TMI Blog2023 (5) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... licant is a pure service not involving any supply of goods. The pure services [excluding works contract service or other composite supplies involving supply of any goods] provided to the local authority [i.e. in this case to the SMC] by way of any activity in relation to a function entrusted to a Municipality under article 243 W of the Constitution of India is exempt from GST. Having said so the supply by the applicant to SMC being a pure service meets the criterion set out vide Sr. No. 3 of notification No. 12/2017-CT(Rate), dated 28.6.2017, and hence, the supply is exempt from GST. Exemption in relation to Pure Service - pure services provided by a sub contractor of the applicant. - HELD THAT:- We find that [a] the applicant before us is seeking a ruling on behalf of his sub-contractor and is hence is not the supplier of the service in the case wherein the supply is provided by the sub-contractor and [b] that the ruling sought by the applicant is not for admissibility of input tax credit in respect of supply received by the applicant from his sub-contractor. This being the factual matrix, we find that the applicant before us has no locus standi in seeking a rulin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding a wide range of professional consulting services viz architecture, engineering (MEPF), planning, urban design, landscape, sustainability, research and art, building design, interior design, surveying, environmental sciences, project management and project economics. 3. The applicant has been granted work order no. 84/1.2.2022 and 172/22.1.2021 to provide architectural consultancy service to Surat Municipal Corporation [for short - SMC], regarding the project namely SMIMER Hospital College Campus further to prepare architectural and working drawings as required for the construction of the project. 4. It is the applicant s averment that SMC, the recipient of the service, has contended that SMIMER Hospital and College is covered under the 12th Schedule of Article 243W of the Constitution of India is thus exempt, in terms of entry no. 3 of notification No. 12/2017-Central (Rate), it being a pure service. Contra- the applicant however states that according to them, their services would be covered under entry no. 21 of notification No. 11/2017-Central Tax (Rate) is liable to GST @ 18%. 5. The applicant s next contention is that if the activity is exempt as contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion be available to the applicant provided that the exemption is available to the direct contractor of SMC? 3. If the entry number 3 of the notification No. 12/2017-Central (Rate) dated 28.6.2017 is not applicable to the applicant then accordingly the services provided by the applicant will be taxed under which HSN/SAC code and the rate of tax thereof? 8. Personal hearing was granted on 28.2.2023 wherein Shri Vedraj Agarwal and Shri Ajit B Jariwala appeared on behalf of the applicant and reiterated the facts as stated in the application. During the course of personal hearing the applicant sought time to file additional submission. In the additional submission dated 1.3.2023, the applicant further stated viz o that in terms of paragraph f of the work order, the GST is payable as per prevailing government rate; o that the work allotted is a comprehensive work looking to the terminology and words used in the said clauses (A) All inclusive consultancy fee for Architectural Structural designing + Area development landscaping; o that it is very difficult to conclude that it pertains purely to services only; that the work order does not appear to be a supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 9 - Notification No. 12/2017-Central Tax (Rate) dated 28 th June, 2017 In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council. hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) .; (e) .; (f) .; or (g) .; 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 provision for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may he specified therein, with respect to (i) the preparation of plans for economic development and social justice: (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule: (b) the Committees with such powers and authority 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. Regulation of land-use and construction of buildings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orting designs (incl. interior Electrification, fire fighting and sanitation etc)] 2 GST to be reimbursed separately F Other Conditions (1) Service Tax/GST will he paid as per the prevailing rates decided by the Govt. It is bound to change with time. (2) Consultant has to make an agreement with SMC on stamp paper as per the conditions for the above said work. (3) Consultant has to appoint a Structural Engineer and fire Expert (anyone from empanelment list of SMC) and make an agreement with the same. A copy of the agreement shall he submitted to SMC within 10 days of agreement. (4) Consultant has to provide continuous technical support on site for any design execution of work as and when required by SMC. (5) Consultant will be free to independently appoint any expert for project work. However, prior permission of SMC should be taken for such appointments. (6) It should he strictly noted that, SMC will not make any kind of payments to the structural engineer or other experts appointed by the Consultant. On going through the work order no. 84 dated 1.2.2022 , we find that the (i) scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to appoint a Structural Engineer and fire Expert (anyone from empanelment list of SMC) and make an agreement with the same. A copy of the agreement shall he submitted to SMC within 10 days of agreement. (5) Consultant has to provide continuous technical support on site for any design execution of work as and when required by SMC. (6) Consultant will be free to independently appoint any expert for project work. However, prior permission of SMC should be taken for such appointments. (7) It should he strictly noted that, SMC will not make any kind of payments to the structural engineer or other experts appointed by the Consultant. 13. The applicant has stated that according to them the services rendered to SMC would fall within entry no. 21 of notification No. 11/2017-CT(Rate), reproduced supra and would be taxable @ 18%. However, the SMC is of the view that the project to build the SMIMER Hospital and College being covered under the 12th schedule of Article 243W of the Constitution of India, would be exempted in terms of entry no 3 of notification No. 12/2017-CT (Rate). The competing relevant entries are reproduced in paragraph supra. 14. A careful reading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stem, all are required to be supplied in the form of samples; that they also supply series of drawings in form of hard copy (print outs) and multiple tender books/documents and hence it is not a pure service to say the least - does not hold merit. Our finding is based on the fact that the scope of work as mentioned in work order dated 22.1.2021 and work order dated 1.2.2022, belies the above assertion. Secondly an important question that arises is whether the said supply of drawings, samples, physical models can be termed as a supply of goods to take the applicant s service out of the ambit of pure services. We are of the clear view that the supply of drawings, samples, physical models etc can by no stretch of imagination be termed as supply of goods. Thus, we hold that the service rendered by the applicant is a pure service not involving any supply of goods thus satisfying the first condition [a]. 17. Section 2(69) of the CGST Act, 2017 defines local authority . Article 243W of the Constitution of India, deals with powers, authority and responsibilities of Municipalities, etc.. Municipalities have been further entrusted the performance of functions and the implementation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97(2) in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant ; that an applicant, means any person registered or desirous of obtaining registration under this Act; that such an applicant , may make an application in the prescribed form with appropriate fee , stating the question on which the said ruling is sought. The questions on which the ruling is sought is however, restricted to the 7[seven] issues listed in section 97(2), ibid. Further, in terms of section 103, such a ruling shall be binding only on the applicant and on the concerned officer or the jurisdictional officer, in respect of the applicant. The question posed before us seeking a ruling is whether the sub-contractor providing services to the applicant is exempted or otherwise. We find that [a] the applicant before us is seeking a ruling on behalf of his sub-contractor and is hence is not the supplier of the service in the case wherein the supply is provided by the sub-contractor and [b] that the ruling sought by the applicant is not for admissibility of input tax credit in respect of supply received by the applicant from his sub-contractor. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the ambit of the conditions specified in the exemption notification. In the preceding paragraphs, while examining the applicability of the GST on the supply by the applicant we have already held that 3 conditions need to be satisfied [refer paragraph 14 above]. The fact that in the hypothetical situation of the applicant being a sub- contractor when he has provided the services/supply to the main contractor and not to the Central Government, State Government or Union Territory or Local authority or a Governmental authority or a Governmental entity directly would clearly take him out from the ambit of exemption provided vide Sr. No. 3 of the notification No. 12/2017-CT(Rate). 25. To substantiate the contention that a sub-contractor is also exempted from GST if the main contractor is exempted from the levy, the appellant has relied upon the below mentioned Advance ruling/Appellate rulings. We would like to take it up one after the other viz Advance Ruling No. Raj/AAR/19-20/28 dated 18.12.19 in the case of Sevak Ram Sahu . On going through the said ruling, we find that in this dispute, the said applicant had sought exemption in terms of SI. No. 10 of notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sr. No. 3 (v) is fulfilled the sub contractor is liable to pay GST at the concessional rate of 12%. It is clearly evident that the facts of the case are not similar to the dispute before us. Further the Appellate authority held that the works contract undertaken by the sub-contractor is undoubtedly pertaining to the railways. In the present dispute of the applicant before us, we find that the wordings used for becoming eligible for the benefit of the notification are that the pure services should be provided to the Central Government, State Government or Union territory or local authority. The applicant as a sub-contractor would be providing the supply to the main contractor and not to the local authority and hence would not be eligible for the benefit of the exemption notification. Advance Ruling No. UP/AAR/61/2020-21 dtd 7.7.2020 in the case of M/s. Manpur Icon Technologies. The Advance Ruling Authority, Uttar Pradesh vide this ruling held that the service of providing preparation of detailed project report and providing project management consultancy service under Pradhan Mantri Awas Yojana by the applicant i.e. M/s. Manpur Icon Technologies in terms of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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