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TMI Blog2021 (1) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 or otherwise? HELD THAT:- looking to the terminology and words used in the said clauses of the contract / agreement, it is very difficult to conclude that it pertains purely to services only. In fact, on going through the same, we get the impression that this does not appear to be a supply of pure service only but also includes supply of goods along with supply of services. Further, as reported by the concerned officer and as per the GST portal, the applicant supplies Works Contract Service also besides supplying design and consultancy services and few other services and looking to the aforementioned facts, it appears that Works Contract Service may also be involved in the said contract. If a person provides only service to any person without involvement of supply of goods along with supply of services, then the same would be termed as supply of pure service - the Financial offer as per the contract/agreement includes the GST amount and that GST is to be paid to the Government as per the terms and conditions of the Contract/Agreement. This, itself, proves that the applicant is not eligible for the ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Art, Building Design, Interior Design, Surveying, Environmental Sciences, Project Management and Project Economics. The applicant has stated that they support a diverse range of public and private sector projects at every stage, from the conceptualization and financial feasibility study to project completion and beyond and that they provide services for projects in India and internationally in Buildings, Industry, Infrastructure and Social Sectors such as Residential, Mixed-Use, Retail, Pharmaceuticals, Healthcare, Educational and Civic projects. 2. The applicant has submitted that their services are covered by SAC Code 99832-Architectural services, urban and land planning and landscape architectural services liable to tax at 18% (9% SGST + 9% CGST); that presently they have received work orders from various local authorities like the Surat Municipal Corporation, Ahmedabad Urban Development Authority, Pune Municipal Corporation, State Government of Maharashtra (through Executive Engineer, Public Works Division, Pune), for Government projects namely Rajkot Smart City Development ltd. and from Government Entity namely Gujarat Technological University. The applicant has submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017, the said service is liable to tax at NIL rate. Entry No.21 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 reads as under: Sr.No. Chapter, Section, Heading, Group or Service Code ( Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 21 Heading 9983 (Other Professional, technical and business services) (i) Selling of space for advertisement in print media. 2.5 -- (ii) Other professional, technical and business services other than (i) above (and serial No.38 below). 9 --- Entry No.3 of Notification No.12/2017-Central Tax(Rate) appears as under: Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 3. 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 or a Government entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es with such powers and authority as 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 Municipalities, subject to such conditions as may be specified therein, with respect to: (i) The preparation of plans for economic development and social justice. (ii) The performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule. (b) The Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. (c) The Twelfth Schedule reads as under: 1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation conservancy and solid waste management. 7. Fire services. 8. Urban forestry, protection of the environment and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t T.P.S.No.6 (Majura-Khatodara), F.P.No.235, Ring Road, Surat. The applicant has stated that they seek a ruling on rate of tax of pure services, which are rendered to municipality for work which is in the nature of administrative building and according to their understanding, it is not covered under any activity in relation to any function entrusted to Municipality under Article 243W of the Constitution read with 12th Schedule of Entry 3 of Notification No.12/2017 dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. (2) The applicant's services to Ahmedabad Urban Development Authority, stated to be design consultant(Pure services) for various projects like (a)Preparation of design and detailed estimation of Town hall at Dehgam.(b) Preparation of Local Area Plan for Transit Oriented Zone(TOZ), can be covered by Entry No.3 of Notification No.12/2017 dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. (3) The applicant's services to Executive Engineer, Public Works(East) Division, Pune, State of Maharashtra and local municipality for "Planning & Designing of Medical college, Teaching hospital and Nursing college fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultancy Work for Development of Green Field Areas provided to Rajkot Smart City Development ltd. covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. (5) Whether Consultancy Services for Architectural and Engineering design/working drawing of Baramati Hospital provided to Executive Engineer, Public Works(East) Division, Pune covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. (6) Whether Consultancy service to Gujarat Technological University for Architectural design/engineering design, working drawing, Structural analysis and drawings, electrical drawings and details of all services for phase wise construction of building for proposed project can be covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. 8. The applicant has given additional submission vide letter dated 05.08.2020 which is as under: (i) The word "Pure Services" referred in notification has nowhere been defined in the Act, Rules or notification. The Notification also does not specifically name the services which are eligible for exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hereunder: (a) Surat Municipal Corporation(Annexure B of Paper book-Pages17 to 97): Providing Design and Comprehensive Consultancy services from concept to completion for State of Art High rise office building for Surat Municipal Corporation at T.P.S.No.6(Majura-Khatodara) F.P.No:235, Ring Road, Surat." Sr.No. Conditions Yes/No Remarks 01. Pure Service Yes Not covered under list of 243W of Constitution. In the case of Shri Jayesh Anilkumar Dalal, it is held that all conditions of 243W need to be satisfied for claiming pure service as exempt. 02. Provided to the Local Authority. Yes 03. Activity in relation to any function of the Municipality under Article 243W No (b) Ahmedabad Urban Development Authority(Annexure C of Paper Book Page 98): Preparation of Design and Detailed Estimation of Town Hall at Dehgam. Sr.No. Conditions Yes/No Remarks 01. Pure Service Yes Covered at Sr.No.13 of List. As per judgement of Consulting Engineers Group ltd. Order dated 13.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 350 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH. 02. Provided to the Local Authority. Yes 03. Activity in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns Yes/No Remarks 01. Pure Service Yes Covered by definition of Govt. Entity as per (zfa) of Notification. Covered by Sr.No.13 of List. As per judgement of Zigma Global Environ Solutions pvt.ltd. Order dated 05.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 448 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH.. 02. Provided to the Government Entity. Yes 03. Activity in relation to any function of the Municipality under Article 243W Yes 9. The applicant has given additional submission vide letter dated 01.09.2020(received by mail on 01.09.2020) for the following projects, as under: 1. Ahmedabad Urban Development Authority. (Annexure C of Paper Book) Page No 98 "Preparation of Design and Detailed Estimation of Town Hall at Dehgam." Sr.No. Conditions Yes/No Remarks 1. Pure Services Yes Covered at Sr.No.13 of list. As per judgement of Consulting Engineers Group ltd. Order dated 13.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 350 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH. 2. Provided to Local Authority Yes 3. Activity in relation to any function of Municipality under Article 243W Yes 10. The applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for public welfare use and not for residential or commercial use - mere earmarking 1/3rd of entire area for using different sports facilities on specified rates would not make said complex/ stadium a commercial entity in its entirety. Dominant use of said complex/stadium or sports complex is not commercial and hence same is not covered under aforesaid services. 12. Regarding the services rendered to Rajkot Smart City Development limited, the applicant has submitted the following details: Rajkot Smart City Development Limited: (Annexure E of Paper Book) Page No 157 to 303: "Work of Preparation of Master Plan of Green Field Areas for the Development of Green Field Area - Rajkot Smart City at Rajkot;Project Management Consultancy Work Of Master Plan of Green Field Areas for the Development of Green Field Area - Rajkot Smart City at Rajkot" Sr.No. Conditions Yes/No Remarks 1. Pure Services Yes Covered at Sr.No.1 and 8 of list. As per judgement of Zigma Global Environ Solutions pvt.ltd. dated 05.05.2020 of Andhra Pradesh Advance Ruling Authority. 2. Provided to Local Authority Yes 3. Activity in relation to any function of Municipality under Article 243W Yes The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... City Development Ltd., squarely falls under the definitions of "government authority" as per explanation to clause (16) of Section 2 of the Integrated Goods and Services Tax Act, 2017; that with reference to deduction of TDS as per the provisions of Section 51 of CGST Act, and Gujarat SGST Act, for the services rendered as stated in the application, they would like to refer to Sec 51(1) of the Act read with Notification no 50/2018 Central tax dtd: 13/09/2018, which reads as under: (a) an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function; (b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860); (c) public sector undertakings. Has to deduct tax at source on taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees. In the instant case, Rajkot Smart City Development Ltd., falls within the above notification as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant is providing services to Surat Municipal Corporation, Pune Municipal Corporation, Ahmedabad Urban Development Authority and Rajkot Municipal Corporation. (5) As per Article 243W service provided to local authority, State/Central Government or any Government entity may be called Pure Services. In 12th Schedule of Article 243W, nothing is specified about the mentioned services in application, so the confusion may have arisen whether service is pure service or not. So as per this view, the applicant may be granted for Advance Ruling. (6) As per the GST portal, the applicant is providing different services such as Architects services, Consulting Engineer services, Interior Decorators/Designers services and Works Contract Services. (7) The applicant is providing services to Surat Municipal Corporation, Pune Municipal Corporation, Ahmedabad Urban Development Authority and Rajkot Municipal Corporation and from the information available it cannot be decided whether the service provided is pure service or not. DISCUSSION & FINDINGS: 16. We have considered the submissions made by the applicant in their application for advance ruling, additional submissions made by them dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter, we are required to refer to Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended by Notification No.02/2018-Central Tax(Rate) dated 25.01.2018) referred to by the applicant which contains a list of exempted services. Entry No.3 of the said notification reads as under: Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 3. 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 or a Government entity 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. NIL NIL 19.1 As can be seen from the above, Entry No.3 of aforementioned Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 exempts Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which raise a question mark as to whether the above services supplied by the applicant are pure services or otherwise. The same are as under: (a) Para 1.5(Brief scope of work) in Tender Notice No: CE SP CELL/EO1/201617/01 (Request for Proposal) (Page-10)reads as under: "SMC desires to make its new Main Office Buildings as State of the Art High Rise Building. The successful architect to be selected from among the short listed architects after limited tender (RFP) which shall also include price part, shall be responsible for providing Comprehensive Consultancy Services from Concept to Completion but not limited to Conceptual design, Architectural services, Estimate, Specifications, Tender preparation, Civil Structural designs and all other engineering services like Electrical, HVAC etc., Sanitary system, Fire safety system, Communication system, LAN, Access control, Surveillance Security system, Power backup, Signage, Interiors of High Rise office Building and design of Landscaping of campus for all works involved in the proposed new main Administrative High Rise Office Building." (b) Para 2.5.4(Electrical System) of above referred Tender Notice (Page-33) reads as under: "S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated period shall be the sole responsibility of the Successful Bidder /Consultant, failing which SMC may recover the amount due from any other payable dues with SMC and decision of Municipal Commissioner shall be final and binding on the Contractor/Successful Bidder in this regard. Further, the non-payment of GST to the Government may lead to the termination of the contract and forfeiture of Security Deposit/Performance Guarantee Amount. 20.1 From a plain reading of the clauses (a) above, which states about "providing Comprehensive Consultancy Services and all other engineering services like Electrical, HVAC etc., Sanitary system, Fire safety system, Communication system, LAN, Access control, Surveillance Security system, Power backup, Signage, Interiors of High Rise office Building and design of Landscaping of campus for all works involved in the proposed new main Administrative High Rise Office Building" and clause(b) above which states that "the supply of service includes providing internal and external electrification system with necessary electrical rooms, cablings, power supply network including sub-station (building-specific), backup generators, external lighting, alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST(Rate) dated 28.06.2017. On going through the letter dated 18.08.2017 issued by the Ahmedabad Urban Development Authority, subject of the letter reads as "Preparation of design and Detailed Estimation of Town Hall at Dehgam falling under Auda" whereas the reference portion reads as "Empanelment of Consultant Urban Design and Architecture and Landscaping Design Service for AUDA area (Category-1 Urban Design Project)(Job No.47/2011-12). Further, the applicant has submitted that the Work Order of AUDA is a one pager. However, free English translation of second paragraph of the aforementioned letter(original letter is in Gujarati) reads as under: "with reference to the above subject, the work order related to consultancy for construction of Town hall at Dehgam T.P.Scheme No.2, FP No.338 such as Survey, Planning, Estimate, Draft tender papers etc. is being given. It is informed that the whole work is to be done as per the conditions of the agreement. Also an amount equivalent to 2% of the bills pertaining to your work will be deducted as Security deposit." From the above, it is crystal clear that an agreement has materialised between the applicant and AUDA in respect to the above w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tender no.52 Year 2017-18 dated 20.11.2017 issued by the PMC." (2) Point (f) in Para 1.1(Medical Planning) under the head '1.Scope of Work' in Page 4 of the agreement reads as under: "Facilitate to prepare complete Architectural, Structural and services design and drawings, working details, schedules, specifications including Architectural design, Structural details, Electrical services, HVAC system, Sanitary and plumbing details, Medical gas system, BMS, CSSD, Kitchen and catering, Laundry System, CCTV Surveillance, Communication and networking plan, Fire detection, Fire-fighting systems, Solid waste water management(SWM) including Bio-medical waste management, Furniture layout for all units and its specification, Medical equipment layout plan and details." (3) Point (g) in Para 1.2(Architectural Design) under the head '1.Scope of Work' in Page 5 of the agreement reads as under: "Prepare complete Architectural, Structural and services design and drawings, working details, schedules, specifications including Architectural design, Structural details, Electrical services, HVAC system, Sanitary and plumbing details, Medical gas system, BMS, CSSD, Kitchen and catering, Laundry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to Pune Municipal Corporation are not Pure services. Since the applicant has failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 20.4 The applicant has stated that he has provided the services of design consultant (Pure services) for 'Preparation of MP and PMC of Green Field areas for the development of Rajkot Smart city at Rajkot under Smart City Mission (urban renewal and retrofitting program by GOI)" rendered to Rajkot Smart City Development Limited. We have gone through the letter of acceptance dated 05.06.2018 issued by Rajkot Smart City Development limited to the applicant regarding acceptance of their offer of ₹ 5,52,40,000/- for the work of Urban Planning and Infrastructural planning as well as the agreement made between Rajkot Smart City Development limited and the applicant. On going through the terms and conditions of the said agreement, we found that there are certain clauses of the agreement which raise a question mark as to whether the above services supplied by the applicant are eligible for exemption by virtue of entry No.3 of Notification No.12/2017-Central Tax( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax is introduced, an existing Tax is abolished, or any change in interpretation or application of any Tax occurs in the course of the performance of the Contract, an equitable adjustment to the Contract Price shall be made to fully take into account any such change by addition to or reduction from the Contract Price, as the case may be. From a plain reading of the above 2 clauses, it is crystal clear that the Contract Price in the above case is inclusive of all taxes which also includes GST and that as per the terms and conditions of the Contract/Agreement, GST is to be paid to the Government. This, in itself, proves that the applicant is ineligible for exemption by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. In view of the above, we conclude that the applicant is not eligible for the benefit of exemption by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 on the aforementioned grounds itself. 20.5 The applicant has stated that the service provided by them to Executive Engineer, Public Works(East) Division, Pune is for "Design and PMC Services for Baramati Hospital. On going through the agreement made betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sewerage details, Environment sustainability, Rain water harvesting, EIA and clearance, Solid waste water management(SWM), including (b) Bio-medical waste management, Detailed Furniture layout for all units and its specifications, Medical equipment layout plan and details, Electrical layout and details, integration of all systems and services, Specialist services like audiovideo, IT and Intelligent Management system, Operating workflows and systems, Pneumatic chute system, EPABX, Glazing, HR planning, Organization and Manpower plan, Traffic and packing system, Security system, Landscape Design(Site Planning Land form and grading, surface drainage, Irrigation, Hard and soft copy, garden furniture, illumination), schedule of finishes, bill of quantities as per PWD schedule of rates to describe the whole project adequately and get them approved from Competent Authorities and from all the local bodies etc. The PMC will provide 10 sets of drawings to the employer. Fee of the consultants engaged in scope of services will be the part of PMC fee and not the project cost. On a plain reading of the aforementioned clause (1), especially the portion "arrange water supply connection, Dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of building for proposed project. On going through the agreement dated 12.12.2019 made between Gujarat Technological University and the applicant, it is observed that the applicant is required to provide a complete and Comprehensive Consultancy service for Architectural design/engineering design, working drawing, structural analysis and drawings, electrical drawings and details for all services for phase wise construction of buildings for proposed project to Gujarat Technological University. On going through the terms and conditions of the aforementioned agreement, we find that there is a certain clause of the agreement which raises a question mark as to whether the above services supplied by the applicant are pure services or otherwise. The same are as under: (1) Point (a) under the head '3.Scope of work' in Page 2 of the aforesaid agreement reads as under: "Preparation and submission of detailed "Master Plan" of entire area, Location of building in the Master Plan and providing connectivity to neighbouring buildings in the campus at the designated location of all the phase wise buildings, obtaining necessary approvals from client and statutory bodies wherever required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: Answered in the negative for the reasons discussed hereinabove. Question-3: Whether Medical and Design Consultancy Services for establishment of Medical College, Teaching Hospital and Nursing College at Pune, provided to Pune Municipal Corporation covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? Answer: Answered in the negative for the reasons discussed hereinabove. Question-4: Whether work of Preparation of Master Plan of Green Field Areas and Project Management Consultancy Work for Development of Green Field Areas provided to Rajkot Smart City Development ltd. covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? Answer: Answered in the negative for the reasons discussed hereinabove. Question-5: Whether Consultancy Services for Architectural and Engineering design/working drawing of Baramati Hospital provided to Executive Engineer, Public Works(East) Division, Pune covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? Answer: Answered in the negative for the reasons discussed hereinabove. Question-6: Whether Consultancy service to Gujarat Technological University f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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