2019 (9) TMI 1100 - AAR - GST

Exemption of GST - providing services to Government of Mizoram, as a Financial Management Specialist and Institutional Development Specialist - Inter-state supply - HELD THAT - The Applicant is required to support the Water Resources Department in implementing the Climate Adaptation in Vennar Sub-basin in Cauvery Delta Project . The project aims at improving water management in the Vennar System. The expected outputs are improved flood risk management and up-gradation of irrigation infrastructure. Seven consultants, including the Applicant have been engaged for supporting the PMU in implementing the project - Entry 3 of the Eleventh Schedule of the Constitution includes minor irrigation, water management and watershed development. The Applicant is, therefore, providing pure service to the State Government in relation to a project that involves functions listed under Entry 3 of the Eleventh Schedule. The Applicant s service to the Government of Tamilnadu is, therefore, eligible for exemption under Sl.No. 3 of the Exemption notification. Entry 13 of the Eleventh Schedule lists roads, culverts, bridges, ferries, waterways, and other means of communication. But Art 243M (2) states that the Part of the Constitution containing provisions on Panchayats, including Art 243G, does not apply to Mizoram. However, Entry 4 of the Twelfth Schedule and Entry 4 of the Mizoram Municipalities Act, 2007 include roads and bridges. Improvement, construction and modernisation of roads is, therefore, a function entrusted to a Municipality under Art 243 W of the Constitution. The Applicant is, therefore, providing pure service to the State Government in relation to a project that involves functions listed under Entry 4 of the Twelfth Schedule. The Applicant s service to the Government of Mizoram is, therefore, eligible for exemption under Sl.No. 3 of the Exemption notification.

Summary

Issues involved:
1. Admissibility of the Application
2. Interpretation of Exemption Notification for services provided to State Governments

Admissibility of the Application:
The Applicant sought a ruling on the availability of exemption under Sl.No. 3 of the Exemption Notification for services provided to the Governments of Tamilnadu and Mizoram. The Applicant's services were considered inter-state supplies, making them eligible for an advance ruling under relevant sections of the GST Act. The Application was admitted as the question raised was not decided by any authority under the GST Act, and there were no objections from the Revenue officer.

Interpretation of Exemption Notification for services provided to State Governments:
The Applicant provided services as a Financial Management Specialist and Institutional Development Specialist to the Governments of Tamilnadu and Mizoram, respectively. The Authority analyzed Circulars clarifying the scope of exemptions under the Exemption Notification. It was established that services related to functions listed in the Eleventh or Twelfth Schedules of the Constitution were eligible for exemption. The Applicant's contracts and scope of work were examined to determine the nature of services provided. The Authority found that the services were purely consultancy-based and did not involve the supply of goods. The projects undertaken by the Applicant were related to functions entrusted to Panchayats or Municipalities under the Constitution, making them eligible for exemption under Sl.No. 3 of the Exemption Notification.

Conclusion:
The Authority ruled that the Applicant's services to the State Governments were eligible for exemption under the relevant Notification. The ruling was deemed valid unless declared void under the provisions of the GST Act. The detailed analysis considered the specific functions performed by the Applicant in relation to the projects undertaken for the Governments of Tamilnadu and Mizoram, ensuring a thorough interpretation of the Exemption Notification in light of the Constitutional provisions.