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of <h1>Municipal Corporation's GST exemption request rejected due to service recipient status</h1> <h3>In Re: M/s. Surat Municipal Corporation (SMC),</h3> In Re: M/s. Surat Municipal Corporation (SMC), - 2021 (53) G. S. T. L. 359 (A. A. R. - GST - Guj.) Issues Involved:1. Applicability of GST exemption under Entry No. 3 of Notification No. 12/2017-CT.2. Interpretation of 'in relation to' functions entrusted to a municipality under Article 243W of the Constitution.3. Eligibility of the applicant to seek an advance ruling under Section 97 of the CGST Act, 2017.Issue-wise Detailed Analysis:1. Applicability of GST exemption under Entry No. 3 of Notification No. 12/2017-CT:The applicant, a Municipal Corporation, sought clarification on whether the supply made by M/s. INI Design Studio Pvt. Ltd. qualifies for exemption under Entry No. 3 of Notification No. 12/2017-CT as a 'Pure Service' related to functions entrusted to a municipality under Article 243W of the Constitution. The applicant argued that the service provided was a 'Pure Service' with no element of goods, thus falling under the exemption criteria.2. Interpretation of 'in relation to' functions entrusted to a municipality under Article 243W of the Constitution:The applicant emphasized that the duties listed under Section 63(1) and 66 of the Gujarat Province Municipal Act, 1949 (GPMC Act) are obligatory and discretionary duties of the Municipal Corporation. They argued that the term 'in relation to' should be interpreted broadly to include activities that promote public safety, health, convenience, or instruction, as well as the maintenance of municipal offices and public properties. The applicant cited legal precedents to support the expansive interpretation of 'in relation to,' asserting that the design and consultancy services for the new office building are in relation to the functions entrusted to the municipality.3. Eligibility of the applicant to seek an advance ruling under Section 97 of the CGST Act, 2017:The Authority for Advance Ruling (AAR) examined whether the applicant, as a recipient of services, could seek an advance ruling. Section 95(a) of the CGST Act defines 'advance ruling' as a decision provided to an applicant on matters specified in Section 97 or 100, in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant. The AAR noted that the applicant is the recipient, not the supplier of the services in question. Consequently, the application was deemed non-maintainable and rejected without delving into the merits of the case.Ruling:The application filed by the Municipal Corporation was rejected under Section 98(2) of the CGST/GGST Act, 2017, as it was non-maintainable due to the applicant being the recipient rather than the supplier of the services.
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