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TMI Blog2023 (6) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution as amended by notification no. 16/2021-central tax (rate) w.e.f 1.1.2022 are exempt from tax. SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government - As SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government and as per the information contained in Memorandum of Association (in Para 14 above), it is clear that SUDA is a part of State Government of UP. Further, as per website of Pradhan Mantri Awas Yojana-blousing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and affordable Housing in Partnership. As per the details available on website SUDA is the state level nodal age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... territory or local authority or a Governmental authority and there is no condition in the notification that the said services are provided directly to the Central Government, State Government or Union territory or local authority or a Governmental authority. Accordingly, the applicant is entitled for exemption if the specified services are provided to SUDA under sub-contract with main contractor. - SHRI RAJENDRA KUMAR AND SHRI HARILAL PRAJAPATI, MEMBER Represented by : Shri Pankaj Kumar Shukla (CA Authorized representative) ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98(4) OF THE UPGST ACT, 2017 1. M/s RUDRABHISHEK ENTERPRISES LIMITED, A 6, SECTOR 58, NOIDA, Uttar Pradesh, 201301, (here in after referred to as the applicant) is a registered assessee under GST having GSTN: 09AAACR0707L2ZD. 2. The Applicant has submitted application for Advance Ruling dated 29-11-2022 enclosing duly filled Form ARA-01 (the application form for Advance Ruling). 3. The Applicant in his application sought Advance Ruling as follows : - (1) Whether the Project Development Service (i.e. Detailed Project Report Service ( DPR ) and Project Management Consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Awas Yojana-Housing for All (Urban) Mission. As SUDA Lucknow is a State Level Nodal Agencies (SLNA) for PMAY (U) in Uttar Pradesh, SUDA through its Director invited technical and financial proposals from eligible Consultancy Firms / Agencies/ Companies for Preparation of Detailed Project Report (DPR) and providing Project Management Consultancy Service (PMC) services under Pradhan Mantri Awas Yojna (PMAY in short) for Projects under Beneficiary Led Construction in 635 Urban Local Bodies/Authorities in Uttar Pradesh by its Request for Proposal (RFP) vide Invitation No. 708/01/29/HFA/2016-17 dated 01/02-06-2017 (RFP Attached Annexure-4) (Page Nos. 55-116). 2. Brief Description of the Project- Pradhan Mantri Awas Yojana - Urban (PMAY-U), a flagship Mission of Government of India being implemented by Ministry of Housing and Urban Affairs (MoHUA), was launched on 25th June 2015. The Mission addresses urban housing shortage among the EWS/LIG and MIG categories including the slum dwellers by ensuring a pucca house to all eligible urban households by the year 2022, when Nation completes 75 years of its Independence. PMAY (U) adopts a demand driven approach wherein the Housing sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers for various local bodies/authorities under the cluster were issued by SUDA one by one after completion of work of a given local body. 5. To understand purpose and scope of work for which the applicant has gone into contract with SUDA and PMAY. 6. SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government to carry out any function entrusted to a municipality under article 243W of the Constitution. As per the Memorandum of Association of State Urban Development Agency , it s main objectives shall be- (a) To identify the urban poor in the state. (b) To draw up plans and formulate schemes for the upliftment of the urban poor in the state. (c) To implement schemes for the benefit of the urban poor either directly or through other agencies engaged in this direction, whether private, public or cooperative. (d) To review the progress of the execution of these activities as well as effectiveness of the benefits directed towards the urban poor. (e) To set up or establish any specific service such as training facilities, infrastructural etc. in furtherance of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Uttar Pradesh. 11. Furthermore, the matters listed in the 11th and 12th schedule to the constitution (details 243G and 243W, respectively), as functions pertaining to Panchayats/Municipality, are inter alia: (a) Safe water for drinking, (b) Maintenance of community assets, (c) Family welfare, (d) Markets and Fairs, (e) Poverty Alleviation Programmes, (f) Regulation of land use and construction of land buildings, (g) Urban planning including the town planning, (h) Planning for economic and social development, (i) Urban poverty alleviation, (j) Slum improvement and up-gradation. 12. Now, The scope of work by the applicant with the contractor - A. Scope of work under Preparation of DPR: 100% physical verification includes door survey, collection of land documents and consent letters from the beneficiaries as per HFAPOA (Housing for All by 2022- Plan of Action), data collection, data verification and data compilation inclusion of present status and proposed works of infrastructure details MIS Entry. Key stakeholder consultations. preparation of beneficiaries wise detailed Arch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PMC shall be fully responsible for quality control and shall put in place such measures as are essential for ensuring regular on site quality check. PMC shall submit the tentative organization chart for managing the project so that appropriate decisions are taken quickly However the actual number of technical and financial personnel to be deployed and the deployment schedule shall be prepared by the PMC and manually agreed upon after award of work Generate and submit to the ULBs time Progress reports in the agreed formats and the agreed frequency PMC shall also apprise the beneficiaries of the progress or activities of the project on fortnightly/monthly basis. Cash flow Chart Actual and Scheduled Bar Chart Actual and Scheduled Status of payments of beneficiaries. Photographs of various stages (Before excavation, Foundation, Plinth Level, Lintel Level Completion) of DUs of each beneficiary, Geo tagging of constructions all the stages Visitors Site Inspection, Settlement of all accounts of the beneficiaries with the ULBs. Provide project completion report/closure report which shall contain all technical and financial information of the projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em 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. 4. According to foregoing discussions it may be construed that the Consultancy services rendered i.e. DPR and PMC under the contract with SUDA as per scope of RFP issued by SUDA, and for PMAY-U are in relation to functions entrusted to Municipalities under Article 243G and to Panchayats under Article 243 W of the Constitution of India. 5. Now coming to second question for consideration which is a corollary to the first, when answer to the first is in affirmative. Since it may be established that answer to the first question is in affirmative, moving to decide as to whether such services provided would qualify as Pure services (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 as amended (relevant portion is reproduced below), and correspon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service and, thus, be eligible for exemption from levy of CGST and UPGST, respectively. 8. As per the said entry (entry no. 3 of notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017, as amended), the main conditions for the exemption are: a. It should be a pure service (excluding works contract service or other composite supplies involving supply of any goods). b. Provided to the Central Government, State Government or Union Territory or Local Authority c. 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 243 W of the Constitution. 9. Hence since it is established in para 15.vi 15.vii supra and the same was also observed by AAAR in an identical matter vide Appeal Order No. 17/AAAR/02/07/2021, that SUDA falls under Government Category and the services of providing Preparation of Detailed Project Report (DPR) and providing Project Management Consultancy Service (PMC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CGST Act 2017 being a matter related to applicability of a notification issued under the provisions of this Act. We therefore, admit the application for consideration on merits. 11. We have gone through the submissions made by the applicant and examined the detailed explanation submitted by them. We observe that the question sought by the applicant is as under- (1) Whether the Project Development Service (i.e. Detailed Project Report Service ( DPR ) and Project Management Consultancy services ( PMCS ) provided by the applicant to the recipient under the Contract from State Urban Development Agency (SUDA) under the Contract for PMA Y-U would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively of the Constitution of India? (2) If answer to first question is in affirmative then, whether such services provided by the applicant would qualify as Pure services (excluding works contract service or composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entruste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director SUDA Lucknow will be Executive Secretary. Further, as per point no. 33 of Article of Association, the accounts of the SUDA shall be subject to an account audit by the Comptroller and Auditor General of India and as per point no. 43 Members to receive no profit upon dissolution of the society if after disposal and settlement of the property of the society and its claims and liabilities, there are any surplus assets, such asset shall not be paid to or distributed amongst the member of the society or any of them but shall be disposed off as directed by the Government of India or State Government. 15. As SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government and as per the information contained in Memorandum of Association (in Para 14 above), it is clear that SUDA is a part of State Government of UP. The said observation is further supported by the following Government Orders which is addressed to the Director, SUDA UP, Department for Urban Employment and Poverty Alleviation (available on www.shasnadesh.up.nic.in). (i) No. 172/69-1-10-75(Sa)/97 dated 26.02.2010 and No. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant would qualify as Pure services, we come to examine the scope of work under agreement, as provided by the Applicant:- a. Identification and Validation of new beneficiaries/replacement of beneficiaries as and when required b. Scope of work under preparation of DPR:- 100% Physical verification including Door to Door Survey, Collection of land documents and consent letter from the beneficiaries Data collection, Data verification and Data compilation Inclusion of present status and proposed works of infrastructure details MIS Entry Key Stakeholder consultations Preparation of Beneficiaries wise detailed Architectural/ Engineering designs. Drawings Estimates for all sizes of plots Project structuring under appropriate development and funding mechanism Assistance in obtaining approvals from concerned agencies / departments The Consultant shall incorporate all necessary data in reference to Slum Free City Plan in the DPR. The DPR should be complete in all respects with all reports drawings, statements and document necessary for obtaining the grant from the Government of India. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er award of work. Generate and submit to the ULBs time-to-time progress reports in the agreed formats and at the agreed frequency. PMC shall also apprise the beneficiaries of the progress and/or activities of the project on fortnightly/monthly basis. Cash Flow Chart - Actual and Scheduled Bar Chart-Actual and Scheduled Status of Payment to beneficiaries Photographs of various stages (Before Excavation, Foundation, Plinth level, Lintel Level Completion) of DUs of each beneficiary Geo tagging of constructions of all the stages Visitors Site Inspection Settlement of all accounts of the beneficiaries with the ULBs Provide project completions report/closure report which shall contain all technical and financial Information of the project. 20. After examining the agreement and scope of work, we are of the opinion that services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 issued under Central Goods and Services Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Rajasthan Authority tor Advance Ruling, vide Advance Ruling No. RAJ/AAR/2019-20/28 dated 19.12.2019, in the case of Sevak Ram Sahu (M/S S.R.S. Enterprises) wherein the Authority has observed that . .... The entry does not speak of contractor or sub-contractor but supply of pure service by way of construction under certain project. It dearly stipulates that whosoever is supplying the pure labour contract services for the construction of a civil structure or any other original work under PMAY is exempt from GST. (2) Appellate Authority for Advance Ruling, Maharashtra, Order No. MAH/AAAR/SS-RJ/15/2018-19 dated 03.01.2019 in the case of M/s Shree Construction wherein it was observed that- ...In the instant case though the respondent i.e. M/s Shree Construction is providing works contract service to its main contractor who has entered into works contract agreement with Railways, the composite supply of works contract being carried out by M/s Shree Construction is ultimately going to the use of Railways without being subjected to any change or modification, thus the said work contract, though undertaken by the sub-contractor is undoubtedly pertaining to the Railwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no condition in the notification that the said services are provided directly to the Central Government, State Government or Union territory or local authority or a Governmental authority. Accordingly, the applicant is entitled for exemption if the specified services are provided to SUDA under sub-contract with main contractor. In view of the above, both the members unanimously rule as under; RULING Question 1 Whether the Project Development Service (i.e. Detailed Project Report Service ( DPR ) and Project Management Consultancy services ( PMCS ) provided by the applicant to the recipient under the Contract from State Urban Development Agency (SUDA) under the Contract for PMAY-U would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India? Answer 1- The Services rendered under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY-U are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. Question 2. If answer to first questio ..... 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