GST exemption for services to Govt. entity confirmed by AAR

The Authority for Advance Ruling (AAR) determined that the services provided by the applicant to the Directorate of Public Health Engineering, Government of West Bengal, qualify as pure services exempt from GST under entry serial number 3 of Notification No. 1136 F.T. The ruling is subject to provisions under Section 103 and can be voided under Section 104(1) of the GST Act.

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Issues Involved:
1. Whether the services provided by the applicant are pure services.
2. Whether the applicant provides services to the Central Government, State Government, Union Territory, local authority, or a Governmental authority.
3. Whether the services are related to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution of India.

Detailed Analysis:

1. Whether the services provided by the applicant are pure services:
The term 'pure services' is not explicitly defined under the GST Act. However, entry serial number 3 of Notification No. 1136 F.T. dated 28.06.2017 specifies that pure services exclude works contract services or other composite supplies involving the supply of goods. The applicant claims that their services, which include operating and guarding water pumps, do not involve the supply of goods and should thus be considered pure services. The Authority for Advance Ruling (AAR) noted that the applicant did not provide all necessary documentation to substantiate this claim but conditionally accepted the services as pure services, provided no goods are supplied.

2. Whether the applicant provides services to the Central Government, State Government, Union Territory, local authority, or a Governmental authority:
The AAR confirmed that the applicant provides services to the Directorate of Public Health Engineering, Government of West Bengal, which qualifies as a State Government department. This satisfies the requirement that the services be provided to a governmental authority.

3. Whether the services are related to functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W of the Constitution of India:
The AAR examined the functions listed under Article 243G and Article 243W, as well as the Eleventh and Twelfth Schedules of the Constitution, which include functions like drinking water and water supply for domestic, industrial, and commercial purposes. The services provided by the applicant, which involve operating water pumps and safeguarding pumping machinery for the supply of drinking water, fall under these functions. Therefore, the services are related to the functions entrusted to Panchayats and Municipalities.

RULING:
The AAR ruled that the pure services provided by the applicant to the Directorate of Public Health Engineering, Government of West Bengal, are exempt from GST under entry serial number 3 of Notification No. 1136 F.T. dated 28.06.2017, as amended from time to time. This ruling is valid subject to the provisions under Section 103 and can be declared void under Section 104(1) of the GST Act.

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