2021 (10) TMI 52 - AAAR - GST

Classification of services - hiring services - Government entity or not - scope of clause 5 (f) of the Schedule II to the Central Goods and Services Tax Act, 2017 - Service related to collection of Hire Charges for temporary transfer of right to use goods - activity in relation to any function entrusted to a Panchayat under Article 243-G of the Constitution or in relation to any function entrusted to a Municipality under Article 243-W of the Constitution - exemption under the scope of Sr. No. 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. HELD THAT - It appears from the nature of activities described by the appellant that the appellant is required to temporarily deploy various equipments at specified places to provide live videography of the events organized by the department of the State Government or by a Government Entity. Thus, it cannot be said that the appellant is supplying goods to the State Government or to a Government Entity. In fact, what emerges from the submissions of the appellant is that the appellant is required to temporarily deploy various goods in order to supply the service of live videography to the department of the State Government or Government Entity. The use of required goods and equipments by the appellant in order to provide service of live videography to the Government of Gujarat and Government Entity would not change the nature of service from pure service to supply of service with goods - exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) is admissible when Pure Services is provided to the Central Government, State Government or Union Territory or local authority or a Governmental authority or a Government Entity. Whether the service of providing equipments on hire for live videography of the appellant can be termed to be services by way of any activity in relation to any function entrusted to a Panchayat or a Municipality under Article 243G or Article 243W of the Constitution, rather than the nature of events or programmes held by the Government? - HELD THAT - The appellant has provided equipments on hire for live videography during the events or programmes held by the Government Department for which Hire Charges have been paid by the Government Department to the appellant. The activity of providing equipments on hire or live videography is not an activity in relation to any function entrusted to a Panchayat or a Municipality under Article 243G or Article 243W of the Constitution - The service of providing equipments on hire for live videography does not have any direct and proximate relationship with any of the activities listed in Article 243G or Article 243W read with Eleventh Schedule and Twelfth Schedule of the Constitution of India. The exemption provided vide Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) is not admissible to the appellant for providing service of equipment on hire for live videography to the State Government - the services being provided by the appellant Ms. Jayshreeben Rameshchandra Kothari are not covered under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended and Notification No. 12/2017-State Tax (Rate) dated 30.06.2017, as amended. Appeal dismissed.

Summary

Issues Involved:
1. Whether the services provided fall under clause 5(f) of Schedule II to the Central Goods and Services Tax Act, 2017.
2. Whether the services related to collection of Hire Charges for temporary transfer of right to use goods are exempted under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Issue-wise Detailed Analysis:

1. Classification under Clause 5(f) of Schedule II to the CGST Act, 2017:
The appellant argued that the services provided involve the hiring of equipment without transferring effective control and possession to the government departments, thus not constituting a supply of goods. The GAAR, however, ruled negatively, implying that the services did not fall under clause 5(f). The appellant maintained that the nature of the service was purely hiring without any transfer of goods or construction of immovable property, as the equipment was always dismantled and taken back post-event.

2. Exemption under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate):
The appellant contended that the services provided were "pure services" to the State Government or its agencies, which should be exempt under Sr. No. 3 of the Notification. The appellant emphasized that the term "pure service" was not defined under GST law but referred to FAQs by CBIC, suggesting that the services did not involve the supply of goods. The appellant highlighted that the work orders were for temporary structures and equipment, dismantled post-event, indicating no supply of goods or works contract service.

Findings:
The authority reviewed the submissions and the nature of the services provided. It was noted that the appellant's activities involved temporary deployment of equipment for live videography without transferring ownership or creating immovable property, thus constituting "pure services." However, the authority emphasized that the exemption under Sr. No. 3 of Notification No. 12/2017 is specific to services related to functions entrusted to Panchayats or Municipalities under Articles 243G and 243W of the Constitution.

The authority concluded that the service of providing equipment on hire for live videography did not directly relate to any functions listed under Articles 243G or 243W. The phrase "in relation to any function" was interpreted to refer to the nature of the service provided by the appellant, not the activities of the recipient government entity. Therefore, the services did not qualify for the exemption under the specified notification.

Conclusion:
The appellate authority upheld the GAAR's ruling, confirming that the services provided by the appellant did not fall under the exemption provided in Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate). The appeal was thus rejected, maintaining that the services were not exempt from GST.