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TMI Blog2024 (8) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... ces provided after 01.01.2022 - appointment of MJP as an agency to implement water supply schemes amounts to delegation of sovereign function enumerated in Sch. XI XII within the framework of Constitution of India so as to hold that MJP has performed the function entrusted under Article 243G 243W of the Constitution of India. What is the rate of tax in respect of work allotted by Maharashtra Jeevan Pradhikaran ( MJP ) as a part of Jal Jeevan Mission which is a mission of Government of India allotted, performed invoiced before 01.01.2022? - HELD THAT:- Nil, being exempted under Entry at Sr No. 3 of the Notification No. 12/2017-Central tax (Rate)- dated 28th June 2017. What is the rate of tax in respect of work allotted by Maharashtra Jeevan Pradhikaran (MJP) as a part of Jal Jeevan Mission which is a mission of Government of India which is performed invoiced after 01.01.2022 but which is allotted before 01.01.2022? - HELD THAT:- The services supplied by the applicant are in nature of Technical Consultancy for Project Development and Management support services, and hence classifiable under SAC code-998399- Other professional, technical and business services n.e.c., under the head Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the revenue. Since, the words government authority or entity have been removed, tax is undisputedly attracted. There are no hesitation in holding the Technical Consultancy for Project Development and Management support services , provided by the applicant to the MJP for its Water supply schemes where time of supply is on or after 01-01-2022, are not covered by the entry at Sr No. 3 of the Notification No 12/2017-Central Tax (Rate), dated 28th June 2017. As the words or a Government Authority or a Government Entity , are omitted from the aforesaid Entry at Sr, No, 3. - SHRI. AJAY KUMAR V. BONDE AND MS. PRIYA JADHAV, MEMBER PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act,2017 and the Maharashtra Goods and Services Tax Act, 2017) QUESTIONS RAISED BY THE APPLICANT in application filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively]by M/s. FORTRESS INFRACON LIMITED AND YASH INNOVATIVE SOLUTIONS LLP (JV) the applicant, seeking an advance ruling in respect of the following questions. 1. What is the rate of tax in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment, Villages, towns and cities require regular supply of water and proper facilities of sewage used water disposal. The Constitution in its XI XIIth Schedule has enumerated the duties to be performed by the State Govt the Panchayat Raj Institutions under article 243G 243W respectively. For that purpose, the said Government institutions initiate appropriate water supply schemes, drainage schemes etc. The implementation of the above schemes requires meticulous engineering, planning designing. Due to lack of manpower expertise the said activity is outsourced to outside agencies by the respective Govt. The applicant is engaged in this activity of designing, planning, supervising the implementation of such schemes within the framework of rules procedures laid down by the Government. The activity of the applicant is in the nature of pure services. 1.3 Hitherto, the above activities have undisputedly been held to be exempted from tax by virtue of notifications issued under the CGST/MGST Acts. Even under the existing laws (Finance Act, 1994) the above activities were exempted. The applicable notifications under GST are reproduced as a matter of convenience. 1.4 On 18th November 2021 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid for by the sovereign, they are and always have been, exempted from payment of tax. In the erstwhile Service Tax Regime, under the mega exemption notification 25/2012 services related to sanitation water supply were exempted as: 25. Services provided to Government, a local authority or a governmental authority by way of (a) water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or (b) repair or maintenance of [a vessel]; Even after the coming of GST Act, the exemption continued by virtue of notification 12/2017-CT (Rate) as:- 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 2.1.1 There have been quite a few judicial pronouncements mandating that sovereign functions are exempt from taxation. The same are quoted as a matter of illustration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment /or the Panchayat Raj Institution which form the third tier of Government after the 1991 Constitutional Amendment. It would be seen that in Maharashtra the Jal Jeevan Mission is managed at a policy level by the State Government the execution part is delegated to MJP. The Operational Guidelines issued by the Government of India lay down that all the payments made in respect of Jal Jeevan Mission shall be made through reflected in the Public Finance Management System. Thus, it would be seen that even after appointment of MJP as an implementing agency the payments are fully wholly controlled by the Government therefore the payments must be held to have been made by the Government, because they come from budgetary grant their payment is controlled by the Government through PFMS by appointing appropriate officers to disburse it. 2.2.2. The Applicant says submits that supply of water construction of water supply schemes is a constitutional duty of the respective Government under Article 2436/243W of the Constitution of India. The schemes impugned herein, wherein the Applicant has rendered pure services are fully financed by the Central Government or the State Government. The Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2 (93) of the GST Act defines the term recipient of service .- (93) recipient of supply of goods or services or both, means- (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; . It is important to note that since the impugned schemes on which the applicant works are constitutional responsibilities of Government, it is the Government who is liable to pay the consideration to the applicant. In fact, in the impugned arrangement, the services are paid through grants, the respective Governments become service receivers in view of the above definition. 2.3.1. Even otherwise, it is a fundamental principle of law that in situations where any transaction or activity is conducted through an agent, the agent works for and on behalf of, the principal. In the present case, the water supply sewage disposal schemes are constitutional responsibilities of the State Governments the Panchayat Raj Institutions under Article 243G 243W respectively. The above functions are managed by the Central Government as a mission. In such circumstances, it must beheld that the Central Government along with the State Governments / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would mean that the State Government has abdicated its function of water supply, irrigation, canaling etc.to the Maharashtra Jeevan Pradhikaran which would be entirely unlawful contrary to the constitutional prescriptions and procedure. 2.4.1. Any law enacted in India has to be interpreted construed in harmony with the provisions of the Constitution or otherwise it falls prey to the vice of unconstitutionality. If as per the Constitution a given activity is the function/duty or responsibility of State/Central Government or local Government, then, despite the fact that apparently a body corporate owned by Government is entrusted with the function, the activities of the said body corporate have to be construed as an agent of the respective Government. For all the above reasons ,the applicant prays that it beheld that despite the deletion of words Government Authority/Entity from notification no 12/2017 with effect from 01-01-2022,the activity performed rendered by the applicant in respect of Jal Jeevan Mission remain to be rendered to the respective Government who has financed the above activity through their budget allocations as a part of their Constitutional function. 2.5. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay that where funds are allocated by Central/State Government in matters related to Article 243G/243W, the notification contemplates exemption. 2.6.4. Coming back to MJP, MJP itself has very little source of revenue, the little revenue that it generates is on account of water user charges as per Section 35/36 of MJP Act. The above sum is totally insufficient to fund any water supply scheme therefore as a general rule, all the MJP schemes are funded by Central/State Government or through loans that are guaranteed by the State Government as per Section 33 of the MJP Act. 2.6.5. The notification speaks of supply of pure services to Central/State Government/Local Authority/Government entity/Authority. The concept of supply envisages a provider providing service a service receiver to whom the service is provided. The question that is raised is who shall be the service receiver in case the money is provided through Budgetary support as a part of Government Scheme. In case of a Centrally sponsored scheme where the payment is through budgetary support, the payment is authorized through a money bill that becomes a Finance Act upon passage, duly passed in the Parliament/Assembly having the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceive the payments through the above nodal account under the head of support services which are capped at 5%of total expenditure sanctioned. 2.6.8. Website of PFMS specifies that the PFMS is the codification of Government of India Receipt Payment Rules which are framed under article 283 of the Indian Constitution. 2.6.9. The payment received by the applicants is reflected in PFMS in their bank statements as received from State Water Sanitation Mission (SWSM), therefore though the payment is received in consequence of empanelment by MJP, it is not the person making the payment. The payment advice, too, reflects the name of SWSM. 2.6.10. What should be the implication of para 5.5 of the empanelment contract. It may be noted that the empanelment contract is Standard form contract. MJP as a body corporate having perpetual existence has devised a standard form contract. JIM has been formulated in 2019 with limited time span of 5 years. It is a scheme which contemplates 100% Government funding, as against other schemes where contributions from other stakeholders are involved similarly the present application is not intended in respect of schemes implemented through Commercial Borrowings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay in terms of the provisions of their respective Finance Acts. 2.7.3. It was also submitted along with evidences that the actual payments are made by the Water supply department the payments are received from State Water Sanitation Mission (SWSM). During the course of above submission, your honour s expressed an opinion that there is a difference between person liable to pay the person who makes the payment. The applicant s representative was confronted with a question as to why was State Government/ SWSM making the payment. The undersigned representative was unable to reply extempore. Upon further deliberation the applicants submit that water supply, as submitted earlier, is a sovereign function duty of Government. It is submitted that the present Jal Jeevan Mission which is impugned in the present application has been devised in consequence of the above duty of the respective Governments payments under Jal Jeevan Mission are made in consequence Of the Constitutional/ Legal duty of the sovereign Governments to supply water. It is in this context that the applicants submit that the State/ Central Government are making the payments being Constitutionally legally liable to make p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of Section 2 (93) of GST Act. Alternatively, it is submitted that the supplies be held to be to Central/ State Government because they being legally liable have made the payments through budget appropriations having the force of law. Alternatively, it be held that the supplies to MJP are to Government, since MIP is acting as an agent of Government so far as water supply schemes involving Jal Jeevan Mission are concerned therefore in each of the above scenarios the supplies would continue to enjoy exemption despite the amendment deleting the words Government Authority/ Entity from notification 12/2017 entry 3 w.e.f. 01-01-22. Lastly, if your Honour are not inclined to accept the above propositions it be held that supplies till 31-12-21 are exempted within the meaning of notification no 12/ 2017 entry g as amended w.e.f. 01-01-22 being to MJP which is a Government Authority/ Entity supplies after 01-01-22 are taxable @18%. 3. CONTENTION -AS PER THE CONCERNED OFFICER: 3.1. Before adverting to the Arguments in reply, the facts of the case are briefly canvassed by the Revenue: - a. The Applicant is an engineering consultant, it, among others, is providing engineering consultancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judice to the aforesaid submission, although the applicant claims that MJP is working as an agent of the Centra/State Government for the execution of the Jal Jeevan Scheme, it is MJP not the Government that has issued the tender, empanelled the applicant, allotted work to the applicant. Section 188 of the Indian Contract Act delineates the scope of an agent s authority: - 188. Extent of agent s authority. An agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order to do such act. An agent having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business. Thus, the extent of agency is limited to carrying out the means or a mode of doing an act not to decide the very act itself. Actions of MJP in fixing the technical qualifications necessary for being eligible in the tender process, to enter into an agreement with applicant confirming his empanelment eligibility, to enter into contractual negotiations for fixing consideration are much too broad decisive to be narrowly circumscribed by the trappings of an agency. It is trite law that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport. ii Carrying out detailed survey. preparing proposal for getting requisite. iii. Providing services for preparation of Tender Documents and Bid Process Management including preparing proposal for getting requisite permissions from various concern competent authority. iv. Functioning as Project Management Consultant Technical Auditor. v Supervision and Monitoring of Operation and Maintenance (O M) and asset management for a period of maximum one year. (Emphasis supplied) (c.) Para 3- The MJP hereby agrees to pay the Consultant in consideration of the performance of the Services such amounts as may become payable under the provisions of the agreement at the times and in the manner prescribed in the Consultancy Agreement. (Emphasis supplied) 4. In consideration of the payments to be made by the MJP to the Consultant as hereinafter mentioned in Clause 4 of the Consultancy Agreement, the consultant hereby agrees with the MJP to perform the Services of Project Development Management Support as CLASS I Consultant for Konkan Region in conformity with the provision of the Agreement. (Emphasis supplied). Para no. 1 of the agreement the MJP desires that certain services should be perfor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed) 5.1.6. The applicant has submitted copy of invoice issued to the MJP vide bill no YISFT/A bad/900mm/part-3/AC.23-24/2023/4 dated 14-09-2023 in name of Executive Engineer Maharashtra Jeevan Pradhikaran, Division-Aurangabad, Description of services is on submission and approval of monthly progress report and office administration services for water supplies scheme . Total value of the invoice amount is Rs. 31,32,829/- No GST is shown separately. GST implication mentioned on bill- Services provided against this invoice are exempted in GST under article 243W of function entrusted to municipality twelfth schedule point no. 12/2017. 5.1.7. The applicant has submitted payment receipt Advice with its application . The payment receipt advise is actually PFMS generated DSC transaction payment advice report . Agency name stated in the advice is Jala Jeevan mission Maharashtra, Escrow account - (MHND 00010898) debit Bank HDFC BANK LTD, approval date in PE-MS is 31st Oct 2023 amount Rs. Beneficiary name FORTRESS INFRACON LIMITED AND YASH INNOVATIVE SOLUTIONS LLP (JV). 5.2 The applicant has raised multiple questions, which need findings, discussion decision on following issues: 5.2.1 What is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SAC code -998399- Other professional, technical and business services n.e.c., under the head Business and Production Services, covered at Sr No 21 in the Notification No 11/2017-CentraI Tax (Rate)- dated 28th June 2017 and are taxable at rate of 18% (9% CGST SGST each), wherever exemption is not applicable. 5.3.2 Submission of the Jurisdictional Officer is as under - The Applicant is an engineering consultant, it, among others, is providing engineering consultancy services to Maharashtra Jeevan Pradhikaran ( MJP ) a governmental corporation for the execution of Jal Jeevan Mission Scheme. The Applicant, up until, 1.1.2022 was claiming exemption from payment of GST under Sr. No. 3 of notification 12/2017-GST as is providing pure services to a government authority for a purpose covered under 243 G/W of the Indian Constitution. 5.3.3 Findings, observations and decision The services supplied by the applicant are in nature of Technical Consultancy for Project Development and Management support services, and hence classifiable under SAC code-998399- Other professional, technical and business services n.e.c., under the head Business and Production Services covered at Sr No 21 (ii) in the N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment or local Government, then, despite the fact that apparently a body corporate owned by Government is entrusted with the function, the activities of the said body corporate have to be construed as an agent of the respective Government. For all the above reasons. the applicant prays that it be held that despite the deletion Of words Government Authority/ Entity from notification no 12/2017 with effect from 01-01-2022, the activity performed rendered by the applicant in respect of Jal Jeevan Mission remain to be rendered to the respective Government who has financed the above activity through their budget allocations as a part of their Constitutional function. 5.4.2 Submission of the Jurisdictional Officer is as under - The Officer stated that it is trite law that the words of a notification have to be strictly construed any ambiguity has to be construed in favour of the revenue. Since, the words government authority or entity have been removed, tax is undisputedly attracted. 5.4.3 Findings, observation and decision - Being creature of GST Law this Authority cannot comment on the submission that setting up MJP is entirely unlawful and contrary to the constitutional prescription ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stered office at 4th Floor, Express Towers, Ramnath Goenka Marg, Nariman Point, Mumbai Maharashtra 400021. (Hereinafter called the MJP which expression shall means and includes its successor or succession and permitted assigns) of the one part. 3 The MJP hereby agrees to pay the Consultant in consideration of the performance of the Services such amounts as may become payable under the provisions of the agreement at the times and in the manner prescribed in the Consultancy Agreement. 4 In consideration of the payments to be made by the MIP to the Consultant as hereinafter mentioned in Clause 4 of the Consultancy Agreement, the consultant hereby agrees with the MJP to perform the Services of Project Development Management Support as CLASS Consultant for Pune Region in conformity with the provision of the Agreement. (Emphasis supplied). c. Provisions of GST Act- As per section 60 of The MJA Act, 1976, State Government has control over the MJP . Under GST Act- MJP and the State Government are related persons and not agents and principal. And supply by them to each other is treated as deemed supply. Under GST such agent Principal relation does not exist between MJP State Government. Ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is under no obligation to give these grants to any State; the Centre may give such a grant to one State and not to another, and the matter lies solely within the Centre s discretion. The use of the word may in Art. 282 signifies the discretionary nature of these pants. Unlike the fiscal need grants under Art. 275, these grants lie outside the purview of the Finance Commission. The technique for grants under Art. 282 is used for a number of purposes. There are programmes which fall within the State sphere for purposes of legislation and administration, but interested in their implementation. Therefore, in our view Scheme of Jal Jeevan Mission Funding is not a matter of Right for State or the implementing agency, and by no stretch of imagination, it can create right for benefit of vendors and suppliers of implementing Agencies., as claimed by the Applicant. e. Provisions of Article 282 of the Constitution of India- 283. Custody, etc. of Consolidated Funds, Contingency Funds and moneys credited to the public accounts: - (I) The custody of the Consolidated Fund of India and the Contingency Fund of India, the payment of moneys into such Funds. the withdrawal of moneys therefrom, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 2 (93) of the GST Act, 2017 and, they shall be treated to be recipient of service. Therefore, any service provided to MJP under Jal Jeevan Mission whether before 01-01-2022 or after is in fact service provided to the Central Government and State Government 50% respectively, and exempted from tax as per exemption Entry No. 3 even after deletion of word Government Authority from the said entry, a. Submission of the Jurisdictional Officer is as under - The Officer stated that it is trite law that the words of a notification have to be strictly construed any ambiguity has to be construed in favour of the revenue. Since, the words government authority or entity have been removed, tax is undisputedly attracted. 5.4.6 Findings, observations and decision - The applicant did not produce any evidence in support of his argument, He did not show any part in Budget Speech or Finance Bill or Finance Act, where such liability to pay the amount to various suppliers or vendors of the implementing agencies for such Constitutional work for which grants are earmarked. We have gone through the Interim Budget-2024 Speech of Hon ble Finance Minister, Government of India, in Para 5 - Inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... health and on the other hand, the State of Punjab is unable to even release grant-in aid to the aided schools situated in its own State because of which the teachers of this State are not able to get salaries for several months as alleged by the petitioner; whether the amount is sanctioned only because the respondent No,4 is the alumni of the said school and was invited to the valedictory function of 165th Foundation Celebration of the said School? 22. All these issues need to be debated by the Legislature and are to be left to its wisdom, adhering to the principles of separation of powers, Giving respect to the doctrine of separation of powers and realizing that judicial scrutiny of such expenditures is not permissible and leaving the matter to the Legislative wing of the State, we are left with no option but to dismiss the writ petition. In view of lack of evidence in support of arguments by the applicant, the above Findings, discussion and provisions of Article 282 Article 283 as explained by Hon ble High Courts, we hold that the Supplies made by the Applicant to the MJP, are in fact supplies to the MJP itself and even by any stretch of imagination it can be treated as supply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through pipeline, It is further submitted that as per government resolution, 50% share of the expenditure incurred for the scheme is going to be is borne and shared by the central government and the remaining 50% by the state government. Hence it is submitted that both these Governments are liable to pay the applicant the consideration for services supplied by it to MJP the Governments are recipient of supplies as per proviso ns of section 2 (93) the GST act. Therefore any service provided to MJP under Jal Jivan Mission whether before 01-01-2022 or after is in fact service provided to the Central Government and State Government 50% respectively, and exempted from tax as per exemption Entry No. 3 even after deletion of word Government Authority from the said entry. Section 2 (93) of GST Act is as under, (93) recipient of supply of goods or services or both. means- (a) where a consideration is payable for the supply of goods or services or both. the person who is liable to pay that consideration; (b) .. (c) . and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly such portion of a monthly statement that is not satisfactorily supported may be withheld from payment. From the terms of tender documents and Contract signed by the applicant; no term provides that The State Government of Maharashtra is liable for payment to the applicant. The applicant did not produce any document is support of his contention that Government of Maharashtra is liable for payment to the applicant. (b) Secondly- Scope of supply under section 7 of the GST Act is as under, Section 7. Scope of supply. (1) For the purposes of this Act, the expression - supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; The provision makes it very clear that supply has underlying contract between two persons to supply goods or services for consideration. In case of applicants case, it is service provider and other party of contract liable to pay consideration for the supply of service is the MJP. Hence question of third party becoming liable to pay consideration does not arise, either under GS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Govt is a time bound programme. A strong four-tier organizational structure has been created to achieve the objectives within the prescribed time frame. It is the State Water and Sanitation Mission (SWSM) at the level of National Jal Jeevan Mission (NJJM) at the second level. District Water and Sanitation Mission (DWSM) Bar Rural Water Supply and Sanitation Committee (VWSC). Para- 6.1- State Water and Sanitation Mission (SWSM)- 6.1.1- For implementation of Water supply and sanitation programs through this Department, State Water and Sanitation Mison is registered on 10-02-2010 under the Society Registration Act. 1860, under the Chairmanship of the Chief Secretary of Government of Maharashtra . The State Water and Sanitation Mission has full responsibility and authority for the planning, implementation and control of Jeevun Mission and sanitation programs in the state. The State Water and Sanitation Mission has full powers to function as per the guidelines of the Jal Jeevan Mission. The State Water and Sanitation Mission (SWSM) is being empowered to act as the implementing mechanism for Jal Jeevan Mission as per the guidelines of the Central Government Para- 8 Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh PFMS, proves that both the Central Governments have paid to applicant for the services supplied by them, hence are services provided to the Governments and not MJP. As per operational guidelines of Jal Jeevan mission by ministry of Jal Shakti. The applicant has received the payment through Public Financial Management System PFMS rules that the central government and state government have directly paid the consideration to the applicant for the services rendered by him and as both these governments are liable to make payment to the applicant. In view of provisions of sub-section (93) of section 2, the supplies may of the services made by the applicant treated as supplies made to the central government and state government for their respective share. 5.4.16 Submission of the Jurisdictional Officer is as under - The Officer stated that it is trite law that the words of a notification have to be strictly construed any ambiguity has to be construed in favour of the revenue. Since, the words government authority or entity have been removed, tax is undisputedly attracted. 5.4.17 Findings, observations and decision - a. For decision on this issue exact nature Of Public Financial Manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . All the existing accounts for SBMG at District / Block / GP levels will be closed after transferring the unspent balance of those accounts to the State nodal account. The details of the SSBMG nodal bank account have to be communicated to DDWS along with the name of the bank. IFSC Code and Account Number. etc. and should not be changed during the implementation of the project without prior permission of the DDWS. The States/UTs may use the existing account at their SSBMG level as nodal account. The funds release / advance / transfer / expenditure under the programme at all levels shall be mandatory through the Public Financial Management System (PFMS) of Government of India. All the implementing agencies and below level agencies in the States / UTS will be registered in PFMS as parent-child agency and shall be mapped with Linked State scheme code for SBMG and to the State nodal account - it is also to be ensured that all the transactions shall be mandatorily made in PFMS. Utilization of funds and unspent balance will be monitored through the PFMS for the purpose of release of funds to the States / UTs. b. The procedure of Billing Payment needs to be understood to decide the issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment authorities, various implementing agencies/ institutes which government schemes, Each such implementing agency has its own bank account one or many depending upon scheme etc. Government grants are transferred to such implementing agencies accounts, only when any bill is processed by the implementing agency. This the grants never flow from Government account to beneficiary accounts directly, but through implementing agencies. This it is far fetched argument that money received through PFMS is money paid by Government. 5.4.18 Findings, discussion Decision- The argument of the applicant that services provided to MJP for the Constitutional function of State Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies are in fact made to the Central State Government. Hence, even after deletion of the word Government Authorities with effect from 01-01-2022, from the notification entry number 3, the services provided by the applicant shall be eligible for benefit of exemption services provided by it to MJP, is not based on evidence, far-fetched and based on conjectures and surmises and very specio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution; 5.5.2 Submission of the Applicant- In this regard also, the applicant has argued that Supply of Services by it, to the MJP for Jal Jeevan Mission, are in fact supplies to the Central Government, State Government for the aforesaid reasons. These arguments are found to be is not based on evidence, far-fetched and based on conjectures and surmises and very specious argument and hence rejected and are in fact supplies made to the MJP. 5.5.3 whether the services provided by the applicant as aforesaid are pure services (excluding works contract service or other composite supplies involving supply of any goods)? a. Submission of Applicant- It is submitted that the aforesaid services are pure services. b. Submission of the Jurisdictional Officer is as under - It is submitted that the aforesaid services are pure services. C. FINDING OBSERVATIONS AND DISCUSSION - From the contract referred above, it is clear that the applicant has supplied only the Technical Consultancy for Project Development and Management support services , which are pure services. No transfer of goods in any form takes pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of exemption entry at Sr No 3, before the omission of the words from the entry by Notification No. 16/2021-Central Tax (Rate) dated 18-11-2021 (W.e.f. 01 January 2022). We are supported by earlier advance ruling in case of M/s Mekorot Development and Enterprises Limited, order dated 22 September 2021 in GST Ara application number 71 dated 29th November 2019, rendered by Maharashtra Authority of advanced ruling. 5.5.6 Final decision - Supply of services where Time of supply is on or before 31-12-2021. After Considering all the aforesaid facts, provisions of Law, issues and decision therein, we have no hesitation in holding the Technical Consultancy for Project Development and Management support services , provided by the applicant to the MJP for its Water supply schemes where time of supply is on or before 31-122021. are covered by the exemption entry at Sr No. 3 of the exemption notification No 12/2017-Central Tax (Rate), dated 28th June 2017. 5.6 Supply of services where Time of supply is on or after 01-01-2022. To decide applicability of the Exemption entry to the applicant for impugned period following issues need to be decided. 5.6.1 Submission of the Applicant- In this regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputedly attracted. 5.6.4 Findings, observation and decision - Deletion of words or a Government Authority or a Government Entity , from the entry at Sr No, 3 will result in making this entry not applicable of supply of pure services to the or a Government Authority or a Government Entity (a) This decision is supported by principle laid down by Hon ble Supreme court in case of New Okhla Industrial Development ... vs Chief Commissioner of Income Tax, in CIVIL APPEAL NOS. 792-793 OF 2014 decided on 2 July, 2018. where the issue of benefits of exemption available to Governmental Authorities vide Section 10 (20A), and effect of its deletion on the levy of Income Tax is decided. The appellant-New Okhla Industrial Development Authority has been constituted under Section 3 of the U.P. Industrial Area Development Act, 1976. Earlier on 14-02-2000, High Court held that it is covered by the exemption under Section 10 (20A) of l.T. Act, 1961. However, sub-section (20A) is now deleted wef 01-04-2003. In brief provisions are as under, Section 10 - In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (20). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word/expression of Municipality in clause (e) of Article 243P. Thus, the appellant is not clearly included in sub-clause Explanation. It is not even the case of the appellant that the appellant is covered by Section 10 (20) except clause (ii). 56. Thus. we are of the considered opinion that the appellant is not covered by the definition of local authority as contained in Explanation to Section 10 (20). 57. In view of what has been stated above, we dismiss these appeals. b. This decision is supported by principle laid down by Constitution Bench of Hon ble Supreme Court has in case of Commissioner of Central Excise, New Delhi Versus M/S Hari Chand Shri Gopal Others etc. etc. in CIVIL APPEAL NOS. 1878-1880 OF 2004 decided on November 18, 2010 , in para 22 has held as under, 22. A person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a part of Jal Jeevan Mission which is a mission of Government of India allotted, performed invoiced after 01.01.2022)? Answer . - Taxable at rate of 18% (at 9% under CGST SGST Act, each), being covered by Entry at Sr. No. 21 Heading 9983, (ii) of the Notification No. 11/2017-Central tax (Rate)- dated June 2017. Question 4: Who is the service receiver within the meaning of Sec. 2 (93) of CGST/MGST Act in respect of amounts received as grants by MIP which are paid to the applicant on services provided before 01.01.2022? Answer : - The Maharashtra Jeevan Authority [erstwhile the Maharashtra Jeevan Pradhikaran] Question 5: Who is the service receiver within the meaning of Sec. 2 (93) Of CGST/MGST Act in respect of amounts received as grants by MJP which are paid to the applicant on services provided after 01.01.2022? Answer: - The Maharashtra Jeevan Authority [erstwhile the Maharashtra Jeevan Pradhikaran] Question 6: Whether appointment of MJP as an agency to implement water supply schemes amounts to delegation of sovereign function enumerated in Sch. XI XII within the framework of Constitution of India so as to hold that MIP has performed the function entrusted under Article 243G 243 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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