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2024 (7) TMI 521 - AAR - GSTLevy of GST - rent received from the Department of Social Welfare - Pure services or not - HELD THAT - The Applicant is providing pure services to the State Government by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution and the same is covered under entry No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017 and hence the same is exempted. The pure services provided by the Applicant to the State Government are exempted as per entry No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 and hence not taxable.
Issues:
1. Whether rent received from the Department of Social Welfare is taxable or not? Analysis: The applicant sought an advance ruling regarding the taxability of rent received from the Department of Social Welfare, Government of Karnataka for a building used as a boys' hostel. The admissibility of the application was confirmed under Section 97(2)(e) of the CGST Act 2017. The applicant claimed that the services provided to the Department of Social Welfare were exempted and fell under article 243W of the Constitution. During the personal hearing, the authorized representative reiterated the facts stated in the application. The authority clarified that the CGST Act and KGST Act were similar in most provisions. The applicant rented out the building to the Scheduled Tribe welfare Department, a government department, which satisfied the condition of providing services to the State Government. The authority examined the relevant constitutional provisions under article 243G and 243W, which outlined the powers and responsibilities of Panchayats and Municipalities. The rental agreement indicated the building's use for the welfare of Scheduled Tribes, falling under the functions entrusted to a Panchayat. This fulfilled the conditions for exemption as per Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017. Based on the analysis, the authority ruled that the pure services provided by the applicant to the State Government were exempted under entry No. 3 of Notification No. 12/2017-Central Tax (Rate) and hence not taxable. The judgment provided a detailed interpretation of the constitutional provisions and notifications to support the ruling on the taxability of the rent received from the Department of Social Welfare.
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