2021 (3) TMI 706 - AAR - GST

Activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided by the applicant to recipient under the Contract for SUDA - Project Management Consultancy services (PMC) under the contract for PMAY - pure services or not - exemption as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 - HELD THAT - The Consultancy services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. Pure services or not - exemption as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 - HELD THAT - The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST) and corresponding Notifications No.- KA.N.I.-2-843/X1- 9 (47) / 17-UP. Act-1 - 2017 - Order - (10) 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.

Issues Involved:
1. Qualification of Project Development Service and Project Management Consultancy services under functions entrusted to Panchayat or Municipality.
2. Qualification of these services as Pure Services under Notification No. 12/2017-Central Tax (Rate) and eligibility for GST exemption.

Issue-wise Detailed Analysis:

1. Qualification of Project Development Service and Project Management Consultancy services under functions entrusted to Panchayat or Municipality:

The applicant, M/s Creative Consortium, sought an advance ruling on whether their services provided to the State Urban Development Authority (SUDA) and under the Pradhan Mantri Awas Yojna (PMAY) qualify as activities related to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India.

The Authority examined the scope of work under the contracts with SUDA and PMAY. SUDA's objectives include identifying urban poor, formulating and implementing schemes for their upliftment, and reviewing the progress and effectiveness of these schemes. PMAY aims to provide central assistance to Urban Local Bodies for slum rehabilitation and affordable housing.

The Authority reviewed the detailed scope of work for the applicant, which includes preparation of Detailed Project Reports (DPRs), physical verification, data collection, and project management consultancy (PMC) services. The PMC services involve coordinating, executing, and monitoring construction activities, ensuring quality control, and assisting beneficiaries at various stages of construction.

Considering these functions, the Authority concluded that the services rendered by the applicant are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.

2. Qualification of these services as Pure Services under Notification No. 12/2017-Central Tax (Rate) and eligibility for GST exemption:

Given the affirmative response to the first issue, the second issue considered whether these services qualify as "Pure services (excluding works contract service or other composite supplies involving supply of any goods)" under serial number 3 of Notification No. 12/2017-Central Tax (Rate), as amended by Notification No. 2/2018-Central Tax (Rate).

The Authority examined the sample contract and the scope of work, which includes preparation of DPRs and providing PMC services. They determined that the services mentioned in the contract qualify as Pure Services, as they do not involve works contract services or composite supplies involving goods.

Therefore, these services are eligible for exemption from the levy of CGST and UPGST under the specified notifications.

Ruling:

1. The services rendered under the contract with SUDA and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.
2. These services qualify as Pure Services and are exempt from the payment of GST, as covered in Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June 2017, and corresponding notifications under the UPGST Act.

This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.

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