2025 (2) TMI 297 - AAR - GST

Exemption from GST - Pure services or not - services provided by the applicant to the Directorate of Public Health Engineering Government of West Bengal - applicant provides services to the Central Government State Government or Union Territory or local authority? - said services are 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 the instant supply of services can be regarded as pure services? - HELD THAT - From the copies of work orders issued by the Directorate of Public Health Engineering Government of West Bengal as produced at the stage of hearing we find that the applicant has been awarded with the work of providing technological support for smooth running of water distribution networks for the Directorate of Public Health Engineering Government of West Bengal which plays a key role under Jal Jeevan Mission for supplying safe drinking tap water to every household in Bengal. The scope of works involves up-gradation and maintenance of integrated water quality management information system overall coordination supervision handholding support data management digital scrutinization of pipeline alignment and asset evaluation and data collection from field through WB-JJM mobile application design of mobile app web application etc. - considering the scope of works being undertaken by the applicant it appears prima facie that the supply doesn t involve any transfer of materials in goods. The supply of services as pure services. Whether the applicant provides services to the Central Government State Government or Union Territory or local authority? - HELD THAT - As the work orders have been issued from Nadia Division Burdwan Division and Resource Division of Public Health Engineering Directorate Government of West Bengal admittedly the applicant provides the aforesaid services to Government of West Bengal. It is found that the first and second criteria i.e. the supply of services can be regarded as pure services and having been provided to the State Government get satisfied. Whether the said services are in relation to any function entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution of India? - HELD THAT - The services being provided by the applicant for designing and development of Web and mobile based applications; Designing and drawing of GIS mapping and analysis; Digital or Analog surveying; Relevant Data management analysis and documentation and other technical consultancy are in relation to the functions entrusted to a Panchayat or to a municipality as listed in the Eleventh and/or Twelfth Schedule which inter alia includes drinking water or water supply for domestic industrial and commercial purposes. The Nadia Division and Burdwan Division of the PHE Department are not independent entities; they are merely a divisional office of the Directorate of Public Health Engineering (PHED) Government of West Bengal. These divisions function under the State Government to manage public water distribution networks and related infrastructure within their geographical jurisdictions. Supply of services against work order issued by the said divisions would therefore be regarded as supply to the State Government. Conclusion - i) The services provided by the applicant to the Directorate of Public Health Engineering are exempt from GST as pure services. ii) The same exemption applies to services provided to the Nadia Division and Burdwan Division of the PHED. iii) The question of classification and tax rate if exemption is denied is not applicable.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

1. Whether the services provided by the applicant to the Directorate of Public Health Engineering, Government of West Bengal, qualify as "pure services" under sl. no. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended), thereby exempting them from GST.

2. Whether the same classification and exemption apply when the services are provided to the "Nadia Division" and "Burdwan Division" of the Public Health Engineering Department (PHED).

3. If the services do not qualify for exemption, what should be the classification and rate of tax?

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of Services as "Pure Services"

Relevant Legal Framework and Precedents

The legal framework involves the GST Act and Notification No. 12/2017-Central Tax (Rate), which provides exemptions for "pure services" provided to government entities in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W of the Constitution.

Court's Interpretation and Reasoning

The Court examined whether the services provided by the applicant could be classified as "pure services," which are defined as services not involving any supply of goods. The Court noted that the applicant's services involved technological support, data management, and GIS mapping, without any transfer of goods.

Key Evidence and Findings

The evidence included work orders from the Directorate of Public Health Engineering, which detailed the nature of the services provided. The Court found that these services were purely technological and did not involve goods.

Application of Law to Facts

The Court applied the criteria for "pure services" and found that the applicant's services met the requirements for exemption under the specified notification.

Treatment of Competing Arguments

There were no objections from the revenue authority regarding the classification of services as "pure services."

Conclusions

The Court concluded that the services provided by the applicant qualify as "pure services" and are exempt from GST under sl. no. 3 of Notification No. 12/2017-Central Tax (Rate).

Issue 2: Applicability to "Nadia Division" and "Burdwan Division"

Relevant Legal Framework and Precedents

The same legal framework applies as in Issue 1, focusing on whether the services provided to different divisions of the PHED also qualify for exemption.

Court's Interpretation and Reasoning

The Court considered whether the divisions were separate entities or part of the State Government. It determined that these divisions are part of the Directorate of Public Health Engineering, thus services provided to them are also covered under the exemption.

Key Evidence and Findings

The work orders and organizational structure of the PHED were examined to ascertain the relationship of the divisions with the State Government.

Application of Law to Facts

The Court applied the same reasoning as in Issue 1, confirming that the services provided to these divisions are also exempt.

Treatment of Competing Arguments

No competing arguments were presented regarding the classification of services to these divisions.

Conclusions

The Court concluded that services provided to the "Nadia Division" and "Burdwan Division" qualify for the same GST exemption as services provided to the main Directorate.

Issue 3: Classification and Rate of Tax if Exemption is Denied

This issue was rendered moot by the affirmative conclusions to Issues 1 and 2, as the services were found to be exempt.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Court held that "the supply of services as pure services and having been provided to the State Government get satisfied," confirming the exemption under the GST notification.

Core Principles Established

The judgment establishes that services classified as "pure services" provided to government entities in relation to functions under Articles 243G and 243W of the Constitution are exempt from GST.

Final Determinations on Each Issue

1. The services provided by the applicant to the Directorate of Public Health Engineering are exempt from GST as "pure services."

2. The same exemption applies to services provided to the "Nadia Division" and "Burdwan Division" of the PHED.

3. The question of classification and tax rate if exemption is denied is not applicable.