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TMI Blog2024 (7) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that BWSSB is not Local Authority - BWSSB is neither State Government nor Local Authority and hence the first condition is not satisfied. The Applicant states that he is providing professional services in relation to corporate tax return filing to BWSSB. But these services are not provided 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. Thus, the second condition is also not satisfied. Hence the services provided by the Applicant to BWSSB are not exempt as per entry No. 3 of Notification 12/2017 Central Tax (Rate) dated 28th June 2017. The professional services for assistance in filing of corporate tax returns provided by the Applicant to BWSSB is not an exempt supply as per SI No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017. - DR. M.P. RAVI PRASAD AND SRI. KIRAN REDDY T, MEMBER Represented by : Sri Ravi Banthia and Sri Chillakuru Chaitanya Duly Authorised Representative ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 AND UNDER SECTION 98(4) OF THE KGST ACT, 2017 M/s ERNST AND YOUN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Thus, the board is an extended arm of the State Government and akin to municipality and is not into any business operations. 5.4. The Applicant states that the main functions of BWSSB are adequate water supply to meet demand; creation of sewerage network; safe disposal of sewage; levy and collection of water charges on no loss no profit basis for sustainability of the system. 5.5. The Applicant states that The Income tax Act 1961, requires every assessee to file a Return of Income ( ROI ) offering to tax the income earned by it during the relevant financial year. According to prevalent laws, the tax return for assessee having no international transactions with Associated Enterprises, whose accounts are required to be audited under the act or under any other law for the time being in force and is due for filing on or before 31 October 2022 for the year ended on 31 March 2022. 5.6. The Applicant states that they have entered into an agreement with BWSSB for rendering services for assistance in filing corporate tax returns ( ROI ) of BWSSB for the period 2022-23. A copy of the agreement is attached herewith as Annexure 1. The scope of work of the Applicant under the agreement has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry or Local Authority or a Governmental Authority c. It must be an activity in relation to any function entrusted to a:- (i) Panchayat under Article 243G of the Constitution; or (ii) Municipality under Article 243W of the Constitution First condition 6.4. Regarding the first condition, the Applicant would like to submit that Pure Services have not been defined under the GST Laws. In general parlance, an activity which does not involve goods can be termed as a pure service. The abovementioned exemption also specifically excludes works contract service or other composite supplies involving supply of any goods. 6.5. In the instant case, the Applicant is engaged in providing assistance in filing of corporate tax returns which are not linked to any supply of goods whatsoever and qualify as pure services. 6.6. Further, in the FAQs issued by the Goods and Service Tax Council on Sectoral series on Government Services, it was clarified as follows: Question 25: What is the scope of pure services mentioned in the exemption notification No. 12/2017-Central Tax (Rate), dated 28.06.2017? Answer : In the context of the language used in the notification, supply of services without involving any su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity . 6.12. Accordingly, the second condition provided under Entry 3 of Notification no. 12/2017-Central Tax (Rate) dated 28 June 2017, as amended from time to time, is also being fulfilled. Third condition 6.13. Regarding the third condition, the services must be an activity related to any function entrusted to a municipality under Article 243W of the Constitution. It is submitted that the Income Tax Act, 1961, makes it mandatory for BWSSB to file its corporate tax returns. Hence, the professional service of assistance in filing of corporate tax returns is a mandatory activity to ensure smooth operations of BWSSB in carrying out its functions entrusted under Article 243W the Constitution. Hence, it is submitted that the third condition is also being fulfilled. 6.14. Given that all the conditions are being fulfilled, the Applicant is of the view that the services being provided by it to BWSSB are eligible for exemption under Entry 3 of Notification no. 12/2017-Central Tax (Rate) dated 28 June 2017, as amended from time to time. Accordingly, the Applicant should raise Bill of Supply for its exempt services. 6.15. Therefore, professional services rendered for assistance in filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n supply of services as per the entry mentioned supra, two conditions should be satisfied:- 1. Pure Services (excluding works contract service or other composite supplies involving any goods) provided to the Central Government, State Government or Union territory or local authority. 2. 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. 11. Now we examine them one by one. The Applicant states that he is providing professional services in relation to corporate tax return filing to BWSSB. BWSSB is neither the Central Government nor the Union Territory. Now we need to examine whether BWSSB is a State Government or Local Authority. BWSSB is a Board set up by The Bangalore Water Supply and Sewerage Act 1964, hence, the same cannot be considered as State Government. Now let us examine whether BWSSB is a Local Authority or not. Subsection 69 of section 2 of CGST Act 2017 defines Local Authority as below:- Section 2. Definitions.- In this Act, unless the context otherwise requires,- .......................... ..................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration for a larger urban area, in accordance with the provisions of this Part: Provided that a Municipality under this clause may not be constituted in such urban area or part thereof as the Governor may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an industrial establishment in that area and such other factors as he may deem fit, by public notification, specify to be an industrial township. As per Clause (e) of Article 243 and Article 243Q of Indian Constitution, we can say that Municipality is an institution of self-government at transitional area, smaller and larger urban areas. 11.3 From the definitions of Panchayat and Municipalities we can see that both are institutions of self-government in defined areas. Self-Government is the management of local affairs by local Authorities, members of which have been elected by the local people. One of the distinctive attributes and characteristics of Local Authority is that their members are elected through direct elections by the inhabitants of the defined area. But as per section 3 of BWSSB Act 1964, all the members of BWSSB are appointed by the State Government. 11.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Public distribution system. 29. Maintenance of community assets. 12.1 243W. Powers, authority and responsibilities of Municipalities, etc Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow,- (a) the Municipalities 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; There are 18 items in the twelfth schedule of the Constitution which are as below:- 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 servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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