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2024 (8) TMI 62 - AAR - GSTExemption from tax - supply of selling space for advertisement in print media - pure service for the purpose of Entry at Sr. No.3 of the Exemption Notification - composite supply of goods and services in which the value of supply of goods constitute not more than 25%, for the purpose of Entry at Sr. No.3Aof the Exemption Notification - Pune Municipal Corporation and Pimpri Municipal corporation are local authorities for the purpose of entry at Sr no. 3 and 3 A of notification 12/2017 or not - content of advertisement has some connection either direct, indirect, remote etc. to the function entrusted to the panchayat or not - supply of service of selling space for advertisement for recruitment of doctors for the posts of 'Medical Officers' and 'Professors' required for hospital and medical college, having attached Hospital, run by the respective corporation can be said to be in relation to the function entrusted to the Panchayat under Article 243G 243W of the Constitution. Whether supply of selling space for advertisement in print media is pure service as referred in the said Entry No 3 of the Exemption Notification? - HELD THAT - In supply of space for advertisement in print media, only the rights to publish advertisement are available to the recipient in specified publication, in which such advertisement is published. For printing of newspaper or printed material, Ink and papers are used and the property in such ink and papers get transferred in form of newspaper or print media, to customers who purchase or receive such of newspaper or print media. No property in goods in form of newspaper or print media, is transferred to the recipient of service of supply of selling space in print media. The recipient of such supply get only space in the newspaper, where content of its advertisement is printed. Therefore, it is decided that the supply of selling space in print media is supply of pure service as envisaged in Entry No. 3 of the Exemption Notification. Whether supply of selling space for advertisement in print media is composite supply of goods and services in which the value of supply of goods constitute not more than 25% %, for the purpose of Entry at Sr. No.3Aof the Exemption Notification? - HELD THAT - Decision on this issue become redundant as the services are held to be pure services as discussed decided in above issue. Whether Pune Municipal Corporation and Pimpri Municipal corporation are local authorities for the purpose of entry at Sr no. 3 and 3 A referred above of the Exemption Notification? - HELD THAT - This issue is decided by Maharashtra Authority for Advance Ruling in M/s. City and Industrial Development Corporation of Maharashtra Limited 2019 (6) TMI 1009 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA holding that 'we also are of the opinion that the NMMC and PMC are Municipal Corporations which satisfy the definition of a 'Local Authority' as defined in Section 2 (69) of the GST Act.' - the earlier decision of Maharashtra ARA in CIDCO's case agreed upon. Whether the content of advertisement has some connection to the function entrusted to a panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution? - HELD THAT - From the recruitment Rules framed by PMC and similar Rules framed by PCMC, Publication of Advertisement for Recruitment of Medical Officers etc. is mandatory to be published in the Newspaper or Notice Board of the Corporation. Therefore, we are of the opinion that Activity of placing Advertisement for recruitment of Medical Officers and Professors from Medical Profession is mandatory on the Corporation and the content of advertisement has some connection, whether direct, indirect or remote, to the function entrusted to a panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution. Whether supply of service of selling space for advertisement for recrement of doctors required for hospital and medical colleges run by the respective corporation can be said to be in relation to the function entrusted to the Panchayat under Article 243G 243W of the Constitution? - HELD THAT - The words any activity in relation to any function used in entry at Sr. no 3 are very broad and shall not be confused with the words directly in relation to , which are used for direct and proximate relationship - Hon'ble Supreme court-Constitution Bench in case of State Of Karnataka vs Azad Coach Builders Pvt. Ltd. Anr 2010 (9) TMI 879 - SUPREME COURT held that ' The expression in relation to1 are words of comprehensiveness, which might both have a direct significance as well as an indirect significance, depending on the context in which it is used and they are not words of restrictive content and ought not be so construed.' Context of word in exemption notification-Entry at Sr No 3 - HELD THAT - The exemption under the entries at Serial No. 12(e) and 25(a) of notification 25/2012-Service Tax dated 20-6-2012, will cover a wide range of activities/services provided to a government, a local authority or governmental authority and will include the activity of construction of tube wells. As the content of advertisement is in relation to the function of Education, including primary and secondary schools and Health and sanitation, including hospital, Primary health centres and dispensaries; it is decided that being pure services provided to the Municipal Corporations are covered by Entry No. 3 of the Notification 12/2017-Central Tax (Rate) Dated 28th June 2017, and exempted from tax.
Issues Involved:
1. Whether the supply of selling space for advertisement in print media is classified as a pure service. 2. Whether the supply of selling space for advertisement in print media is a composite supply of goods and services. 3. Whether Pune Municipal Corporation (PMC) and Pimpri Chinchwad Municipal Corporation (PCMC) are local authorities. 4. Whether the content of the advertisement has a connection to the functions entrusted to a panchayat under Article 243G or a municipality under Article 243W of the Constitution. 5. Whether the supply of service of selling space for advertisement for recruitment of doctors for hospitals and medical colleges run by the respective corporation is in relation to the functions entrusted to the Panchayat under Article 243G and 243W of the Constitution. Issue-wise Detailed Analysis: 1. Pure Service Classification: - Applicant's Submission: The applicant argued that the sale of space for advertisement in print media involves both goods and services, as materials like paper and ink are used, thus not qualifying as "pure services." - Authority's Findings: The authority determined that the supply of selling space in print media is a pure service. The recipient of the service only gets the right to publish advertisements in the specified publication, and no property in goods (newspaper or print media) is transferred to the recipient. Therefore, the supply is classified as pure service under Entry No. 3 of the Exemption Notification. 2. Composite Supply of Goods and Services: - Authority's Findings: Since the services are held to be pure services, the decision on whether the supply is a composite supply of goods and services becomes redundant. 3. Local Authorities Classification: - Applicant's and Officer's Admission: Both the applicant and the jurisdictional officer agreed that PMC and PCMC are local authorities as per the definition in Section 2 (69) of the GST Act. - Authority's Findings: The authority confirmed that both PMC and PCMC are local authorities constituted under the Maharashtra Municipal Corporations Act, 1949, and satisfy the definition of a 'Local Authority' as defined in Section 2 (69) of the GST Act. 4. Connection to Functions Entrusted to Panchayat or Municipality: - Facts and Findings: The advertisements in question were for the recruitment of medical officers and professors for hospitals run by PMC and PCMC. The recruitment rules of these corporations mandate the publication of such advertisements. The authority concluded that the activity of placing advertisements for recruitment has some connection, whether direct, indirect, or remote, to the functions entrusted to a panchayat under Article 243G or a municipality under Article 243W of the Constitution. 5. Relation to Functions Entrusted to Panchayat or Municipality: - Applicant's Submission: The applicant contended that selling space for advertisement in print media is not an activity covered under the Eleventh and Twelfth Schedules of Articles 243G and 243W of the Constitution, nor is it a pure service. - Officer's Submission: The officer argued that the service of selling space for advertisement is not in relation to the functions entrusted to the municipality by Article 243W. - Authority's Findings: The authority referred to various judgments and circulars explaining the broad scope of the phrase "in relation to." It concluded that the activity of publishing advertisements for recruitment of doctors is in relation to the constitutional functions stated in Article 243G and 243W, as it is mandatory for recruitment and necessary for providing health services. Final Decision: - The authority ruled that the supply of selling space for advertisement in print media, being pure services provided to the Municipal Corporations, is covered by Entry No. 3 of the Notification 12/2017-Central Tax (Rate) dated 28th June 2017, and is exempt from tax.
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