Recovery from gov't for research exempt from GST under Entry No. 3, not services to gov't.

The amount recovered by the applicant from other government departments for research work and studies, aiding in policy-making, is exempt from GST under Entry No. 3 of Notification No. 12/2017 CT(R), subject to specified conditions. However, services provided by the applicant to other government departments do not qualify for exemption under Entry No. 8 of the same notification as the applicant does not meet the criteria of being the Central Government, State Government, or local authority.

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Issues Involved:

1. Whether the amount recovered by the applicant from other government departments for doing research work and study, which help them make policies or understand its impact, is chargeable to GST.
2. Whether services provided by the applicant to other government departments are covered under entry no. 8 of Exemption Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017.

Issue-wise Detailed Analysis:

Issue 1: GST Applicability on Amount Recovered for Research Work

The applicant, Atal Bihari Vajpayee Institute of Good Governance & Policy Analysis (AIGGPA), sought clarity on whether the amount recovered from other government departments for research work and studies, which assist in policy-making or understanding impacts, is chargeable to GST. The relevant exemption notification is Notification No. 12/2017 CT(R) dated 28th June 2017, particularly Entry No. 3.

Key Conditions for Exemption under Entry No. 3:
- Pure Service: The services must be pure, excluding works contract service or composite supplies involving goods.
- Service Recipients: The services must be provided to the Central Government, State Government, Union territory, local authority, governmental authority, or a government entity.
- Activity Relation: The services must relate to any function entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution.

The contracts awarded to the applicant by various government departments are for impact evaluation, research works, and policy analysis, which qualify as pure services. These services are not excluded under the works contract or composite supplies clause. The applicant provided a list of 63 projects indicating that services are rendered to government departments, local authorities, or government entities.

Constitutional Provisions:
- Article 243G: Pertains to the powers and responsibilities of Panchayats, including economic development and social justice plans.
- Article 243W: Relates to the powers and responsibilities of Municipalities, including urban planning and public health.

The services provided by the applicant are in relation to functions listed in the Eleventh and Twelfth Schedules of the Constitution, thus satisfying the conditions under Entry No. 3 of Notification No. 12/2017 CT(R). Therefore, the amount recovered by the applicant for these services is exempt from GST.

Issue 2: Coverage under Entry No. 8 of Exemption Notification No. 12/2017

The applicant also questioned whether their services to other government departments fall under Entry No. 8 of Exemption Notification No. 12/2017 CT(R).

Key Conditions for Exemption under Entry No. 8:
- Service Providers: The services must be provided by the Central Government, State Government, Union territory, or local authority to another similar entity.

The applicant, being a society registered under the MP Societies Registrikaran Act 1973 and governed by a body presided over by the Chief Minister of Madhya Pradesh, does not qualify as the Central Government, State Government, or local authority. However, it falls within the definition of a "Government Entity" as per clause (zfa) of Notification No. 12/2017, which includes entities with 90% or more participation by way of equity or control by the government to carry out a function entrusted by the government.

Since Entry No. 8 specifically covers services provided by the government or local authorities only, and the applicant does not meet this criterion, services provided by the applicant to other government departments are not covered under Entry No. 8 of Exemption Notification No. 12/2017 CT(R).

Ruling:

1. Question 1: The amount recovered by the applicant from other government departments for research work and study, which assists in policy-making or understanding its impact, is exempt from GST, provided all conditions under Entry No. 3 of Notification No. 12/2017 CT(R) are satisfied.
2. Question 2: Services provided by the applicant to other government departments are not covered under Entry No. 8 of Exemption Notification No. 12/2017 CT(R) as the applicant does not qualify as the Central Government, State Government, or local authority.

This ruling is valid subject to the provisions under section 103 (2) until declared void under Section 104(1) of the GST Act.

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