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TMI Blog2021 (4) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 106. (hereinafter called the Applicant) are registered under GST with GSTIN 33AADFU9240M1ZV. They are engaged in Operation and Maintenance of High Quality Treated Drinking Water Plant. The applicant has sought Advance Ruling on:- Whether the Services provided by the applicant to the recipient i.e. The Greater Chennai Corporation is a pure service provided to the local authority by way of activity in relation to functions entrusted to a Panchayat under article 243G and Municipality under article 243W of the Constitution and eligible for benefit of exemption provided under Serial No. 3 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017? The Applicant has submitted the copy of application in Form GST ARA 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The Applicant has stated that they have entered into a contract with the Greater Chennai Corporation based on which they have been awarded with the project of Operation and Maintenance of High Quality Treated Drinking Water Plant for the "Amma Kudineer (Drinking Water Plant) Project". As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al public for consideration and hence the service provided by the applicant is a pure service. 2.3 The applicant has stated that in order to avail the benefit of the above mentioned exemption, they have to satisfy the following two conditions:- (1) The Service recipient should be Central Government or State Government or local authority or a Governmental authority or a Government Entity. (2) It should carry out any function entrusted to a Panchayat under article 243G of the Constitution or to a Municipality under article 243W of the Constitution In the Instant case, it could be seen from the contract that the service is provided to the Greater Chennai Corporation i.e Municipal Corporation of the city of Chennai. The Greater Chennai Corporation is established in India on the 29th September 1688 and it is wholly owned and under the control of the Tamil Nadu Government. As per Section 2 (69) of the CGST Act, 2017 the term local authority is defined as below,- (69) "local authority" means,- (a) a "Panchayat"...........; (b) a "Municipality" as defined in clause (e) of article 243P of the Constitution; or (g) a Regional Council................; Article 243P. Definitions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. TWELFTH SCHEDULE (Article 243W) 1. Urban planning including town planning. 2. ................... 5. Water supply for domestic, industrial and commercial purposes. .................................... 18. Regulation of slaughter houses and tanneries. As per entry no. 5 of the Twelfth schedule, the functions entrusted to the Municipality includes "Drinking Water" and "Water supply for domestic, industrial and commercial purposes" which are being undertaken by them based on the contract entered with GCC and thus the second part of the condition mandated under No. 3 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 is also satisfied. 2.4 Further the applicant has placed reliance on the recent ruling given by the Authority for Advance Ruling in Gujarat in the case of M/s. A B Enterprise reported in 2020-TIOL-143-AAR- GST wherein it is held that applicant will be eligible to claim exemption benefit under Sr.No.3 of Notification No. 12/2017 -CT(R) dated 28.06.2017 for pure services provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave further stated that it appears that service rendered by applicant M/s. Unique Aqua Solutions as stated in their application i.e. dispensing treated water to general public as directed by service recipient i.e. Greater Chennai Corporation is a pure service provided to local authority in relation to functions entrusted under Article 243G and Article 243W of the constitution of India and the applicant appears to be eligible for exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 5. The State Jurisdictional authority, who holds the administrative control over the applicant, vide their letter Rc. No. 343/2020/A4 dated 28.11.2020, has stated as under:- * The applicant has filed a letter dated 19.08.2019 issued by Kodambakkam Zonal Officer, Corporation of Chennai indicating acceptance of their tender for operation and Maintenance of RO/UV Filtration Plant at a cost of Rs. 10,01,141/- for nine months. There is no indication in the intimation Letter about the conditions in the Tender Document and whether that service is related to any function entrusted to a Municipality under 243W of the Constitution of India. * The dealers are filing monthly returns decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Chennai * Extracts from the Measurement Book * Copy of the complete set of Tender Documents 7.3 On perusal of the documents furnished by the applicant, it is seen that resolution No. 251/2016 dated 25.02.2016 has been made by the Greater Chennai Corporation to execute "Amma Kudineer Thittam" based on the Press Note No. 049 dated 13.02.2016 of the Chief Minister, Tamilnadu. As per the resolution, it had been decided by the GCC,- * to put up Reverse Osmosis Plant with a purification capacity of 2000 litre per hour, with expandable capacity initially in 20 places identified for the same; * after testing for the quality of such purified water to distribute 20 litres of such water/family; * that those family who wish to get the benefit will be extended 'Smart Card'. 7.4 Accordingly, GCC has floated a tender P.D.T.D.C.No.Al/0481/2016-Tender for Rate Contract (RC) for the supply, installation, commissioning of High quality treated Drinking Water Plant(RO/UV Filtration) of 2000 Litres /Hour capacity expandable to 4000 Litres/Hour and Operation & Maintenance For 5 Years period in various places of Greater Chennai Corporation.- * The Scope of work as per the tender a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen,- * Name of the work- Operation and Maintenance of High Quality treated drinking water Plant (RO filtration) of 2000 litres/hour capacity... * 1. O & M of RO plant including water vending machine and supply of product water for 4th year of operation, variable capacity cost as per P.O. No * 2. Labour cost per month for O&M of RO Plant 2000 litres/hour .... * Retention 2.5%; Income Tax 2%; SGST 1%; CGST 1% 7.6 From the above, it is seen that the applicant is awarded the work which consists of,- * Supply of Reverse Osmosis plant in a container or shed provided by GCC with the capacity of purifying 2000 litres per hour expandable to 4000 litres per hour which should be operated for 8 hrs/day and if needed another 8 hours/day(second shift); * Operation of the plant to provided treated/purified water, Maintenance of the RO Plant, vending machine for supply of the product water through smart cards for the distribution of water to the beneficiaries for a period of 5 years. The entire work is agreed upon as a rate contract with the rates for the setting up of the Plant and undertaking O & M including providing security, issuance of Smart Card, etc specified separately. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the raw water supplied to them to treated/purify water for dispensing the same to the designated beneficiaries of the GCC. The operation of the Plant includes providing the security for the plant and also issuance of smart cards whenever necessary. They are paid a variable cost based on the sale of water on volumetric basis and a fixed labour cost for providing security and operator. Thus, the applicant has entered into a composite contract of supply of RO Plant along with the Operation &Maintenance of the said Plant for a period of 5 Years. The applicant at present as per the contract undertakes the O & M of the Plant. The supply under a composite contract cannot be vivisected as the supply of R.O. Plant and the O&M of the same are naturally bundled. It is not that the RO Plant can be supplied by one contractor and the O & M of the same can be done by any other contractor in as much as the tender is floated for both together. The tender and agreement are to be read as a whole, to understand the intention of such agreement. Even if we consider that the supply of RO Plant and the O & M of such plant are two different supplies, while not accepting, we find that the supplies undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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