2018 (9) TMI 1037 - AAR - GST

Levy of GST - landscaping and gardening work for government departments - pure services - Entry no. 3 of the Notification No. 12/ 2017 Central Tax (Rate) dated 28th June 2017 - Whether landscaping and gardening work for government departments like BBMP, KSRTC, etc, through works contract attracts GST from this society? Held that - Since the scope of exemption allowed in the entry no. 3 of the Notification No. 12/ 2017 Central Tax (Rate) dated 28th June 2017 is only to the extent of pure services of provision of urban amenities and facilities such as parks, gardens, playgrounds to the Governments and Local Authorities and does not cover any activity where in transfer of property in goods is involved either in the form of a works contract or a composite supply. The activity done by the applicant is of the nature of maintenance of parks and hence the activities can be divided into two different types (a) maintenance of parks not involving the transfer of property in goods And (b) maintenance of parks involving the transfer of property in goods. The first activity is of the nature of pure services and is squarely covered under the entry no. 3 of the Notification No. 12/ 2017 Central Tax (Rate) dated 28th June 2017, if it is provided to a Government or Local Authority and Governmental authority - The second activity falls in the ambit of works contract and hence is not covered under the entry no. 3 of the Notification No. 12/ 2017 Central Tax (Rate) dated 28th June 2017 even if it is provided to a Government or Local Authority and Governmental authority. The applicant are not covered under the entry no. 3 of the Notification No. 12/ 2017 Central Tax (Rate) dated 28th June 2017 and hence there is no question of answering the same. Ruling - The service of maintenance of parks provided by the society to the State Government, Central Government or a Local Authority (including BBMP) or a Governmental Authority, not involving transfer of property in goods either as a component of a works contract or a composite supply is covered under entry no. 3 of the Notification No. 12/ 2017 Central Tax (Rate) dated 28th June 2017 and hence exempt. This exemption is not available if there is any transfer of property in goods or if the service is made to persons other than State Government, Central Government or a local Authority or a Governmental Authority.

Issues involved:
1. Whether landscaping and gardening work for government departments through works contract attracts GST?
2. Whether maintenance of parks for government undertakings is exempt from GST?

Analysis:
1. The Applicant, a Co-operative Society, sought an Advance Ruling on whether landscaping and gardening work for government departments through works contract attracts GST. The Applicant is involved in the formation of parks and landscaping on government lands. The Applicant claimed that the said activity falls under the exemption category under the CGST Act and KGST Act. The Applicant also referred to a previous ruling by the Clarification and Advance Ruling Authority, which stated that landscaping work is not liable to tax under the Karnataka Sales Tax Act. The Applicant argued that services provided to governmental authorities for functions entrusted to Panchayats or Municipalities are exempt from tax under specific notifications. The representative of the Applicant further argued that services provided to local authorities and governmental authorities are exempt from tax.

2. The representative of the Applicant contended that maintenance of parks is a community asset and falls under the activities assigned to Urban Local Bodies. The maintenance of parks for government undertakings is not covered under the exemption clause of the CGST Act. The representative highlighted the distinction between pure services and works contract/composite supplies. The legal provisions related to composite supply and works contract were discussed during the hearing. It was clarified that the exemption under the Notification No. 12/2017 Central Tax (Rate) applies only to pure services and not to activities involving the transfer of property in goods.

3. The Authority analyzed the nature of the activities performed by the Applicant, distinguishing between maintenance of parks not involving the transfer of property in goods and maintenance of parks involving such transfer. It was concluded that the maintenance of parks provided to the State Government, Central Government, Local Authority, or Governmental Authority, without the transfer of property in goods, falls under the exemption category. However, if there is a transfer of property in goods, the exemption does not apply. The ruling clarified that the exemption is specific to services provided to government entities and does not extend to services provided to other persons or entities.

4. In the final ruling, it was stated that the service of maintenance of parks provided by the society to specified government entities, without involving the transfer of property in goods, is exempt from GST as per the Notification No. 12/2017 Central Tax (Rate). However, if there is a transfer of property in goods or if the service is provided to entities other than those specified, the exemption does not apply. The ruling provided clarity on the tax treatment of landscaping and gardening services provided to government departments through works contract and maintenance of parks for government undertakings.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the ruling provided by the Authority for Advance Rulings, Karnataka.

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