AAR rules services by Vidarbha Infotech to NESL for managing Non-Network Tanker exempt from GST

The Authority for Advance Ruling (AAR) determined that services provided by Vidarbha Infotech Pvt. Ltd. to NESL for managing Non-Network Tanker using GPRS system are exempt from GST. NESL was classified as a local authority, and the services were deemed pure services under the relevant GST notification. The contract with NESL falls under exempt services specified in Article 243W of the Constitution of India, rendering it exempt from GST.

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Issues Involved:
1. Applicability of GST exemption for services provided under a contract with Nagpur Environmental Services Ltd (NESL) for management of Non-Network Tanker using GPRS system.
2. Classification of NESL as a "local authority" under GST laws.
3. Determination of whether the services provided qualify as "pure services" under the relevant GST notification.

Detailed Analysis:

1. Applicability of GST Exemption:
The applicant, Vidarbha Infotech Pvt. Ltd., sought an advance ruling to determine whether the services provided under a contract with NESL for managing Non-Network Tanker using GPRS system are exempt from GST. The applicant argued that these services fall under the exempt services described in Article 243W of the Constitution of India and are rendered to a local authority.

The relevant GST notification (No. 12/2017-Central Tax (Rate)) exempts pure services provided to the Central Government, State Government, Union territory, local authority, or a Governmental authority by way of any activity in relation to functions entrusted to a municipality under Article 243W of the Constitution.

2. Classification of NESL as a "Local Authority":
The applicant contended that NESL, a 100% subsidiary of the Nagpur Municipal Corporation (NMC), qualifies as a local authority. NESL was established under the Nagpur Municipal Corporation Act, 1948, specifically to manage water supply services for NMC. The applicant argued that NESL is controlled and managed by NMC, implying it should be considered a local authority.

The Authority for Advance Ruling (AAR) examined the Government Resolution and the Memorandum of Understanding (MOU) between NMC and NESL. It was found that NESL was set up to carry out functions entrusted to NMC, and its management and control rest with NMC. Therefore, NESL qualifies as a local authority under Section 2(69) of the GST Act.

3. Determination of "Pure Services":
The applicant asserted that the services provided are pure services, as they do not involve the supply of goods. The contract involves the management of Non-Network Tanker using GPRS technology to ensure water supply to designated locations in Nagpur. The applicant charges NESL per tanker trip, and no transfer of goods is involved.

The AAR reviewed the work order and the nature of services provided. It was concluded that the services qualify as pure services within the meaning of Entry No. 3 of Notification No. 12/2017-CT (Rate), which exempts such services from GST.

Conclusion:
The AAR ruled that the services provided by Vidarbha Infotech Pvt. Ltd. to NESL for managing Non-Network Tanker using GPRS system are exempt from GST. NESL qualifies as a local authority, and the services provided are classified as pure services under the relevant GST notification.

Order:
The contract from NESL for providing services for the management of Non-Network Tanker with the help of GPRS system at Nagpur is exempt from GST as it falls under the various exempt services in Article 243W of the Constitution of India and is rendered to a local authority.

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