TMI Blog2022 (9) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 are exempt from tax. As SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government and as per the information contained in Memorandum of Association, it is clear that SUDA is a part of State Government of UP - Further, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and affordable Housing in Partnership. As per the details available on website SUDA is the state level nodal agency for PMAY(U) in the state of Uttar Pradesh - the Consultancy services rendered by the Applicant under the contract with SUDA, and for PMAY are in relation to functions entrusted to Municipalities / Panchayats under Article 243W / 243G of the Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India? (2) If answer to first question is in affirmative then, whether such services provided by the applicant would qualify as Pure services (excluding works contract service or composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST') and corresponding Notifications No. KA.N.I.-2-843/X1- 9 (47)/17-UP. Act-1 - 2017 - Order - (10) - 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 ('UPGST Act'), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively. 4. As per the declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pated and qualified. (6) The applicant is providing no other services to the main contractors other than the services mentioned in scope of work mentioned in section-5 of RFP No. 708/01/29/HFA/2016-17 for preparation of DPR and providing Project Management Consultancy (PMC) Service with the main contractors. (7) SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government to carry out any function entrusted to a municipality under article 243W of the Constitution. This agency is registered under the 'Registration of Societies Act since 20th November 1990. As per the Memorandum of Association of State Urban Development Agency , it's main objectives shall be- (a) To identify the urban poor in the state. (b) To draw up plans and formulate schemes for the upliftment of the urban poor in the state. (c) To implement schemes for the benefit of the urban poor either directly or through other agencies engaged in this direction, whether private, public or cooperative. (d) To review the progress of the execution of these activities as well as effectiveness of the benefits d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the activities till the completion of DUS will be taken care of by PMC. PMC shall also administer the works by the beneficiaries and ensure that the agreement between the ULBs and beneficiaries whether related to quality or quantities of work are executed in accordance with its provisions. PMC shall attach Beneficiaries to the project in PMAY-MIS and also upload Annexure 7A 7C. PMC shall execute all MIS related work of PMAY (U). PMC will supervise the construction work to ensure adherence to the drawings, prescribed high standards of quality and timely completion of the project and verify and certify the progress of the work. Preparation of Physical and Financial progress and shall submit to respective ULBs and DUDA. Preparation of individual files consist of application, copy of Aadhar Card, bank details, land documents, consent letters etc, stage wise photographs for every beneficiaries. PMC will assist Beneficiaries at various stages such as Plinth Level, Lintel Level, roof level and final finishing works and assist to get timely installments. PMC will make sure that the project/ DUs construction must complete as per the agreement made with the benefic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed by the Client. 6. The applicant has submitted statement containing the applicant's interpretation of law as under- (1) Issue raised in the application is squarely covered under Section 97(2) (b) of the CGST Act 2017 being a matter related to applicability of a notification issued under the provisions of this Act. (2) As per Constitution of India the text of Article 243G and 243W stands as follows- Functions entrusted to Panchayats as laid down under section 243G of the Constitution of India are:- Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow the Panchayats 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 Panchayats at the appropriate level, subject to such conditions as may be specified therein, with respect to- (a) the preparation of plans for economic development and social justice; (b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reimbursement of cost of procurement of goods for rendering such service and, thus, be eligible for exemption from levy of CGST and UPGST, respectively. (5) The extracts of Notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017 are as follows: Table S.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) 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 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. NIL NIL (6) Going through the Scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. (9) From perusal of entry no. 03 of the Notification No. 12/2017, it may be observed that service should be pure service, supplied to specific class of recipient and should be in relation to any function entrusted to panchayat or municipality under article 243G or 243W of the constitution. Accordingly it may be established that the service of providing Preparation of Detailed Project Report (DPR)/ Beneficiary Document Preparation and providing Project Management Consultancy Service (PMC)/Supervision Services under Pradhan Mantri Awas Yojna, by the applicant, in terms of contract entered between main-contractor and SUDA and sub-letting of same contract by the main contractor to the applicant, is exempt from GST. (10) Circular No. 147/16/2011 - Service Tax Dated 21st October 2011 where in reference to Circular no. 138/07/2011-Service Tax Dated 06th May 2011 was also invited, wherein it was clarified that the services provided by the subcontractors / consultants and other service providers are classifiable as per Section 65 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubjected to any change or modification, thus the said work contract, though undertaken by the sub-contractor is undoubtedly pertaining to the Railways and no one else. Thus the condition specified under item (u) of the sr. 3 of the said Notification is completely fulfilled and therefore the service provided by the sub-contractor would attract concessional rate of 12% GST there was no need to include such sub-contracts in the item (v) of the Notification as there was no confusion whether the sub-contractor will be eligible to such concessional rate of GST, since the activities described under item (v) of sr. no. 3 of the Notification are services specific. The service provider and the service recipient are immaterial for the determination of beneficiary of this concessional rate of GST... (13) Supreme Court in case of G.P. Ceramics Private Limited v. Commissioner, Trade Tax, Uttar Pradesh, (2009) 2 SCC 90 has categorically mentioned that It is now a well-established principle of law that whereas eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Division-1, Lucknow vide his F.No. 19-CGST/LKO-I/AAR/R-11/2022/1461 dated 08.06.2022 has informed that no proceedings on the questions raised is pending or decided under any of the provisions of the Act. He, however, offered no comments on the questions raised by the applicant. 8. The applicant was granted a personal hearing in the matter. In compliance, Shri Pankaj Shukla, Chartered Accountant Authorized representative, attended personal hearing on 27.06.2022 through virtual mode on behalf of the applicant. During the personal hearing, he reiterated the submissions already made in the application of advance ruling. DISCUSSION AND FINDING 9. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the `CGST Act'. 10. We have gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority 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 are exempt from tax. 13. We observe that SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government. As per the Memorandum of Association of State Urban Development Agency , its main objectives shall be- (a) To identify the urban poor in the state. (b) To draw up plans and formulate schemes for the upliftment of the urban poor in the state. (c) To implement schemes for the benefit of the urban poor either directly or through other agencies engaged in this direction, whether private, public or cooperative. (d) To review the progress of the execution of these activities as well as effectiveness of the benefits directed towards the urban poor. (e) To set up or establish any specific service such as training facilities, infrastructural etc. in furtherance of the economic interest of the urban poor. 14. As per the Memorandum of Association, the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arkets and Fairs, (e) Poverty Alleviation Programmes, (f) Regulation of land use and construction of land buildings, (g) Urban planning including the town planning, (h) Planning for economic and social development, (i) Urban poverty alleviation, (j) Slum improvement and up-gradation etc. Further as per the preface to the PMAY, Housing for All (Urban) Scheme Guidelines:- The Mission seeks to address the affordable housing requirement in urban areas through following programme verticals: Slum rehabilitation of Slum Dwellers with participation of private developers using land as a resource Promotion of Affordable Housing through Credit Linked Subsidy Affordable Housing in Partnership with Public Private sectors Subsidy for Beneficiary-Led individual house construction /enhancement. 18. In view of forgoing discussions, we are of the opinion that the Consultancy services rendered by the Applicant under the contract with SUDA, and for PMAY are in relation to functions entrusted to Municipalities / Panchayats under Article 243W / 243G of the Constitution of India. 19. Now coming to the second question that wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... photographs for every beneficiaries. PMC will assist Beneficiaries at various stages such as Plinth Level, Lintel Level, roof level and final finishing works and assist to get timely installments. PMC will make sure that the project / DUs construction must complete as per the agreement made with the beneficiaries for the successful and timely implementation of the Project. PMC will implement the Geo tagging of constructions of all the stages. Time extension will not be considered except in very exceptional cases without prejudice to levy of penalties. However any approval for extension of time of completion of the works stipulated in the construction, beneficiaries will be without any additional financial implication. PMC shall be fully responsible for quality control and shall put in place such measures as are essential for ensuring regular on site quality checks. PMC shall submit the tentative organization chart for managing the project so that appropriate decisions are taken quickly. However, the actual number of technical and financial personnel to be deployed and the deployment schedule shall be prepared by the PMC and mutually agreed upon af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with M/s Wapcos Limited (main contractors) for provisioning of above services and Work Order No. 1172/01/29/HFA/2018-19 dated 16.01.2019 was issued by the SUDA to M/s WAPCOS Limited. The applicant was back to back awarded with same work i.e. Preparation of Detailed Project Report (DPR) and providing Project Management Consultancy Service (PMC) by M/s WAPCOS Limited vide work order no. is WAP/INFRA/SUDA-LPR/2019 dated 21.01.2019. 23. The applicant has submitted that service provided by sub-contractor regarding DPR and PMS to main contractor shall be exempted because such services stands exempted as long as they are provided to SUDA under PMAY either by main contractor or by subcontractor. They have cited following orders in their support- (1) Rajasthan Authority for Advance Ruling, vide Advance Ruling No. RAJ/AAR/2019-20/28 dated 19.12.2019, in the case of Sevak Ram Sahu (M/s. S.R.S. Enterprises) wherein the Authority has observed that The entry does not speak of contractor or sub-contractor but supply of pure service by way of construction under certain project. It clearly stipulates that whosoever is supplying the pure labour contract services for the constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under Pradhan Mantri Awas Yojna (PMAY in short). The above two parties made an agreement and awarded, back to back, same work to M/S Manpar Icon Technologies, Lucknow, Uttar Pradesh. In the said case, exactly the same two questions as raised in this application were raised before the Authority for advance ruling and answers to both the questions were given in affirmative by the AAR. 24. We observe that sl. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 exempts 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 . As such, for qualifying exemption under the said entry, it is essential that specified services are provided to the Central Government, State Government or Union territory or local authority or a Governmental authority and there is no condition in the notification that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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