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TMI Blog2021 (4) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... testing. Thus, it is clear that the applicant is the service provider and the service is provided to both governmental and non-governmental agencies. The services rendered to the contractors, though done as per the contract conditions, at the insistence of TWAD, the same cannot be termed as services provided to Government/Local authority because these tests are done by TWAD for the individual contractors in fulfillment of his contractual obligations for a specific charge. This proves that testing is a service done by the provider viz., TWAD to the receiver, any individual contractor for a consideration which is the fee charged. Hence the service so rendered by TWAD to their contractors is not exempted by the entry at SI.No. 3 above as the services are not provided to the class of service receivers specified in the said entry. The functions entrusted are clearly mentioned in the schedules and only those activities fall under the functions entrusted to Panchayat/ Municipality. The exemption entry under consideration exempts pure services by way of any activity in relation to any of the functions listed above when provided to the said class of service receivers. The services rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. Tamilnadu Water Supply and Drainage Board, No.31, TWAD House, First Kamarajar Salai, Chepauk, Chennai-600005 (hereinafter called 'the Applicant' or TWAD') are registered under GST with GSTIN 33AAALT0834FBZ1. The applicant has preferred an application seeking advance ruling on the following questions:- 1. Applicability of the Notification issued under the provisions of the CGST Act, 2017:- Rendering Pure Services (testing of materials for quality) by TWAD Board which is the Governmental Authority relating to water supply and sewerage schemes to urban and rural beneficiaries which are covered under Twelfth Schedule of Article 243 W of the constitution. Therefore, the services (Quality material testing charges) rendered by the TWAD Board are exempted from CGST under SI.No.3 of the Notifications No. 12/2017 CT(Rate) dated 28.06.2017 as amended and exempted from SGST under SI.No.3 of the G.O(Ms) No.73 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality in these laboratories. TWAD Board has fixed Material quality testing charges for various materials under Turnkey system, for various schemes allotted to contractors by the TWAD Board. During execution of works, the contractor submits materials samples such as cement, steel, bricks, sand, pipes, etc. to TWAD Board LAB for testing the quality of material for which testing fee is collected from the contractor and the same will be added by contractor to the cost of the scheme which is reimbursed by TWAD Board and the testing charges are booked in the scheme expenditure only. 2.2 The applicant has stated that the basic testing charges during 2019 have been approved by MD/TWAD Vide is No: F 7161/Testing charges/LAB / AEE/ SQMS/2019/ DT 06.12.2019, the orders were communicated to the field engineers and with effect from 1.1.2020 GST is exempted for TWAD Board works and 18% GST is charged for other than TWAD Board Material testing works. The applicant has made reference to Notification 12/2017 CT(Rate) dated 28.06.2017 as amended and Sl.No.3 of the G.O (Ms) No.73 dated 29.06.2017 No.II(2)/CTR/532(d-15)/2017 as amended. The applicant has sought the authority to clarify whether to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Geophysical survey testing charges for identification of borewell locations 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.(Corporation, Municipality, Town panchayat, Rural panchayat) i.e Urban and Rural Local body as per SI No 3 of the Notifications No: 12/2017 and to charge GST 18% for Geophysical survey investigation works for all other departments expect Corporation, Municipality, Town Panchayat, and Rural Development Department. 2.5 The applicant has relied upon the following case laws to substantiate their contentions:- Order No.22/AAR/2018 dated 28.11.2018 of Tamilnadu AAR in the case of Dr.Amin Controllers Private limited, Chennai. CESTAT Chennai Order No. 41526/2018 dated 01.05.2018 in the case of The Executive Engineer, Urban Division, TWAD vs The Additional Commissioner, O/o the Commissioner of Central Excise, Madurai The applicant has Lr. No. F.7161/Testing Charges/LAB/AEE/SQMS/2019 dated 06.12.2019; Lr. No. 9087/AHG7/HG/2007 dated 12.08.2015; TWAD online material quality Monitorin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by Senior Section Engineer/ Work, Southern Railway, Tambaram requesting to test stoneware pipe samples for the project -Improvement to underground drainage system at Chengalpattu and Tambaram Colonies; Stoneware pipe test certificate dated 09.01.2021 issued to Assistant Divisional Engineer/Southern Railway Tambaram Letter No.3068/2018 dated 24.04.2019 of the Regional Development Officer, shoolagiri issued to Executive Engineer, TWAD, Krishnagiri, requesting for geophysical survey sketch. 4.1 The Centre Jurisdictional authority who has the administrative jurisdiction over the applicant has stated the following:- In respect of Q.No.1 mentioned in para 1 supra, they have stated that the TWAD provides services to contractors, local bodies and other private entities. The Twelfth Schedule of Article 243 W of the constitution lists the functions of the Municipality at SI.No.5 as Water Supply for Domestic, industrial and commercial purposes and at SI. No. 6 as Public health, sanitation conservancy and solid waste management . The Eleventh Schedule of Article 243G of the constitution list the functions of the panchayat at SI.No. 11 as Drinking Water and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Government organization/Authority and the functions of the applicant as per the TWAD Board Act and Regulation (furnished by the applicant along with the application) are,- (a) at the instance of the Government or a local authority:- (i) Investigating the nature and type of schemes that can be implemented in the area of any local authority for the provision of drinking water and drainage facilities (ii) Planning and preparing of schemes including schemes covering areas falling within the jurisdiction of more than one local authority for the purpose of providing the supply of drinking water or drainage facilities (iii) executing such schemes under a phased programme for the provision of drinking water and drainage facilities within the areas of local authorities to which such schemes relate; (b) providing technical assistance or giving advice to local authorities in the execution and maintenance of water supply and drainage works; (c) establishing and maintaining schemes incidental to water supply and drainage such as testing of water, designing of plant for purification of water, conducting research relating to water supply and maintaining farm sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Notification 12/2017-CT (rate) dated 28.06.2017 as amended and exempted from SGST under SI.No.3 of the G.O(Ms) No.73 dated 29.06.2017 No.II/CTR/532(d-15)/2017 as amended. 7. From the submissions before us, we find that the question raised before us are applicability of entry No.3 of Notification no. 12/2017-C.T.(Rate) to the said supply by them. The Question of applicability of entry raised are covered under Section 97(2)(b) of the CGST/TNGST Act 2017 and therefore admissible before this authority for consideration and pronouncement of ruling. 8.1 The facts before us for consideration are that whether the exemption at SI.No.3 of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 is applicable to the applicant when,- they render Pure services of Material quality testing in their laboratories in respect of materials used by the contractors in the turnkey works executed by TWAD. It is their contention that as the testing, the cost of which is part of the project cost and such testing being an activity of 'Pure Service', they are eligible for exemption at SI.No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended; and they undertake Geoph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being collected for Geophysical survey investigation works from the user departments. 8.3 Now they have come up before us seeking ruling on whether the above services rendered by them would merit applicability of entry no.3 of Notification no. 12/2017-C.T.(rate) dated 28.06.2017, in as much as these services are 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 Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. 9.1 Before going further, the entry based on which the exemption is claimed, entry no.3 of Notification 12/2017 CT(R) dated 28.06.2017 is examined as under: SI. No Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 3 Chapter 99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the service so rendered by TWAD to their contractors is not exempted by the entry at SI.No. 3 above as the services are not provided to the class of service receivers specified in the said entry. 9.3 Further the condition that the services rendered should be one of the activities entrusted to a Panchayat / Municipality under Article 243G/243W of the constitution also has to be satisfied. To examine the applicability under this category the relevant extracts of are as under: Articles 243W (Twelfth Schedule):- The functions entrusted to a Municipality under the Twelfth Schedule to Article 243W of the Constitution are 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 promotion of ecological aspects. 9. Safeguarding the interests of weaker sections of society, including the handicapped and mental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule of Article 243W of the constitution lists the functions of the Municipality and at SI.No.5 Water supply for Domestic, Industrial and Commercial purposes and at SI.No.6 Public health, sanitation conservancy and solid waste management are mentioned. The Eleventh schedule of Article 243G of the Constitution lists the functions of the Panchayat and at SI.No. 11 Drinking water and at SI.No.23 Health and Sanitation including hospitals, primary health centers and dispensaries are mentioned. 9.4 The functions entrusted are clearly mentioned in the schedules and only those activities fall under the functions entrusted to Panchayat/ Municipality. The exemption entry under consideration exempts pure services by way of any activity in relation to any of the functions listed above when provided to the said class of service receivers. The services rendered by the Applicant which is the subject matter of the current proceedings, namely quality testing of materials used in the turnkey contracts is undertaken to assure the quality of materials used in the turnkey projects to maintain the international standards required of a project. It is seen that this is an independent activity an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.11.2019. Section 35 ( R)(3) of the Central Excise Act, states as follows:- (3) Notwithstanding the fact that no appeal, application, revision or reference has been filed by the Central Excise Officer pursuant to the orders or instructions or directions issued under sub-section (1), no person, being a party in appeal, application, revision or reference shall contend that the Central Excise Officer has acquiesced in the decision on the disputed issue by not filing appeal, application, revision or reference. Therefore, the reliance placed on the decision of the Hon'ble CESTAT are not sustainable in merits. 9.7 In respect of geophysical survey tests and reports, the applicant conducts the survey and reports on the nature of the site. The applicant has stated that they have not undertaken this service to 'Private agencies so far'. Further from the documents submitted it is seen that such survey has been done by the applicant to the Local Panchayat body of Soolalgiri, on their request to assess the geophysical nature of the land and availability of water. The Local authorities are constitutionally entrusted with the function of 'Water Supply' and TWA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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