2023 (1) TMI 576 - AAR - GST

Exemption from GST - pure services or not - Project Development Service provided by the applicant to the recipient under the Contract from District Urban Development Agency which is District Level Agency of State Urban Development Agency (SUDA) and the Project Management Consultancy services under the Contract for PMAY - activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243 W respectively, of the Constitution of India or not? - applicability of serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST) or not - HELD THAT - The District Urban Development Agency is subordinate district level office of SUDA as such, DUDA also falls under Government category. As per the organizational structure of DUDA as available on the website upsuda.org, the District Magistrate of the district concerned will be the ex-officio chairman of DUDA. Project director and project officers are also appointed by the U.P. government. DUDA utilizes the fund which is released by the SUDA - Further, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and affordable Housing in Partnership. As per the details available on website SUDA is the state level nodal agency for PMAY(U) in the state of Uttar Pradesh. Functions entrusted to Panchayats/Municipalities - HELD THAT - The Consultancy services rendered by the Applicant under the contract with DUDA, and for PMAY are in relation to functions entrusted to Municipalities/Panchayats under Article 243W / 243G of the Constitution of India. Whether such services provided by the Applicant would qualify as Pure services? - 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. Thus, the Services rendered by the appellant to the State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243 W and to Panchayats under Article 243G of the Constitution of India and such services would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods).

Summary

Issues Involved:

1. Whether the Project Development Service (i.e., Detailed Project Report Service and Project Management Consultancy services) provided by the applicant to the recipient under the Contract from District Urban Development Agency (DUDA) qualifies as an activity in relation to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India.
2. If the first question is affirmative, whether such services qualify as Pure services (excluding works contract service or composite supplies involving supply of any goods) provided to the Central Government, State Government, or local authority, thus eligible for exemption from CGST and UPGST.

Issue-wise Analysis:

1. Qualification of Services under Article 243G and 243W:

The applicant provides Project Development Service (Detailed Project Report Service and Project Management Consultancy services) under the Pradhan Mantri Awas Yojana (PMAY) to DUDA, a district-level agency of SUDA. SUDA is a nodal agency under the Department of Urban Employment and Poverty Alleviation by the Uttar Pradesh Government. The services aim to uplift the urban poor by preparing detailed project reports and managing project consultancy. The functions of SUDA and DUDA align with the functions entrusted to Municipalities and Panchayats under Articles 243W and 243G of the Constitution, which include urban planning, poverty alleviation, and slum improvement.

2. Qualification as Pure Services and Exemption from GST:

The services provided by the applicant are considered "Pure services" as they exclude works contract service or other composite supplies involving the supply of any goods. The services are provided to a governmental authority (DUDA/SUDA) by way of activities in relation to functions entrusted to Panchayats and Municipalities under Articles 243G and 243W. Therefore, these services qualify for exemption from GST under serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017, as amended by Notification No. 2/2018-Central Tax (Rate) dated 25 January 2018.

Discussion and Findings:

The Authority for Advance Ruling (AAR) examined the applicant's submissions and the detailed scope of work under the contract. The AAR found that the services provided by the applicant are in relation to functions entrusted to Municipalities and Panchayats under Articles 243W and 243G of the Constitution. The services include physical verification, data collection, preparation of architectural designs, project management, and supervision, which are essential for the successful implementation of PMAY. These services qualify as "Pure services" and are exempt from GST as per the relevant notifications.

Ruling:

Question 1:

The services rendered under the contract with DUDA 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.

Question 2:

Such services qualify as "Pure services" (excluding works contract service or other composite supplies involving supply of any goods) and are exempt from the payment of GST under serial number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017, and corresponding notifications under the UPGST Act.

Validity:

This ruling is valid only within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017, until and unless declared void under Section 104(1) of the Act.