Exemption from GST for Services under Pradhan Mantri Awas Yojna

The services provided by M/s Creative Consortium to the State Urban Development Authority and under the Pradhan Mantri Awas Yojna were deemed to be related to functions entrusted to Municipalities and Panchayats under the Constitution of India. These services were classified as Pure Services and therefore exempt from GST payment under specific notifications. The ruling by the Authority for Advance Ruling Uttar Pradesh confirmed these determinations, subject to relevant provisions of the CGST Act, 2017.

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Issues Involved:
1. Qualification of Project Development Service and Project Management Consultancy services under functions entrusted to Panchayat or Municipality.
2. Qualification of these services as Pure Services under Notification No. 12/2017-Central Tax (Rate) and eligibility for GST exemption.

Issue-wise Detailed Analysis:

1. Qualification of Project Development Service and Project Management Consultancy services under functions entrusted to Panchayat or Municipality:

The applicant, M/s Creative Consortium, sought an advance ruling on whether their services provided to the State Urban Development Authority (SUDA) and under the Pradhan Mantri Awas Yojna (PMAY) qualify as activities related to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India.

The Authority examined the scope of work under the contracts with SUDA and PMAY. SUDA's objectives include identifying urban poor, formulating and implementing schemes for their upliftment, and reviewing the progress and effectiveness of these schemes. PMAY aims to provide central assistance to Urban Local Bodies for slum rehabilitation and affordable housing.

The Authority reviewed the detailed scope of work for the applicant, which includes preparation of Detailed Project Reports (DPRs), physical verification, data collection, and project management consultancy (PMC) services. The PMC services involve coordinating, executing, and monitoring construction activities, ensuring quality control, and assisting beneficiaries at various stages of construction.

Considering these functions, the Authority concluded that the services rendered by the applicant are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.

2. Qualification of these services as Pure Services under Notification No. 12/2017-Central Tax (Rate) and eligibility for GST exemption:

Given the affirmative response to the first issue, the second issue considered whether these services qualify as "Pure services (excluding works contract service or other composite supplies involving supply of any goods)" under serial number 3 of Notification No. 12/2017-Central Tax (Rate), as amended by Notification No. 2/2018-Central Tax (Rate).

The Authority examined the sample contract and the scope of work, which includes preparation of DPRs and providing PMC services. They determined that the services mentioned in the contract qualify as Pure Services, as they do not involve works contract services or composite supplies involving goods.

Therefore, these services are eligible for exemption from the levy of CGST and UPGST under the specified notifications.

Ruling:

1. The services rendered under the contract with SUDA and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.
2. These services qualify as Pure Services and are exempt from the payment of GST, as covered in Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June 2017, and corresponding notifications under the UPGST Act.

This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.

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