TMI Blog2021 (1) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... se? HELD THAT:- looking to the terminology and words used in the said clauses of the contract / agreement, it is very difficult to conclude that it pertains purely to services only. In fact, on going through the same, we get the impression that this does not appear to be a supply of pure service only but also includes supply of goods along with supply of services. Further, as reported by the concerned officer and as per the GST portal, the applicant supplies Works Contract Service also besides supplying design and consultancy services and few other services and looking to the aforementioned facts, it appears that Works Contract Service may also be involved in the said contract. If a person provides only service to any person without involvement of supply of goods along with supply of services, then the same would be termed as supply of pure service - the Financial offer as per the contract/agreement includes the GST amount and that GST is to be paid to the Government as per the terms and conditions of the Contract/Agreement. This, itself, proves that the applicant is not eligible for the benefit of the provisions of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Design, Interior Design, Surveying, Environmental Sciences, Project Management and Project Economics. The applicant has stated that they support a diverse range of public and private sector projects at every stage, from the conceptualization and financial feasibility study to project completion and beyond and that they provide services for projects in India and internationally in Buildings, Industry, Infrastructure and Social Sectors such as Residential, Mixed-Use, Retail, Pharmaceuticals, Healthcare, Educational and Civic projects. 2. The applicant has submitted that their services are covered by SAC Code 99832-Architectural services, urban and land planning and landscape architectural services liable to tax at 18% (9% SGST + 9% CGST); that presently they have received work orders from various local authorities like the Surat Municipal Corporation, Ahmedabad Urban Development Authority, Pune Municipal Corporation, State Government of Maharashtra (through Executive Engineer, Public Works Division, Pune), for Government projects namely Rajkot Smart City Development ltd. and from Government Entity namely Gujarat Technological University. The applicant has submitted the detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to GST at 18%, however when covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017, the said service is liable to tax at NIL rate. Entry No.21 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 reads as under: Sr.No. Chapter, Section, Heading, Group or Service Code ( Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 21 Heading 9983 (Other Professional, technical and business services) (i) Selling of space for advertisement in print media. 2.5 -- (ii) Other professional, technical and business services other than (i) above (and serial No.38 below). 9 --- Entry No.3 of Notification No.12/2017-Central Tax(Rate) appears as under: Sr.No. Chapter, Section, Heading, Group or Service Code (Tar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution. (zfa) Government Entity means an authority or a board or any other body including a society, trust, corporation, (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority. . Article 243W in the Constitution of India 1949 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 imple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax at Nil rate. 7. From the above background and other facts, the applicant wants to know the rate of tax on different services provided to different authorities and submitted the details as under: (1) The applicant s services to Surat Municipal Corporation is stated to be design consultancy for Providing Design and Comprehensive Consultancy Services (including but not limited to Conceptual design, Architectural services, Estimate, Specifications, Tender preparation, Civil Structural designs and all other engineering services like Electrical, HVAC etc., Sanitary system, Fire safety system, Communication system, LAN, Access control, Surveillance Security system, Power backup, Signage, Interiors and Landscaping of campus for all works)from concept to completion for State-of-Art High Rise Office Building for Surat Municipal Corporation at T.P.S.No.6 (Majura-Khatodara), F.P.No.235, Ring Road, Surat. The applicant has stated that they seek a ruling on rate of tax of pure services, which are rendered to municipality for work which is in the nature of administrative building and according to their understanding, it is not covered under any activity in relation to any function e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same: (1) Whether Design and Comprehensive Consultancy Services from concept to completion for State-of-Art High rise office building provided to Surat Municipal Corporation covered under Entry No.3 of Notification No.12/2017Central Tax(Rate) dated 28.06.2017. (2) Whether Consultancy Services for preparation of design and detailed estimation of town hall at Dehgam, provided to Ahmedabad Urban Development Authority covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. (3) Whether Medical and Design Consultancy Services for establishment of Medical College, Teaching Hospital and Nursing College at Pune, provided to Pune Municipal Corporation covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. (4) Whether work of Preparation of Master Plan of Green Field Areas and Project Management Consultancy Work for Development of Green Field Areas provided to Rajkot Smart City Development ltd. covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. (5) Whether Consultancy Services for Architectural and Engineering design/working drawing of Baramati Hospital provided to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government, State Government or Union Territory or Local Authority or a Governmental Authority or a Governmental Entity. 3. 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. (iii) Please note that, out of 6 projects, Three projects/contracts are with Local Authority in form of Municipality Surat Municipal Corporation, Ahmedabad Urban Development Authority and Pune Municipal Corporation. One with State Government of Maharashtra, through Executive Engineer, Public Works Division, Pune. One for Government projects namely, Rajkot Smart City Development ltd. One for Government projects namely, Gujarat Technological University. (iv) All projects have been examined with basic conditions of notification for considering them as exempt which are detailed hereunder: (a) Surat Municipal Corporation(Annexure B of Paper book-Pages17 to 97): Providing Design and Comprehensive Consultancy services from concept to completion for State of Art High rise office building for Surat Municipal Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity in relation to any function of the Municipality under Article 243W Yes (d) Rajkot Smart City Development ltd.(Annexure E of Paper Book-Page 157 to 303): Work of Preparation of Master Plan of Green Field Areas for the Development of Green Field Area-Rajkot Smart City at Rajkot; Project Management Consultancy Work of Master Plan of Green field Areas for the Development of Green Field Area-Rajkot Smart City at Rajkot. Sr.No. Conditions Yes/No Remarks 01. Pure Service Yes Covered at Sr.No.1and 8 of List. As per judgement of Zigma Global Environ Solutions pvt.ltd. Order dated 05.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 448 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH. 02. Provided to the Government Entity. Yes 03. Activity in relation to any function of the Municipality under Article 243W Yes (e) Executive En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Pure Services Yes Covered at Sr.No.13 of list. As per judgement of Consulting Engineers Group ltd. Order dated 13.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 350 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH . 2. Provided to Local Authority Yes 3. Activity in relation to any function of Municipality under Article 243W Yes 10. The applicant has submitted that they have provided consultancy work order of AUDA, which is on page 98 of paper book, for Preparation of Design and Detailed Estimation of Town Hall at Dehgam. , as work order is one pager, hon ble member has asked for further details to understand whether the same is covered as per list provided in twelfth schedule of constitution or not. The applicant have submitted that they have designed the project with below specifications: 1. Area Statement: i. Plot Area 4,526.4 Sqm ii. Built Up Area -8,092 Sqm iii. Parking Area: a) Basement 2,221 Sqm; b) Surface-107 Sqm 2. Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3: Work of Preparation of Master Plan of Green Field Areas for the Development of Green Field Area Rajkot Smart City at Rajkot;Project Management Consultancy Work Of Master Plan of Green Field Areas for the Development of Green Field Area Rajkot Smart City at Rajkot Sr.No. Conditions Yes/No Remarks 1. Pure Services Yes Covered at Sr.No.1 and 8 of list. As per judgement of Zigma Global Environ Solutions pvt.ltd. dated 05.05.2020 of Andhra Pradesh Advance Ruling Authority. 2. Provided to Local Authority Yes 3. Activity in relation to any function of Municipality under Article 243W Yes The applicant has submitted that they have given reference of Zigma Global Environment Solutions P Ltd advance ruling judgment in their additional submission. It is in context to Tirupati Smart city corporation limited, a special purpose vehicle (SPV)created by the Government of Andhra Pradesh vide G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, for the services rendered as stated in the application, they would like to refer to Sec 51(1) of the Act read with Notification no 50/2018 Central tax dtd: 13/09/2018, which reads as under: (a) an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function; (b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860); (c) public sector undertakings. Has to deduct tax at source on taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees. In the instant case, Rajkot Smart City Development Ltd., falls within the above notification as specified persons. As per the judgment, the Hon ble Advance Ruling Authority of West Bengal in the following cases has taken a similar view. 1. Singh Transport 2. Mahendra Roy 3. Time Tech Waste Solutions Private Limited 4. Indrajit Singh, carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocal authority, State/Central Government or any Government entity may be called Pure Services. In 12th Schedule of Article 243W, nothing is specified about the mentioned services in application, so the confusion may have arisen whether service is pure service or not. So as per this view, the applicant may be granted for Advance Ruling. (6) As per the GST portal, the applicant is providing different services such as Architects services, Consulting Engineer services, Interior Decorators/Designers services and Works Contract Services. (7) The applicant is providing services to Surat Municipal Corporation, Pune Municipal Corporation, Ahmedabad Urban Development Authority and Rajkot Municipal Corporation and from the information available it cannot be decided whether the service provided is pure service or not. DISCUSSION FINDINGS: 16. We have considered the submissions made by the applicant in their application for advance ruling, additional submissions made by them dated 05.08.2020 and 01.09.2020 as well as the arguments/discussions made by their representative Shri Priyam Shah, C.A. at the time of personal hearing. We have also considered the issues involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Other professional, technical and business services other than (i) above (and serial No.38 below). 9 --- 19. Thereafter, we are required to refer to Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended by Notification No.02/2018-Central Tax(Rate) dated 25.01.2018) referred to by the applicant which contains a list of exempted services. Entry No.3 of the said notification reads as under: Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 3. Chapter 99 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 or a Government entity by way of any activity in relation to any fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise. Let us take each one of them chronologically. 20. On going through the agreement dated 20.02.2019 entered into between Surat Municipal Corporation and the applicant, it is mentioned under the head Name of work that it pertains to Providing Design and Comprehensive Consultancy Services from concept to completion for State-of-Art High Rise Office Building for Surat Municipal Corporation at T.P.S.No.6 (MajuraKhatodara), F.P.No.235, Ring Road, Surat. However, there are certain clauses of the agreement which raise a question mark as to whether the above services supplied by the applicant are pure services or otherwise. The same are as under: (a) Para 1.5(Brief scope of work) in Tender Notice No: CE SP CELL/EO1/201617/01 (Request for Proposal) (Page-10)reads as under: SMC desires to make its new Main Office Buildings as State of the Art High Rise Building. The successful architect to be selected from among the short listed architects after limited tender (RFP) which shall also include price part, shall be responsible for providing Comprehensive Consultancy Services from Concept to Completion but not limited to Conceptual design, Architectural services, Estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, if there is any change in Rate of GST(Goods and Service Tax) by the Government, the same shall be reimbursed/recovered separately by SMC, subject to the submission of Original Receipt/Proof for the amounts actually remitted by the Successful bidder/Consultant to the Competent Authority along with a Certificate from Chartered Accountant of Contractor/Successful Bidder certifying that the amount of GST paid to the Government and the same shall be intimated/submitted/claimed within 30(Thirty) Days from the date of payment. Remittance of GST within stipulated period shall be the sole responsibility of the Successful Bidder /Consultant, failing which SMC may recover the amount due from any other payable dues with SMC and decision of Municipal Commissioner shall be final and binding on the Contractor/Successful Bidder in this regard. Further, the non-payment of GST to the Government may lead to the termination of the contract and forfeiture of Security Deposit/Performance Guarantee Amount. 20.1 From a plain reading of the clauses (a) above, which states about providing Comprehensive Consultancy Services and all other engineering services like Electrical, HVAC etc., Sanitary sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 20.2 The applicant has stated that the services provided by them to Ahmedabad Urban Development Authority, as a design consultant (Pure services) for various projects like (a)Preparation of design and detailed estimation of Town hall at Dehgam.(b) Preparation of Local Area Plan for Transit Oriented Zone(TOZ), can be covered by Entry No.3 of Notification No.12/2017 dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. On going through the letter dated 18.08.2017 issued by the Ahmedabad Urban Development Authority, subject of the letter reads as Preparation of design and Detailed Estimation of Town Hall at Dehgam falling under Auda whereas the reference portion reads as Empanelment of Consultant Urban Design and Architecture and Landscaping Design Service for AUDA area (Category-1 Urban Design Project)(Job No.47/2011-12). Further, the applicant has submitted that the Work Order of AUDA is a one pager. However, free English translation of second paragraph of the aforementioned letter(original letter is in Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Second last of Page 3 of the above agreement reads as under: The consultant who is experienced and has the required professional skills, personnel and technical resources for Planning and Designing of such Medical Establishment and has offered to provide Consultancy Services in accordance to the requirements, terms and conditions as mentioned hereunder. The Consultant has quoted a fee of (currently estimated Project cost as INR 622 Crores) + GST amounting to 13,41,90,000/-(In Words Rupees Thirteen Crore Forty one Lakhs Ninety Thousand only) + GST in response to the tender no.52 Year 2017-18 dated 20.11.2017 issued by the PMC. (2) Point (f) in Para 1.1(Medical Planning) under the head 1.Scope of Work in Page 4 of the agreement reads as under: Facilitate to prepare complete Architectural, Structural and services design and drawings, working details, schedules, specifications including Architectural design, Structural details, Electrical services, HVAC system, Sanitary and plumbing details, Medical gas system, BMS, CSSD, Kitchen and catering, Laundry System, CCTV Surveillance, Communication and networking plan, Fire detection, Fire-fighting systems, Solid waste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Lakhs Ninety Thousand only) + GST in response to the tender no.52 Year 2017-18 dated 20.11.2017 issued by the PMC, it can be seen that the contract/agreement includes the GST amount and that GST is to be paid to the Government as per the terms and conditions of the Contract/Agreement. This, itself, proves, that the applicant are not eligible for the benefit of exemption of GST by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 under which the rate of GST is NIL. In view of the above facts, we conclude that the aforementioned services supplied by the applicant to Pune Municipal Corporation are not Pure services. Since the applicant has failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 20.4 The applicant has stated that he has provided the services of design consultant (Pure services) for Preparation of MP and PMC of Green Field areas for the development of Rajkot Smart city at Rajkot under Smart City Mission (urban renewal and retrofitting program by GOI) rendered to Rajkot Smart City Development Limited. We have gone through the letter of accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood to reflect the terms and conditions used in the specification of prices in the detailed price schedules, including the taxes, duties and related levies which means that the contract amount will be including of all the taxes, duties and related levies which will also include GST. Clause(2) above, specifically states that the Contract Price Specified in Article 2(Contract Price and Terms of Payment) of the Contract Agreement is based on the taxes, duties, levies and charges prevailing at the date thirty(30) days prior to the date of proposal submission and if any tax rates are increased or decreased, a new Tax is introduced, an existing Tax is abolished, or any change in interpretation or application of any Tax occurs in the course of the performance of the Contract, an equitable adjustment to the Contract Price shall be made to fully take into account any such change by addition to or reduction from the Contract Price, as the case may be. From a plain reading of the above 2 clauses, it is crystal clear that the Contract Price in the above case is inclusive of all taxes which also includes GST and that as per the terms and conditions of the Contract/Agreement, GST is to be paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Point No.(iii) and (iv) under the Head (d)Detailed Design Stage under Scope of Services (in Annexure-1 of agreement-Page 17)reads as under: (a) Prepare complete Building Design, Structural and Services design and drawings, working details, schedules, specifications including Architectural, Facade Design, Structural details, Electrical details, HVAC system, Acoustic designs, sanitary and plumbing details, Medical gas system, BMS, CSSD, Kitchen system and catering, Housekeeping, Laundry System, HIS, HIMSS, Communication and network plan, call system, fire detection, Fire protection and fighting systems, water supply and sewerage details, Environment sustainability, Rain water harvesting, EIA and clearance, Solid waste water management(SWM), including (b) Bio-medical waste management, Detailed Furniture layout for all units and its specifications, Medical equipment layout plan and details, Electrical layout and details, integration of all systems and services, Specialist services like audiovideo, IT and Intelligent Management system, Operating workflows and systems, Pneumatic chute system, EPABX, Glazing, HR planning, Organization and Manpower plan, Traffic and packing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said contract. In view of the above facts, we conclude that the aforementioned services supplied by the applicant to Executive Engineer, Public Works(East) Division, Pune are not Pure services. Since the applicant has failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 20.6 The applicant has stated that the services supplied to Gujarat Technological University is for Architectural design/engineering design, working drawing, structural analysis and drawings, electrical drawings and details of all services for phase wise construction of building for proposed project. On going through the agreement dated 12.12.2019 made between Gujarat Technological University and the applicant, it is observed that the applicant is required to provide a complete and Comprehensive Consultancy service for Architectural design/engineering design, working drawing, structural analysis and drawings, electrical drawings and details for all services for phase wise construction of buildings for proposed project to Gujarat Technological University. On going through the terms and conditions of the aforemention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicant M/s. INI Design Studio pvt.ltd., Ahmedabad. Question-1: Whether Design and Comprehensive Consultancy Services from concept to completion for State-of-Art High rise office building provided to Surat Municipal Corporation covered under Entry No.3 of Notification No.12/2017Central Tax(Rate) dated 28.06.2017? Answer : Answered in the negative for the reasons discussed hereinabove. Question-2: Whether Consultancy Services for preparation of design and detailed estimation of town hall at Dehgam, provided to Ahmedabad Urban Development Authority covered under Entry No.3 of Notification No.12/2017Central Tax(Rate) dated 28.06.2017? Answer : Answered in the negative for the reasons discussed hereinabove. Question-3: Whether Medical and Design Consultancy Services for establishment of Medical College, Teaching Hospital and Nursing College at Pune, provided to Pune Municipal Corporation covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? Answer : Answered in the negative for the reasons discussed hereinabove. Question-4: Whether work of Preparation of Master Plan of Green Field Areas and Project ..... X X X X Extracts X X X X X X X X Extracts X X X X
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