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2022 (10) TMI 860 - AAR - GSTClassification of supply - pure service or work contract services - geotechnical investigation and preparation of foundation recommendation (soil report preparation) for civil works or infrastructure construction works - preparation of detailed project report (DPR) related to civil works/infrastructure construction works - architectural and engineering design for civil works/infrastructure works - project management services for civil works or infrastructure construction works - HELD THAT - It is revealed that the services rendered by the applicant are geotechnical investigation and preparation of foundation recommendation (soil report preparation), architectural and engineering design, preparation of detailed project report (DPR), project management services for civil works or infrastructure construction works - the activity of geotechnical investigation and preparation of foundation recommendation (soil report preparation), preparation of detailed project report, architectural and engineering design and project management services for civil works or infrastructure construction works undertaken by the applicant are services that are appropriately classifiable under Heading 9983 - Other professional, technical and business services of the Scheme of Classification of Services notified as Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and is liable to GST at the rate of 18% as per entry at SI No. 21 (ii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. Whether the services rendered by the applicant to Rebuild Kerala, Kerala State Public Works Department and HLL Infratech Services Ltd are eligible for exemption under entry at SI. No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 as claimed by them? - HELD THAT - The applicant is rendering services to Rebuild Kerala which is an initiative of the Government of Kerala to build sustainable and resilient roads and allied structures that are scientifically designed for efficiency of transport and accordingly the services rendered to Rebuild Kerala are to the Government of Kerala itself - As stated by the applicant the services rendered by them are in relation to the construction of bridges, roads, schools etc. and hence are activities in relation to any function entrusted to a Panchayat under Article 243 G of the Constitution or to a Municipality under Article 243 W of the Constitution. The services supplied by the applicant to Rebuild Kerala and Public Works Department are eligible for exemption as per the entry at SI. No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 being pure services provided to State Government by way of any activity in relation to any function entrusted to a Panchayat or Municipality under Article 243 G or Article 243 W of the Constitution. M/s HLL Infratech Services Ltd is a Public Sector Undertaking under the administrative control of the Ministry of Health and Family Welfare, Government of India and as such, they are neither Central Government nor a State Government. Hence the services supplied by the applicant to M/s HLL Infratech Services Ltd are not eligible for exemption under entry at SI. No. 3 of Notification No.12/2017 Central Tax (Rate) dated 28-06-2017 as exemption under the entry is available only for the specified services provided to the Central Government or State Government or Union territory or local authority - the services rendered by the applicant in respect of the projects in question Nos. 3.1 to 3.4 above to Rebuild Kerala and Public Works Department are covered under the exemption under SI No. 3 of the Notification No.12/2017 Central Tax (Rate) dated 28-06-2017 and the services rendered by the applicant to M/S HLL Infratech Services Ltd are not covered under the said exemption.
Issues Involved:
1. Classification of geotechnical investigation and preparation of foundation recommendation (soil report preparation) for civil works or infrastructure construction works. 2. Classification of preparation of detailed project report (DPR) related to civil works/infrastructure construction works. 3. Classification of architectural and engineering design for civil works/infrastructure works. 4. Classification of project management services for civil works or infrastructure construction works. 5. Eligibility for GST exemption for services provided to Rebuild Kerala, Kerala State Public Works Department, and HLL Infratech Services Ltd. Issue-wise Detailed Analysis: 1. Classification of Geotechnical Investigation and Preparation of Foundation Recommendation (Soil Report Preparation) for Civil Works or Infrastructure Construction Works: The applicant sought to determine whether these services fall under "pure service" or "works contract services." The Authority examined the Scheme of Classification of Services under Notification No. 11/2017 CT (Rate) and found that the services provided by the applicant do not involve any transfer of goods. Therefore, these services are classified under Heading 9983 - Other professional, technical, and business services, specifically under Service Code 998332 for engineering services. These services are liable to GST at the rate of 18% [9% CGST + 9% SGST]. 2. Classification of Preparation of Detailed Project Report (DPR) Related to Civil Works/Infrastructure Construction Works: Similarly, the applicant questioned whether the preparation of DPR falls under "pure service" or "works contract services." The Authority concluded that the preparation of DPR, which involves only the provision of designs, plans, and studies without any transfer of goods, falls under Heading 9983. Specifically, it is classified under Service Code 998332 for engineering services and is subject to GST at the rate of 18%. 3. Classification of Architectural and Engineering Design for Civil Works/Infrastructure Works: The applicant sought clarity on whether these services are "pure services" or "works contract services." The Authority determined that architectural and engineering design services, which involve the creation of designs, plans, and studies without the transfer of goods, are classified under Heading 9983. These services fall under Service Code 998322 for architectural services and Service Code 998332 for engineering services, both subject to GST at the rate of 18%. 4. Classification of Project Management Services for Civil Works or Infrastructure Construction Works: The applicant asked whether project management services fall under "pure service" or "works contract services." The Authority ruled that project management services, which involve assuming overall responsibility for the successful completion of a construction project without transferring any goods, are classified under Heading 9983. Specifically, these services fall under Service Code 998339 for project management services for construction projects, subject to GST at the rate of 18%. 5. Eligibility for GST Exemption for Services Provided to Rebuild Kerala, Kerala State Public Works Department, and HLL Infratech Services Ltd: The Authority examined whether the services provided to these entities are eligible for GST exemption under SI. No. 3 of Notification No. 12/2017 Central Tax (Rate). It was found that: - Services provided to Rebuild Kerala and the Kerala State Public Works Department are eligible for exemption as they are pure services provided to the State Government in relation to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. - Services provided to HLL Infratech Services Ltd are not eligible for exemption as this entity is a public sector undertaking and not considered Central Government, State Government, or local authority. Ruling: The services rendered by the applicant, including geotechnical investigation, preparation of DPR, architectural and engineering design, and project management services, are classified under Heading 9983 - Other professional, technical, and business services, and are subject to GST at the rate of 18%. Services provided to Rebuild Kerala and the Kerala State Public Works Department are exempted under SI. No. 3 of Notification No. 12/2017 Central Tax (Rate), while services provided to HLL Infratech Services Ltd are not eligible for this exemption.
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