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2023 (2) TMI 1126 - AAR - GSTExemption from GST on the services provided by the applicant - services provided in relation to maintenance of various colonies developed by Chhattisgarh Housing Board (CGHB) and not handed over to the local authority by CGHB - composite supply - Pure services or not - SI. No. 3 of exemption Notification no. 12/2017-Central Tax (Rate) dated 28.6.2017 as amended - HELD THAT - With effect from 25.1.2018 vide Sr. no. 3A to Notification no. 2/2018-Central Tax (Rate), 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 provided has been included. Thus, from 25.1.2018 composite supply of goods and services has also been included for the said benefit of Nil tax rate with the stipulation that the value of supply of goods constitutes not more than 25 per cent of the total value of the composite supply has been provided with principal supply of services. However, from the application it is unclear as to how much percentage of the value of composite services provided by the application consists of supply of goods. The Central Government means the President and the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of the President. Similarly, as per clause (60) of section 3 of the General Clauses Act, 1897, the State Government', as respects anything done after the commencement of the Constitution, shall be in a State the Governor, and in an Union Territory the Central Government. As per Article 154 of the Constitution, the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or indirectly through officer's subordinate to him in accordance with the Constitution. Further, as per article 166 of the Constitution, all executive actions of the Government of State shall be expressed to be taken in the name of Governor. Therefore, State Government means the Governor or the officers subordinate to him who exercise the executive powers of the State vested in the Governor and in the name of the Governor. By no stretch of imagination Chhattisgarh Housing Board (CGHB) could be termed as Government or local authority. Chhattisgarh Housing Board was formed under Chhattisgarh Housing Board Act vide notification no. 177/3236/32/2003 dated 12/12/2004. Chhattisgarh Housing Board is the main arm of the Government of Chhattisgarh for giving effect to its housing schemes and for implementing the Government's schemes under social housing. Therefore, CGHB can at best be covered under the definition of Government Authority or Government Entity . However, the benefit of exemption to both Government Authority and Government Entity has been withdrawn with effect from 1st of January 2022 vide Notification no. 16/2021-Central Tax (Rate) dated 18.11.2021. Thus, the service recipient of the applicant in the instant case viz. Chhattisgarh Housing Board (CGHB) does not fall in the specified category of Government , or local authority - The much important second criterion of the service recipient being Government or Local authority, for availing the benefit stipulated therein as provided under Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 as amended by Notification No. 16/2021 -Central Tax (Rate) dated 17.11.2021 effective from 1.1.2022, stands unfulfilled by the applicant. The third decisive condition to be verified is whether the services provided by the applicant are 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 applicant is of the view that they are exempt from the liability of GST in terms of clause 3 of the Notification No 12/2017, as they are providing services which are activities in relation to functions entrusted to a Municipality under article 243W of the Constitution - Based on the work order furnished by the applicant, it is evident that the services in relation to maintenance of various colonies of Chhattisgarh Housing Board / provision of security guards can in no way be equated to the functions 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. Also supply of security guards as is forthcoming from the tender documents cannot be termed as functions 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. Thus, it can be concluded that the provision of services by the applicant to CGHB in relation to maintenance of various colonies of CGHB / provision of security guards etc. do not qualify for be benefit of Nil rate of GST as provided under Sr. no. 3/ (3A) to Notification No. 12/2017- Central Tax (Rate) New Delhi, dated 28th June, 2017 as amended.
Issues Involved:
1. Whether the services provided by the applicant in relation to maintenance of colonies developed by Chhattisgarh Housing Board (CGHB) and not handed over to the local authority are exempt under SI. No. 3 of the Exemption Notification GST Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 as amended. Issue-wise Detailed Analysis: 1. Applicability of Exemption Notification: - The applicant, M/s Call Me Services, sought an advance ruling on whether their services related to the maintenance of colonies developed by CGHB, which have not been handed over to local authorities, are exempt under SI. No. 3 of the Exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017. - The applicant contended that CGHB qualifies as a "local authority" since it performs functions similar to those of a municipality under Article 243W of the Constitution until the developed areas are handed over to the local authority. 2. Legal Position and Analysis: - The Authority for Advance Ruling clarified that the CGST Act and the Chhattisgarh GST Act, 2017 have similar provisions, and the ruling would be based on these provisions. - Section 97(2) of the CGST Act, 2017 covers the question of the applicability of a notification issued under the Act, and thus, the application was admitted for consideration on merits. 3. Examination of CGHB's Status: - The jurisdictional Assistant Commissioner and Deputy Commissioner opined that CGHB does not fall under the category of Central Government, State Government, or local authority. Therefore, the services provided by the applicant are not covered under the exemption. - The Authority observed that for the exemption under SI. No. 3 of Notification No. 12/2017 to apply, three conditions must be met: (i) the service should be pure services, (ii) provided to the Central Government, State Government, Union territory, or local authority, and (iii) related to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. 4. Definition and Interpretation: - The term "pure services" has not been specifically defined but generally includes services not involving any goods. - CGHB, formed under the Chhattisgarh Housing Board Act, 1972, is considered a "Government Authority" or "Government Entity," and not a "local authority" or "Government." - The exemption benefit to "Government Authority" or "Government Entity" was withdrawn effective from 1st January 2022. 5. Functions Entrusted under Articles 243G and 243W: - The functions listed under Articles 243G and 243W were examined. The services provided by the applicant, such as maintenance of colonies and provision of security guards, do not align with these functions. - The Authority concluded that the services provided by the applicant do not qualify as activities in relation to functions entrusted to a Panchayat or Municipality. Conclusion: - The applicant did not meet any of the three mandatory conditions specified in the exemption notification. - Therefore, the services provided by the applicant to CGHB in relation to the maintenance of various colonies and provision of security guards do not qualify for the benefit of Nil rate of GST under Sr. No. 3/3A of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 as amended. Order: - The services provided by the applicant in relation to the maintenance of colonies developed by CGHB and not handed over to the local authority are not eligible for the benefit of Nil rate of GST under the specified exemption notification.
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