2019 (12) TMI 1455 - AAR - GST

Exemption from GST - telecommunication service to GHMC- Hyderabad Telangana - GST amounts are being remitted by the applicant to Government as per the notifications issued from time to time - exemption as per entry No. 3 of CGST Notification No. 12/2017-(R) dated 28th Jun 2017 opining that the telephone services are being used for performing functions under article 243W of Constitution - HELD THAT - In terms of Sec. 2(69) of the CGST Act the recipient of the service i.e. GHMC falls within the definition of local authority and hence the services provided by the applicant are said to have been rendered to the local authority. The applicant have not produced any evidence by way of contract/agreement/other document during written/oral submissions suggesting that the services provided by them do not involve any supply of goods. In the absence of the same it cannot be held that the services provided by the applicant are Pure Services . In order to be eligible for exemption under entry No. 3 of the Not. No. 12/2017- CT (R) the service must be by way of any activity in relation to any of the aforesaid functions. It appears that the telephone services are basically used by the personnel of the GHMC in their offices and provision of the said services has no relation whatsoever to the above mentioned functions. Reliance can be placed in the case of Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT wherein it was held that exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification . - Applying the ratio of the above judgements to the present case it can be concluded that telephone services provided by the applicant cannot be regarded as pure services and these cannot be held as the activities in relation to any of the functions entrusted under Article 243W of the Constitution on the strength of the words in relation to . In their application enclosures also the applicant has not adduced/provided any substantiation to show establish the category. The services provided by the applicant are not eligible for exemption as provided for under entry No. 3 of the Not. No. 12/2017-CT(R) dated 28.06.2017(as amended) - Since the services provided by the applicant are taxable services the tax invoices issued by the applicant should indicate the amount of tax which shall form part of the price at which such supply is made as required under Sec. 33 of the CGST Act 2017.

Summary

Issues involved:
1. Whether the supply of telephone service to Greater Hyderabad Municipal Corporation (GHMC) is exempted?
2. Whether telephone invoices are to be issued with/without GST?

Analysis:
1. The applicant sought an Advance Ruling on whether the supply of telephone service to GHMC is exempted from GST. GHMC argued for exemption under CGST Notification No. 12/2017, claiming the services are used for functions under Article 243W of the Constitution. The Authority analyzed the relevant provisions and definitions. It was established that the services provided were not "pure services" as defined in the notification, as there was no evidence to show that the services did not involve any supply of goods. Additionally, the services were not directly related to the functions listed under Article 243W of the Constitution. The Authority referred to legal interpretations emphasizing the need for a direct or proximate relation to the subject matter for exemption eligibility. Consequently, the services provided were held not eligible for exemption under the notification.

2. Regarding the issuance of tax invoices for the taxable services provided, the Authority ruled that tax invoices must be issued indicating the amount of tax, as mandated under Section 33 of the CGST Act, 2017. The ruling clarified that the tax amount should be included in the price of the service. Therefore, the applicant was directed to issue tax invoices reflecting the applicable tax amount. The rulings were issued based on the detailed analysis of the legal provisions, definitions, and interpretations presented during the proceedings. The decision was made after thorough consideration of the facts, submissions, and applicable laws, ensuring compliance with the GST regulations.