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2024 (8) TMI 377 - AAR - GSTClassification of the services - HSN/ SAC Code - services supplied by the applicant to Maharashtra Jeevan Pradhikaran (MIP) as a part of Jal Jeevan Mission which is a mission of Government of India allotted - entry in Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017 - Services provided to MJP for the Constitutional function of State Central Governments for which these Governments are liable to pay the consideration of contract - Applicability of entry No. 3 in Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 - Supply of services where Time of supply is on or before 31-12-2021 - Supply of services where Time of supply is on or after 01-01-2021. What is the classification of the services supplied to Maharashtra Jeevan Pradhikaran (MJP)? - HELD THAT - The services supplied by the applicant are in nature of Technical Consultancy for Project Development and Management support services and hence classifiable under SAC code 998399- Other professional technical and business services n.e.c. under the head Business and Production Services covered at Sr No. 21 (ii) in the Notification No 11/2017-Central Tax (Rate) dated 28th June 2017 and are taxable at rate of 18% (9% CGST SGST each) wherever exemption is not applicable. Wherever exemption is not applicable. Whether Services provided to MIP for the Constitutional function of State Central Governments. for which these Governments are liable to pay the consideration of contract. and is made through PFMS. supplies are in fact made to the Central State Government? - HELD THAT - Being creature of GST Law this Authority cannot comment on the submission that setting up MJP is entirely unlawful and contrary to the constitutional prescriptions and procedure this is not appropriate forum to discuss such issue. However it is clear that as per the Constitution it is the function/ duty or responsibility of State/CentraI Government or local Government and hence setting up MJP which is a body corporate owned by Government is entrusted with the function is not prohibited but entirely expected for development implementation and regulation of such function - Property created under the Water supply schemes implemented by the MIP vests in MJP only and not with the Government. Hence the argument being contrary to law is not accepted. The applicant has supplied only the Technical Consultancy for Project Development and Management support services which are pure services. No transfer of goods in any form takes place from the Applicant to the MJP. Whether these services are provided in relation to any function entrusted to a Panchayat under article 243G of the constitution or in relation to any function entrusted to the municipality under article 243W of the constitution? - HELD THAT - Supply of services where Time of supply is on or before 31-12-2021. After Considering all the aforesaid facts provisions of Law issues and decision therein we have no hesitation in holding the Technical Consultancy for Project Development and Management support services provided by the applicant to the MJP for its Water supply schemes where time of supply is on or before 31-12-2021 are covered by the exemption entry at Sr No. 3 of the exemption notification No 12/2017-CentraI Tax (Rate) dated 28th June 2017 - Supply of services where Time of supply is on or after 01-01-2022. The Technical Consultancy for Project Development and Management support services provided by the applicant to the MJP for its Water supply schemes where time of supply is on or after 01-01-2022 are not covered by the entry at Sr No. 3 of the Notification No 12/2017-CentraI Tax (Rate) dated 28th June 2017. As the words or a Government Authority or a Government Entity are omitted from the aforesaid Entry at Sr. No. 3.
Issues Involved:
1. Rate of tax for work allotted, performed, and invoiced before 01.01.2022. 2. Rate of tax for work allotted before 01.01.2022 but performed and invoiced after 01.01.2022. 3. Rate of tax for work allotted, performed, and invoiced after 01.01.2022. 4. Identification of the service receiver for amounts received as grants by MJP for services provided before 01.01.2022. 5. Identification of the service receiver for amounts received as grants by MJP for services provided after 01.01.2022. 6. Whether the appointment of MJP as an agency to implement water supply schemes amounts to delegation of sovereign function. Detailed Analysis: 1. Rate of Tax for Work Allotted, Performed, and Invoiced Before 01.01.2022 Findings: - The services provided by the applicant to MJP are classified under SAC code 998399, which includes "Other professional, technical and business services n.e.c." - These services are covered under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, which 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 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." - Since MJP qualifies as a "Governmental Authority" set up by an Act of the State Legislature, the services provided before 01.01.2022 are exempt from tax. Decision: - The rate of tax for work allotted, performed, and invoiced before 01.01.2022 is Nil, being exempted under Entry at Sr. No. 3 of the Notification No. 12/2017-Central tax (Rate)- dated 28th June 2017. 2. Rate of Tax for Work Allotted Before 01.01.2022 but Performed and Invoiced After 01.01.2022 Findings: - The exemption under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) was amended by Notification No. 16/2021-Central Tax (Rate) dated 18-11-2021, which omitted the words "Governmental authority or a Government Entity" with effect from 01.01.2022. - Consequently, services provided to MJP after 01.01.2022 are not exempt and are taxable. Decision: - The rate of tax for work allotted before 01.01.2022 but performed and invoiced after 01.01.2022 is 18% (9% CGST & 9% SGST), being covered by Entry at Sr. No. 21 Heading 9983, (ii) of the Notification No. 11/2017-Central tax (Rate)- dated 28th June 2017. 3. Rate of Tax for Work Allotted, Performed, and Invoiced After 01.01.2022 Findings: - Similar to the findings in Issue 2, the omission of "Governmental authority or a Government Entity" from Sr. No. 3 of the Notification No. 12/2017-Central Tax (Rate) means that services provided to MJP after 01.01.2022 are taxable. Decision: - The rate of tax for work allotted, performed, and invoiced after 01.01.2022 is 18% (9% CGST & 9% SGST), being covered by Entry at Sr. No. 21 Heading 9983, (ii) of the Notification No. 11/2017-Central tax (Rate)- dated 28th June 2017. 4. Identification of the Service Receiver for Amounts Received as Grants by MJP for Services Provided Before 01.01.2022 Findings: - MJP is the entity that contracts with the applicant and is responsible for paying the consideration for the services provided. - The applicant's argument that the Central and State Governments are the service receivers because they provide grants to MJP is not supported by the terms of the contract or the provisions of the GST Act. Decision: - The service receiver within the meaning of Sec. 2 (93) of CGST/MGST Act in respect of amounts received as grants by MJP for services provided before 01.01.2022 is the Maharashtra Jeevan Authority [erstwhile the Maharashtra Jeevan Pradhikaran]. 5. Identification of the Service Receiver for Amounts Received as Grants by MJP for Services Provided After 01.01.2022 Findings: - Similar to the findings in Issue 4, MJP remains the entity responsible for paying the consideration for the services provided, regardless of the source of the grants. Decision: - The service receiver within the meaning of Sec. 2 (93) of CGST/MGST Act in respect of amounts received as grants by MJP for services provided after 01.01.2022 is the Maharashtra Jeevan Authority [erstwhile the Maharashtra Jeevan Pradhikaran]. 6. Delegation of Sovereign Function to MJP Findings: - The question of whether the appointment of MJP as an agency to implement water supply schemes amounts to the delegation of sovereign function is outside the purview of the provisions of section 97 (2) of the GST Act, 2017. Decision: - This question is not answered as it is out of the purview of the provisions of section 97 (2) of the GST ACT, 2017. Conclusion: The judgment clarifies the taxability of services provided by the applicant to MJP under various scenarios before and after the amendment to the exemption notification. It establishes that services provided before 01.01.2022 are exempt, while those provided after this date are taxable at 18%. It also identifies MJP as the service receiver for the purposes of GST.
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