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TMI Blog2020 (7) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the constitution or in relation to any function entrusted to a Municipality under article 243W of the constitution. The services provided by the Applicant are exempted under Sl.No.3 of Notification No. 12/2017 dated 28.07.2017 as amended further by Notification No. 32/2017 - Central Tax (Rate), dated: 13.10.2017. - AAR No.17/AP/GST/2020 - - - Dated:- 13-5-2020 - SRI. D. RAMESH, AND SRI. M. SREEKANTH, MEMBER Represented by: M/s. Rajvanshi Associates. ORDER (Under Sub-Section (4) of Section 98 of Central Goods and Services Tax Act, 2017 and Sub-Section (4) of Section 98 of Andhra Pradesh Goods and Services Tax Act, 2017) 1. The present application has been filed u/s 97 of the Central Goods Services Tax Act, 2017 and AP Goods Services Tax Act, 2017 (hereinafter referred to CGST Act and APGST Act respectively) by M/s. Consulting Engineers Group Limited, (hereinafter referred to as applicant), registered under the Goods Services Tax. 2. The provisions of the CGST Act and APGST Act arc identical, except for certain provisions. Therefore, unless a spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed appropriate technology and safe and effective equipment, machinery and methodology to perform the services in accordance with the Generally accepted Professional standards and practices. 5. The Scope of Project Management Consultancy under the terms of Contract comprises of following components, namely: (i) Review verification of the Project DPRs. (ii) Project Management (execution) and Monitoring, and (iii) Construction Supervision and Contract Management, including QAC (iv) Ensuring that the ESMPs are properly prepared and implemented. 6. The Applicant rendering Project Management Consultancy (PMC) services during implementation will ensure that the contracts are completed with least cost and no time overruns and ensure that quality and sustainable assets are created. Monitoring of the project activities shall be done using WMS (works monitoring system) being developed by PRED using latest IT tools and techniques such as online monitoring work sites with the aid of cyber tools is under process. 7. The scope of work of the Applicant under the PMC Contract Agreement has been briefed for reference: a) Ensure compliance to loan and project agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation reports with reference in following aspects. b) Checking and field verification of existing DPRs including efficacy of DPRs and modification/revision of DPRs to achieve required standards. c) Review of each site environmental aspect for detailed design of the project component. d) Review of environmental safeguard including impact assessment, if any, e) Review of environmental management plan (EMP) and mitigation measures. CONSTRUCTION SUPERVISION CONTRACT MANAGEMENT INCLUDING OAC a) Providing advice and guidance to PMU/PIU (PRED) for modern procedures and guidelines for project implementation and management in general. b) Arrange, coordinate and be available for consultation in all stages of construction of the project, and accordingly ensure modification of the project component, if any c) Contract administration and management of the project d) Prepare construction supervision manual, which shall specify quality control and quality assurance aspects and methodology for the following phrases of the project Mobilization phase Inception Report Quality audits. Pre-construction stage. Construction stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professionals and support staff in the month of February 2019 and raised its first invoice in the month of April 2019 for remuneration of staff and reimbursement of expenses in terms of Agreement. Thereafter, the Applicant has raised monthly invoices regularly and has charged 18% GST in the invoices raised and has deposited this GST amount from time to time to the Government as the Contract Agreement for Consultancy Services has provision (as stated in Point 41.2 of Special Conditions of Contract) for the amount of GST over billed amount to be paid by the APPRED. 9. The Applicant further states that its client, APPRED is of the view that the Project Management Consultancy services provided by them are exempt from CGST and Andhra Pradesh GST as per of Notification No.12/2017 Central Tax (Rate) dated 28/06/2017 and G.O.Ms.No.588 (Andhra Pradesh) State Tax (Rate) Dated 12/12/2017 respectively. 10. Given the above background, the present application is being preferred before the Hon ble Authority of Advance Ruling to determine whether the Project Management Consultancy services provided to Andhra Pradesh Panchayat Raj Engineering Department for APRRP Road Construction Project ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, on the recommendations of the Council, hereby exempts the intro-State supply of services of description as specified in column (3) of the Table below from so much of the central tax liveable thereon under sub-section (i) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:- Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Condition (2) (3) (4) (5) Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the works contract services. The exemption is provided to services which involves only supply of services and not for works contract services. 1.3 The term Works Contract has been defined in Section 2(119) of the CGST Act, 2017 as works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. 1.4 In the Contract between the Applicant and APPRED, there is no component of transfer of property in goods as evident from the contract agreement and is purely a service contract. As per the scope of work mentioned above in Point no. 7 of Exhibit-II, the Applicant is mainly engaged in providing Consultancy services to the APPRED through its professionals and Experts in various fields. 1.5 The scope of work of the Applicant mainly surrounds to services in relation to: (i) Review verification of the Project DPRs. (ii) Project Management (execution) and Monitoring, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) a Regional Council constituted under article 371A of the Constitution. 2.4 Panchayat Raj Engineering Department (PRED) was formulated during the year 1967 by the Government of Andhra Pradesh. It functions directly under the Ministry of Panchayat Raj Rural Development and at State level Secretary to Government (PR RD) as its administrative head and Engineer-in-Chief as its technical head. 2.5 Hence, APPRED is formulated by the State Legislature of Andhra Pradesh and functions directly under the Ministry of Panchayat Raj Rural Development and hence, qualifies to be a Local Authority. III. Services are in relation to any function entrusted to a Panchayat under Article 243G of the Constitution 3.1 Article 243G of the Constitution has been briefed for reference: 243G. Powers, authority and responsibilities of Panchayat Subject to the provisions of this Constitution the Legislature of a State may, by law, endow the Panchayat with such powers and authority and may be necessary to enable them to function as institutions of self government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayat, at the appropriate leve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hearing: The authorised representative of the applicant, M/s. Rajvanshi Associates, Chartered Accountants appeared for personal hearing on 05.02.2020 and they reiterated the submission already made in the application. 6. Discussion and Findings: We have examined the issues raised in the application. The taxability, classification of the services, applicable rate of tax, eligibility of exemption etc., for the Goods and Services supplied or to be supplied, as governed under the provisions of respective GST Acts are examined. From the documents on record, we observe that the applicant provides Project Management Consultancy Services to APPRED(Andhra Pradesh Panchayati Raj Engineering Department) for Andhra Pradesh Rural Road Project (APRRP) which is meant for connectivity of all unconnected habitats of 250+ population in the state of Andhra Pradesh. The issue at hand is to decide whether the Project Management Consultancy services of the applicant provided to Andhra Pradesh Panchayat Raj Engineering Department for Andhra Pradesh Rural Road Project (APRRP) for Road Construction can be termed as Pure Services as referred in Sl. No. 3 - (Chapter 99) of Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government, State Government or Union territory or local authority or a Governmental authority. Andhra Pradesh Panchayat Raj Engineering Department (APPRED) was formulated during the year 1967 by the Government of Andhra Pradesh. It functions directly under the Ministry of Panchayat Raj Rural Development and at State level Secretary to Government (PR RD) as its administrative head and Engineer-in-Chief as its technical head. While the Andhra Pradesh Rural Roads Connectivity Project (APRRP)has been launched by the Government of Andhra Pradesh to provide all weather road connectivity to unconnected habitations with population of 250 or more, this Project is implemented by the Panchayat Raj Engineering Department (PRED), of Government of Andhra Pradesh. The Project will finance activities including building new roads, cross-drainage structures, and resurfacing/rehabilitation of existing roads, Moreover, APPRED, functions directly under the Ministry of Panchayat Raj Rural Development and thus qualifies to be a Technical Wing of the Department of PR RD of the AP State Government. (c) Now we examine whether the functions carried out by applicant are in relation to any funct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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