Appellate authority rules services not exempt from GST under Notification No. 12/2017-Central Tax (Rate)

The appellate authority upheld the GAAR's ruling, confirming that the services provided did not qualify for the exemption under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate). The appeal was rejected, determining that the services of providing equipment on hire for live videography did not directly relate to functions listed under specific constitutional articles. Therefore, the services were not exempt from GST.

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Issues Involved:
1. Whether the services provided fall under clause 5(f) of Schedule II to the Central Goods and Services Tax Act, 2017.
2. Whether the services related to collection of Hire Charges for temporary transfer of right to use goods are exempted under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Issue-wise Detailed Analysis:

1. Classification under Clause 5(f) of Schedule II to the CGST Act, 2017:
The appellant argued that the services provided involve the hiring of equipment without transferring effective control and possession to the government departments, thus not constituting a supply of goods. The GAAR, however, ruled negatively, implying that the services did not fall under clause 5(f). The appellant maintained that the nature of the service was purely hiring without any transfer of goods or construction of immovable property, as the equipment was always dismantled and taken back post-event.

2. Exemption under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate):
The appellant contended that the services provided were "pure services" to the State Government or its agencies, which should be exempt under Sr. No. 3 of the Notification. The appellant emphasized that the term "pure service" was not defined under GST law but referred to FAQs by CBIC, suggesting that the services did not involve the supply of goods. The appellant highlighted that the work orders were for temporary structures and equipment, dismantled post-event, indicating no supply of goods or works contract service.

Findings:
The authority reviewed the submissions and the nature of the services provided. It was noted that the appellant's activities involved temporary deployment of equipment for live videography without transferring ownership or creating immovable property, thus constituting "pure services." However, the authority emphasized that the exemption under Sr. No. 3 of Notification No. 12/2017 is specific to services related to functions entrusted to Panchayats or Municipalities under Articles 243G and 243W of the Constitution.

The authority concluded that the service of providing equipment on hire for live videography did not directly relate to any functions listed under Articles 243G or 243W. The phrase "in relation to any function" was interpreted to refer to the nature of the service provided by the appellant, not the activities of the recipient government entity. Therefore, the services did not qualify for the exemption under the specified notification.

Conclusion:
The appellate authority upheld the GAAR's ruling, confirming that the services provided by the appellant did not fall under the exemption provided in Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate). The appeal was thus rejected, maintaining that the services were not exempt from GST.

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