TMI Blog2019 (10) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... C is a pure service - Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. Sl No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant s supply to HMC is a function mentioned under Sl No. 6 of the Twelfth Schedule - Applicant s service to HMC, therefore, is exempt under Sl No. 3 of the Exemption Notification. The TDS Notifications bring into force section 51 of the GST Act, specifying the persons under section 51(1)(d) of the Act and have mandated and laid down the mechanism for deduction of TDS. These notifications, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 1.1 The Applicant is stated to be providing conservancy/solid waste management service to the Conservancy Department of the Howrah Municipal Corporation (hereinafter the HMC). The HMC, however, is deducting TDS while paying consideration for the above supply in terms of Notification No. 50/2018 - Central Tax dated 13/09/2018 (corresponding State Notification No. 1344 - FT dated 13/09/2018) and State Government Order No. 6284 - F(Y) dated 28/09/2018 (hereinafter collectively referred to as TDS Notifications). The Applicant seeks a ruling on whether the above supply is exempted in terms of Sl No. 3 or 3A of Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Sl No. 3 of the Exemption Notification applies to his supplies. 3. Observations and findings of the Bench 3.1 In its Circular No. 51/25/2018-GST dated 31/07/2018 the Central Government clarifies that the service tax exemption at serial No. 25(a) of Notification No. 25/2012 dated 20/06/2012 (hereinafter the ST Notification) has been substantially , although not in the same form, continued under GST vide Sl No. 3 and 3A of the Exemption Notification. Sl No. 25(a) of the ST notification under the service tax exempts services provided to the Government, a local authority or a governmental authority by way of water supply, public health, sanitation, conservancy, solid waste management or slum improvement and up-gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Sl No. 3 or 3A of the Exemption Notification should, therefore, be examined from three aspects: (1) whether the supply being made is pure service or a composite supply, where supply of goods does not exceed more than 25% of the value of the supply, (2) whether the recipient is government, local authority, governmental authority or a government entity, and (3) whether the supply is being made in relation to any function entrusted to a panchayat or a municipality under the Constitution, as clarified in the above paragraphs. 3.4 The recipient is a municipal corporation, which is a local authority as defined under section 2(69) of the GST Act. 3.5 In the Work Orders issued to the Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant s supply under section 51 of the GST Act. Section 51 (1) of the Act provides that the Government may mandate inter alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both. As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply. Based on the above discussion, we rule as under, RULING The Applicant s supply to the Howrah Municipal Corporation, as described in para 3.5, is exempt from the payment of GST under Sl. No. 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017), as amended fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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