Taxable Status of Auditing, Accounting & Taxation Services for SSNNL under CGST Act

The service of auditing, accounting, and taxation provided by M/s. Dhirubhai Shah & Co. LLP to Sardar Sarovar Narmada Nigam Limited (SSNNL) was deemed taxable under Section 9(1) of the CGST Act, 2017, as it did not qualify for exemption under Entry No. 3 of Notification No. 12/2017-CT (Rate) dated 28-6-2017. The ruling stated that these services are subject to GST, as they were not directly related to the specific functions entrusted to a Panchayat or Municipality as outlined in the Constitution.

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Issues Involved:
1. Whether the professional service for maintenance of accounts and allied items of work provided to Sardar Sarovar Narmada Nigam Limited (SSNNL) is a taxable service under Section 9(1) of the CGST Act, 2017.
2. Whether the service is exempted vide Sr. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017.

Issue-Wise Detailed Analysis:

1. Taxability of Professional Services:
The applicant, M/s. Dhirubhai Shah & Co. LLP (DBS), is engaged in providing services in auditing, accounting, taxation, etc., and has been appointed for professional services in respect of maintenance of accounts and allied items of work in Segment III of SSNNL. The applicant issued a tax invoice charging CGST and SGST for the services provided.

2. Applicability of Exemption under Notification No. 12/2017-CT (Rate):
The applicant contended that the service provided to SSNNL is not covered by the entry at Sr. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017, which exempts pure services provided to the Central Government, State Government, Union territory, or local authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution.

Discussion and Findings:

1. Definition and Conditions of "Pure Services":
The authority examined the term "Pure Services," which is not defined in the GST Act but generally means any activity/supply that does not involve goods. The maintenance of accounts provided by the applicant does not involve any supply of goods, thus satisfying the first condition of being pure services.

2. Recipient of Services:
The second condition requires the recipient to be the Central Government, State Government, Union Territory, Local Authority, Governmental Authority, or Government Entity. SSNNL, being a company with 100% shareholding by the State Government, qualifies as a Governmental Authority.

3. Relation to Functions Entrusted to Panchayat or Municipality:
The third condition examines if the service is in relation to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. The functions listed under these articles include activities like water supply, irrigation, and public health. While SSNNL is involved in functions like providing drinking water and irrigation, the applicant's services of auditing, accounting, and taxation are not directly related to these functions.

Applicant's Submission:
The applicant admitted that their services are not related to the main functions of SSNNL, such as water supply or construction of dams and canals, and do not fall under the functions prescribed in Articles 243G and 243W of the Constitution.

Ruling:
The authority ruled that the service of auditing, accounting, and taxation provided to SSNNL is not covered under Entry No. 3 of Notification No. 12/2017-CT (Rate) dated 28-6-2017. Therefore, these services are liable to GST.

Conclusion:
The professional service for maintenance of accounts and allied items of work provided by the applicant to SSNNL is a taxable service under Section 9(1) of the CGST Act, 2017, and is not exempted under Sr. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017.

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