."

The term 'Pure Services' is not explicitly defined in the Act, Rules, or the notification. However, CBEC clarifies that 'Pure Services' involve the supply of services without any supply of goods. The applicant's contract with APCPDCL includes the procurement of goods such as handheld computers and stationary, which disqualifies it from being considered 'Pure Services'.

2. Whether APCPDCL qualifies as a 'Local Authority':

The applicant contends that APCPDCL qualifies as a 'Local Authority' under the definitions provided in Notification No.11/2017-Central Tax (Rate) and Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. APCPDCL is a company under the Energy Department of the Government of Andhra Pradesh, with 99% shareholding held by the Governor of Andhra Pradesh. The company is responsible for the distribution of electricity in specified areas of Andhra Pradesh.

According to the definitions, a 'Governmental Authority' is an entity set up by an Act of Parliament or State Legislature or established by any Government with 90% or more participation by way of equity or control, to carry out any function entrusted to a Municipality under Article 243W or a Panchayat under Article 243G of the Constitution. Given APCPDCL's formation and functioning under the Government of Andhra Pradesh, it qualifies as a 'Local Authority'.

3. Whether the services provided are in relation to functions entrusted to a panchayat under Article 243G of the Constitution:

Article 243G of the Constitution empowers the Legislature of a State to endow Panchayats with powers and responsibilities necessary for self-government, including the preparation of plans for economic development and social justice. The Eleventh Schedule of the Constitution lists "Rural Electrification, including distribution of electricity" as one of the functions entrusted to Panchayats.

The applicant's services involve the supply and distribution of electricity, which falls under the functions listed in the Eleventh Schedule. Therefore, the services provided by the applicant to APCPDCL are in relation to functions entrusted to a panchayat under Article 243G of the Constitution.

Conclusion:

The Authority for Advance Ruling examined the issues in light of the facts submitted by the applicant. It was found that the services provided by the applicant include the procurement of goods (handheld computers and stationary), disqualifying them from being considered 'Pure Services'. Consequently, the exemption under entry 3 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 does not apply.

Ruling:
- The "Supply of Manpower for preparation and serving of spot Electricity Bills" services provided to APCPDCL cannot be termed as 'Pure Services' and are not eligible for exemption from Central Goods and Service Tax and Andhra Pradesh Goods and Service Tax under the specified notifications.

Answer: Negative

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