2020 (7) TMI 350 - AAR - GST

Tax Exemption for Project Management Services in Andhra Pradesh Rural Road Project

The 'Project Management Consultancy' services provided to Andhra Pradesh Panchayat Raj Engineering Department for the Andhra Pradesh Rural Road Project ... Classification of services - Project Management Consultancy services provided to Andhra Pradesh Panchayat Raj Engineering Department for Andhra Pradesh Rural Road Project (APRRP) for Road Construction - pure services or not - applicability of Sl. No. 3 - (Chapter 99) of Table mentioned in G.O.Ms.No.588 - (Andhra Pradesh) State Tax (Rate) Dated 12/12/2017 - HELD THAT:- The services rendered by the applicant include a wide range of services like, Review & verification of the Project DPRs, Project Management (execution) and Monitoring, Construction Supervision and Contract Management, including QAC and ensuring that the ESMPs are properly prepared and implemented. Exemption under Sl.No.3 of Notification No 12/2017 dated 28.07.2017 as amended - HELD THAT:- Sl.No.3 of the notification describes pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the constitution or in relation to any function entrusted to a Municipality under article 243W of the constitution. The services provided by the Applicant are exempted under Sl.No.3 of Notification No. 12/2017 dated 28.07.2017 as amended further by Notification No. 32/2017 - Central Tax (Rate), dated: 13.10.2017. Issues Involved:1. Whether the 'Project Management Consultancy' services provided to Andhra Pradesh Panchayat Raj Engineering Department (APPRED) for Andhra Pradesh Rural Road Project (APRRP) for Road Construction can be termed as 'Pure Services' as referred in Sl. No. 3 - (Chapter 99) of Notification No. 12/2017 - Central Tax (Rate) Dated 28/06/2017 and accordingly eligible for exemption from Central Goods and Service Tax and Andhra Pradesh Goods and Service Tax.Detailed Analysis:1. Whether the services rendered by the applicant are pure services:The applicant provides Project Management Consultancy Services to APPRED for APRRP, which involves services like review and verification of Project DPRs, project management and monitoring, construction supervision, and contract management. The services are devoid of any incorporation of goods, as evidenced by the agreement and invoices, which show a detailed bifurcation of costs comprising reimbursement of remuneration for professionals and experts. Therefore, the services are classified as pure services, excluding works contract service and other composite supplies involving the supply of any goods.2. Whether APPRED qualifies as a Central Government, State Government, Union territory, local authority, or Governmental authority:APPRED was formulated by the Government of Andhra Pradesh in 1967 and functions directly under the Ministry of Panchayat Raj & Rural Development. It is responsible for implementing the APRRP, which aims to provide road connectivity to unconnected habitations with a population of 250 or more. As it functions under the Ministry of Panchayat Raj & Rural Development, APPRED qualifies as a technical wing of the Department of PR & RD of the AP State Government.3. Whether the functions carried out by the applicant are in relation to any function entrusted to a Panchayat under Article 243G of the Constitution:Article 243G of the Constitution empowers the Legislature of a State to endow Panchayats with powers and responsibilities, including the preparation of plans for economic development and social justice and the implementation of schemes for economic development and social justice, as listed in the Eleventh Schedule. The relevant function under which the applicant's services fall is 'Roads, culverts, bridges, ferries, waterways, and other means of communication.'Conclusion:The services provided by the applicant are exempted under Sl.No.3 of Notification No. 12/2017 dated 28.07.2017, as amended by Notification No. 32/2017 - Central Tax (Rate), dated 13.10.2017.Ruling:The 'Project Management Consultancy' services provided to Andhra Pradesh Panchayat Raj Engineering Department for Andhra Pradesh Rural Road Project (APRRP) for Road Construction can be termed as 'Pure Services' as referred in Sl. No. 3 - (Chapter 99) of Table mentioned in Notification No. 12/2017 - Central Tax (Rate) Dated 28/06/2017 and accordingly eligible for exemption from Central Goods and Service Tax and Andhra Pradesh Goods and Service Tax.Answer: Affirmative.