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Issues: (i) whether the amounts received from the Government of Kerala and the activities undertaken by the applicant in executing and operating the integrated water transport project constituted a taxable supply liable to GST and whether a tax invoice was required for transfer of assets; (ii) whether the applicant could be treated as a Governmental Authority for the purpose of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017; (iii) whether the services rendered as executing agency were pure services exempt under Entry 3 of the said notification.
Issue (i): whether the amounts received from the Government of Kerala and the activities undertaken by the applicant in executing and operating the integrated water transport project constituted a taxable supply liable to GST and whether a tax invoice was required for transfer of assets
Analysis: The applicant was entrusted with execution, operation and maintenance of the water metro project on behalf of the State. The project funds were channelled for project execution, and the applicant's activities in relation to the project were treated as supply under the statutory scheme, including supply between related persons without consideration. However, once the services were characterised as exempt pure services supplied to the State Government in relation to municipal functions, no taxable liability survived on the funds received for the project or on the alleged back-to-back transfer of assets.
Conclusion: The applicant was not liable to pay GST on the funds received from the Government of Kerala, and no GST invoice was required for the alleged transfer of assets.
Issue (ii): whether the applicant could be treated as a Governmental Authority for the purpose of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
Analysis: The applicant was established by Government with full equity participation and had been entrusted with functions connected with urban planning, public amenities, waterways and allied municipal and panchayat-linked functions. On that basis, it satisfied the notification definition requiring establishment by Government with 90 per cent or more participation by way of equity or control for carrying out functions entrusted to a Municipality or Panchayat.
Conclusion: The applicant was a Governmental Authority within Para 2(zf) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
Issue (iii): whether the services rendered as executing agency were pure services exempt under Entry 3 of the said notification
Analysis: The applicant's role was project management and execution of the integrated water transport project without supply of goods as a works contract or composite supply. Such services fell within the classification of project management services for construction projects and were rendered to the State Government in relation to functions entrusted to a Municipality under Article 243W of the Constitution of India. Entry 3 of the notification exempts pure services provided to specified public authorities when the activity is in relation to such functions.
Conclusion: The services rendered by the applicant were pure services and were exempt from GST under Entry 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
Final Conclusion: The ruling granted complete GST exemption treatment to the applicant's project-execution services and recognised its status as a Governmental Authority, thereby negating the proposed tax liability on the project receipts and related invoicing consequences.
Ratio Decidendi: Services performed by a Government-established entity for a State Government, when confined to project management and execution of municipal-function infrastructure and not involving works contract or composite supply of goods, qualify as exempt pure services under the relevant exemption notification.
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