2024 (8) TMI 1373 - AAR - GST

Classification of supply - supply of services or not - pure services - applicant provides services to the Central Government, State Government or Union Territory or local authority or a Governmental authority or not - services in relation to any function entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution of India. Whether such pure services being provided by the applicant satisfies the condition as specified in serial number 3 of the exemption notification supra in respect of the status of the recipient? - HELD THAT - Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is a development mission launched by Central Government with the focus to establish infrastructure that could ensure adequate robust sewage networks and water supply for urban transformation by implementing urban revival. In the state of West Bengal, activities under AMRUT project are supervised by Department of Urban Development and Municipal Affairs, Government of West Bengal. The applicant s supply under this project therefore qualifies as a supply to the State Government. Whether the said services are in relation to any functions entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution of India? - HELD THAT - The functions entrusted to a Panchayat or to a Municipality as listed in the Eleventh and/or Twelfth Schedule includes the functions like drinking water or water supply for domestic, industrial and commercial purposes. The services provided by the applicant for survey, design, drawing, estimate and preparation of comprehensive plan related to water supply schemes application is found to be a matter as listed in the Eleventh and/or Twelfth Schedule in relation to functions entrusted to a Panchayat under article 243G and/or to a municipality under article 243W of the Constitution of India.

Issues Involved:
1. Classification of services as 'Pure Services'.
2. Eligibility for tax exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
3. Determination of whether the services are provided to a government entity or local authority.
4. Relation of services to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution of India.

Issue-wise Detailed Analysis:

1. Classification of Services as 'Pure Services':
The applicant sought an advance ruling on whether the services provided, including survey, design, drawing, estimate, and preparation of comprehensive plans related to water supply schemes, could be classified as 'Pure Services' under serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The term 'pure services' is not defined in the GST Act, but it generally refers to services that do not involve any supply of goods. The ruling confirmed that the services provided by the applicant do not involve any supply of goods and thus qualify as 'pure services'.

2. Eligibility for Tax Exemption:
The applicant argued that the services provided are exempt from tax under entry number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. This entry exempts pure services provided to the Central Government, State Government, Union Territory, or local authority by way of any activity related to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution. The ruling confirmed that the services provided by the applicant, except those provided to Madhya Pradesh Jal Nigam Maryadit (MPJNM), are eligible for this exemption.

3. Determination of Government Entity or Local Authority:
The ruling examined whether the recipients of the services qualify as government entities or local authorities. The services were provided to various entities, including Taki and Ramjibon Municipalities in West Bengal, Directorate of Public Health Engineering, Government of Assam, and Madhya Pradesh Jal Nigam Maryadit. The ruling confirmed that Taki and Ramjibon Municipalities qualify as local authorities, and the Directorate of Public Health Engineering, Government of Assam, qualifies as a State Government entity. However, MPJNM, being a government undertaking incorporated under the Companies Act, does not qualify as a State Government or local authority.

4. Relation to Functions Entrusted to Panchayat or Municipality:
The ruling examined whether the services provided are related to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution. The functions listed in the Eleventh and Twelfth Schedules include water supply for domestic, industrial, and commercial purposes. The ruling confirmed that the services provided by the applicant for survey, design, drawing, estimate, and preparation of comprehensive plans related to water supply schemes fall under these functions.

Ruling:
The ruling concluded that the supplies made by the applicant for survey, design, drawing, estimate, and preparation of comprehensive plans related to water supply schemes to the State Government and local authorities are exempt from payment of tax under serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. However, the services provided to Madhya Pradesh Jal Nigam Maryadit do not qualify for this exemption as it is not considered a State Government or local authority. The ruling is valid subject to the provisions under Section 103 until declared void under Section 104(1) of the GST Act.

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