2019 (2) TMI 64 - AAR - GST

Services to Chhattisgarh Housing Board exempt from GST under Notification No. 12/2017

The ruling determined that the services provided by the applicant to the Chhattisgarh Housing Board are exempt from GST under Notification No. 12/2017 as ... Exemption under Notification No. 12/2017-State Tax (Rate) as regards pure services relating to functions entrusted to a Municipality under Article 243W - Pure services excluding works contract service or other composite supplies involving supply of any goods - Governmental Authority - Functions entrusted to a Municipality under Article 243W of the Constitution (Twelfth Schedule) - Transfer of property in goods defeats exemptionGovernmental Authority - Chhattisgarh Housing Board qualifies as a Governmental Authority for the purposes of Notification No. 12/2017-State Tax (Rate). - HELD THAT: - The Authority examined the statutory constitution of the Chhattisgarh Housing Board under the Chhattisgarh Housing Board Act, 1972 and the State Government notification of reconstitution. The Board is constituted by statute and its membership and appointment structure demonstrate State control and establishment by the Government. In view of the definition of 'Governmental Authority' in the relevant notification (which requires an authority or board set up by a State Legislature or established by Government to carry out functions entrusted to a Municipality under Article 243W), the Chhattisgarh Housing Board falls within that definition and is therefore a Governmental Authority. [Paras 5]Chhattisgarh Housing Board is a Governmental Authority within the meaning of the exemption notification.Functions entrusted to a Municipality under Article 243W of the Constitution (Twelfth Schedule) - Pure services excluding works contract service or other composite supplies involving supply of any goods - Transfer of property in goods defeats exemption - The colony maintenance services awarded to the applicant by Chhattisgarh Housing Board qualify as exempt pure services under Serial No. 3, Chapter 99 of Notification No. 12/2017-State Tax (Rate), subject to conditions. - HELD THAT: - The work order describes colony maintenance functions including solid waste management, water supply operations, garbage collection and disposal, cleaning of gardens, streets and open areas, drainage and sewerage maintenance, and upkeep of common areas. These services correspond to entries in the Twelfth Schedule (notably water supply, public health/sanitation/solid waste management, slum improvement, provision of urban amenities and public amenities). The work order and invoices indicate the contract is for provision of services only, with no transfer of goods. Notification No. 12/2017-State Tax (Rate) exempts pure services provided to the Central/State/Union Territory/local authority or a Government in relation to functions entrusted to a Municipality under Article 243W, provided they are not works contracts or composite supplies involving supply of goods. Applying these criteria, the services supplied to the Chhattisgarh Housing Board qualify for exemption. The exemption, however, is inapplicable if the service involves transfer of property in goods or if supplied to persons other than the specified governmental recipients. [Paras 5]The colony maintenance services supplied to Chhattisgarh Housing Board are covered by the exemption in Notification No. 12/2017-State Tax (Rate) as pure services relating to functions in the Twelfth Schedule, provided there is no transfer of property in goods and the recipient is a Governmental Authority.Final Conclusion: The Advance Ruling holds that the Chhattisgarh Housing Board is a Governmental Authority and that the applicant's colony maintenance services supplied to the Board (as pure services falling within the Twelfth Schedule/Article 243W) are exempt under Notification No. 12/2017-State Tax (Rate), subject to the condition that no transfer of property in goods is involved and the recipient is a Government/authorized local authority. Issues Involved:1. Classification of services provided by the applicant.2. Applicability of GST exemption under Notification No. 12/2017.3. Determination of the status of Chhattisgarh Housing Board as a Governmental Authority.4. Examination of whether the services fall under public utility services as per Article 243W of the Indian Constitution.Detailed Analysis:1. Classification of Services Provided by the Applicant:The applicant, engaged in service contracts, was awarded a contract by the Chhattisgarh Housing Board (CGHB) for services related to solid waste management, water supply operations, garbage collection and disposal, colony cleaning, drainage system maintenance, sewerage cleaning, and cleaning of common areas in residential areas developed by CGHB. These services are typically provided by local authorities to residents.2. Applicability of GST Exemption under Notification No. 12/2017:The applicant sought an advance ruling on whether these services are exempt under Notification No. 12/2017 dated 28th June 2017, which exempts 'pure services' provided to the government or local authorities in relation to functions entrusted under Article 243W of the Constitution. The ruling confirmed that the services provided by the applicant fall under this exemption as they are considered 'pure services' without any supply of goods involved.3. Determination of the Status of Chhattisgarh Housing Board as a Governmental Authority:The Chhattisgarh Housing Board (CGHB) is a public sector undertaking constituted under the Chhattisgarh Housing Board Act, 1972. It performs functions similar to those of a municipality, such as slum improvement and solid waste management, until the developed areas are handed over to local authorities. The ruling referenced the definition of 'Governmental Authority' under Notification No. 25/2012 and concluded that CGHB qualifies as a Governmental Authority due to its establishment by a State Act and its functions entrusted by the State Government.4. Examination of Whether the Services Fall Under Public Utility Services as per Article 243W of the Indian Constitution:The ruling examined the nature of the services provided by the applicant, which include solid waste management, water supply, garbage collection, and colony cleaning. These services are listed under the Twelfth Schedule of Article 243W of the Indian Constitution, which enumerates functions entrusted to municipalities. The ruling concluded that the services provided by the applicant fall under the public utility services listed in Article 243W, thereby qualifying for the exemption under Notification No. 12/2017.Conclusion:The ruling determined that the services provided by the applicant to the Chhattisgarh Housing Board are exempt from GST under Notification No. 12/2017, as they are pure services related to functions entrusted to municipalities under Article 243W of the Constitution. The exemption is applicable as long as no transfer of property in goods is involved and the services are provided to the State Government, Central Government, local authority, or a Governmental Authority.Order:1. The supply of services for colony maintenance work to CGHB, including solid waste management, water supply, garbage collection and disposal, and cleaning of various areas, is treated as exempt under Notification No. 12/2017, Serial No. 3, Chapter 99.2. The exemption is not applicable if there is any transfer of property in goods involved or if the services are provided to entities other than the State Government, Central Government, local authority, or Governmental Authority.