2020 (2) TMI 1470 - AAR - GST

GST exemption for Project Development & Management Services under Pradhan Mantri Awas Yojna

The Authority ruled that the Project Development Service and Project Management Consultancy services provided to the State Urban Development Authority and ... Activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided by the applicant to recipient under the Contract for SUDA - Project Management Consultancy services (PMC) under the contract for PMAY - pure services or not - exemption 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 - HELD THAT:- The Consultancy services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India. Pure services or not - exemption 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 - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other 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. Issues Involved:1. Qualification of Project Development Service (Detailed Project Report Service) and Project Management Consultancy services (PMCS) as activities related to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India.2. Eligibility of these services as 'Pure services' under Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017, as amended, and exemption from levy of CGST and UPGST.Issue-wise Detailed Analysis:Issue 1: Qualification of Services under Article 243G and 243WThe applicant, M/s. Saryu Babu Engineer India Pvt Ltd, sought an advance ruling on whether the Project Development Service (Detailed Project Report Service) and Project Management Consultancy services (PMCS) provided to the State Urban Development Authority (SUDA) and under the Pradhan Mantri Awas Yojna (PMAY) qualify as activities related to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India.The Authority examined the scope of work under the contracts with SUDA and PMAY. SUDA, established as a state-level nodal agency by the Uttar Pradesh Government, aims to uplift the urban poor through various schemes. The PMAY scheme provides central assistance for urban housing and slum rehabilitation.The Authority reviewed the functions listed in the 11th and 12th schedules of the Constitution, which include urban planning, poverty alleviation, slum improvement, and maintenance of community assets. The scope of work under the contracts involved detailed project reports, physical verification, data collection, architectural designs, project structuring, and obtaining approvals, all of which align with the functions entrusted to Panchayats and Municipalities.Finding:The Authority concluded that the Project Development Service and PMCS provided under the contracts with SUDA and for PMAY are indeed activities related to functions entrusted to Panchayats under Article 243G and Municipalities under Article 243W of the Constitution of India.Issue 2: Eligibility as 'Pure Services' and GST ExemptionThe second issue was whether these services qualify as 'Pure services' (excluding works contract service or composite supplies involving supply of any goods) under serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017, as amended by Notification No. 2/2018-Central Tax (Rate) dated 25 January 2018, and thus be eligible for exemption from CGST and UPGST.The Authority examined the sample contract for the preparation of Detailed Project Reports (DPR) and providing Project Management Consultancy for PMAY. The scope of work included coordination, execution, monitoring, quality control, MIS-related work, and ensuring timely completion of projects without involving any supply of goods.Finding:The Authority determined that the services mentioned in the contract qualify as 'Pure services' as they exclude works contract service or other composite supplies involving the supply of goods. Therefore, these services are eligible for exemption from the levy of CGST and UPGST under the specified notifications.Rulings:1. Ruling on Question 1: The services rendered under the contract with SUDA and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.2. Ruling on Question 2: These services qualify as 'Pure services' and are exempt from the payment of GST under serial number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017, as amended, and corresponding notifications under the UPGST Act.Validity:This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.