Court: PDMC & PMC Services for AMRUT & PMAY Qualify as Pure Services

The Court held that Project Development and Management Consultancy (PDMC) services under AMRUT and Project Management Consultancy (PMC) services under PMAY qualify as activities related to functions entrusted to Panchayats or Municipalities under the Constitution of India. These services were deemed as "Pure services" eligible for exemption from CGST and MPGST under specific notifications. The purchase and reimbursement of equipment and furniture did not affect the classification of the services as Pure Services, allowing for the tax exemption.

---

---

Issues Involved:

1. Qualification of Project Development and Management Consultancy services (PDMC) under AMRUT and Project Management Consultancy services (PMC) under PMAY as activities related to functions entrusted to Panchayats or Municipalities under Article 243G or Article 243W of the Constitution of India.
2. Eligibility of such services as "Pure services" for exemption from CGST and MPGST under Notification No. 12/2017-Central Tax (Rate) and corresponding notifications.

Detailed Analysis:

Issue 1: Qualification of PDMC and PMC Services under Constitutional Articles

The core question is whether the PDMC services for AMRUT and PMC services for PMAY qualify as activities related to functions entrusted to Panchayats or Municipalities under Article 243G or Article 243W of the Constitution of India.

- AMRUT Scheme: The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) aims to provide basic civic amenities like water supply, sewerage, urban transport, and parks to improve the quality of life, especially for the poor and disadvantaged. The mission’s objectives include ensuring every household has access to a tap with assured water supply and a sewerage connection, increasing the amenity value of cities by developing greenery and well-maintained open spaces, and reducing pollution by promoting public transport and non-motorized transport facilities.

- PMAY Scheme: The Pradhan Mantri Awas Yojana-Housing for All (Urban) aims to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies for the rehabilitation of existing slum dwellers using their land as a resource through private participation and affordable housing in partnership.

The judgment found that the objectives of both AMRUT and PMAY schemes align with several clauses of the Eleventh and Twelfth Schedules referred to in Article 243G and 243W of the Constitution, including housing, drinking water, sanitation, and parks.

Conclusion for Issue 1: The Consultancy services rendered by the applicant under the agreements for AMRUT and PMAY are in relation to functions entrusted to Municipalities under Article 243-W and to Panchayats under Article 243-G of the Constitution of India.

Issue 2: Eligibility as "Pure Services" for Tax Exemption

The second question is whether such services qualify as "Pure services" (excluding works contract service or other composite supplies involving the supply of any goods) under Serial Number 3 of Notification No. 12/2017-Central Tax (Rate) and corresponding notifications, thus being eligible for exemption from CGST and MPGST.

- Nature of Contract: The contract awarded to the applicant for PDMC under AMRUT and PMC under PMAY is identified as a Pure Service Contract. It is not covered under the exclusion clause for "works contract service" or "composite supplies involving supply of any goods."

- Reimbursement of Goods: The contract includes the purchase of office equipment, furniture, etc., which are reimbursed by the employer. These items are not naturally bundled into the service provided and are to be disposed of as per the principal's instructions after use.

Conclusion for Issue 2: The purchase and reimbursement of equipment and furniture do not alter the classification of the contract as a Pure Service. Therefore, the services qualify for exemption from CGST and MPGST under Serial Number 3 of Notification No. 12/2017-Central Tax (Rate) and corresponding notifications.

Ruling:

1. The PDMC services for AMRUT and PMC services for PMAY qualify as activities related to functions entrusted to Panchayats or Municipalities under Article 243G or Article 243W of the Constitution of India.
2. Such services qualify as "Pure services" and are eligible for exemption from CGST and MPGST. However, the disposal of tangible goods at the end of the contract will be subject to GST depending on the circumstances and manner of disposal.

---