Municipal services like slaughter house fees and pay toilet services confirmed exempt under GST Article 243W

The AAAR ruled on municipal services exemptions under GST. Slaughter house fees and pay toilet services were confirmed exempt as constitutional functions under Article 243W. Locker rental at bus stands was deemed exempt as ancillary municipal activity. For contractor-provided services, exemptions apply when rendered back-to-back to municipalities, except flower shops, bunk stalls, and TV advertisements which qualify as immovable property rentals subject to reverse charge mechanism. Road cutting for cable laying by telephone companies was classified as composite supply since both activities are interdependent.

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Issues Involved:
1. Whether the services rendered directly by the appellant are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted under the specified notifications.
2. Whether services rendered through tender contractors are covered under Twelfth Schedule to Article 243W of the Constitution and/or exempted under the specified notifications.
3. Classification of charges for laying cables and road cutting as composite supply.
4. Regularization of tax collected under direct charge instead of reverse charge.
5. Exemption status of renting of immovable property to various entities.

Issue-Wise Detailed Analysis:

Issue 1: Direct Services Coverage and Exemption
The Appellant sought advance ruling on whether services rendered directly (SI No. 1 to 6, 8, 9, and 13) are covered under Twelfth Schedule to Article 243W and/or exempted under specific notifications. The AAR ruled:
- Maintenance of Park, Market facilities (daily and weekly), Bays in bus stand, Slaughter house facilities, and Toilet facilities are not a supply of service as per Notification No. 14/2017-CT(R) as amended.
- Locker rent facilities are taxable as they do not fall under Notification No. 14/2017.
- Room rent for temporary stay is exempted if it does not exceed Rs. 1000/day/person.
- Entry of vehicles in the market is not a supply of service as per Notification No. 14/2017-CT(R).

Issue 2: Services Rendered Through Contractors
The AAR ruled that the supply of 'Right to collect fees/right to certain amenities' to contractors is an independent supply and did not answer the applicability of the notification to supplies by contractors. The Appellate Authority held that:
- Activities under SI No. 1 to 9 and 13 (except SI No. 5A, 5C, and 7) by contractors are covered under Notification No. 14/2017-CT(R) if rendered as back-to-back services to the appellant.
- Services such as TV advertisement charges, flower shops in bus stands, and bunk stalls are covered under SI No. 7 of Notification No. 12/2017-CT(R) and subject to reverse charge mechanism under SI No. 5 of Notification No. 13/2017-CT(R).

Issue 3: Composite Supply of Cable Laying and Road Cutting
The AAR ruled that road cutting and annual rent for cables are not a composite supply. The Appellate Authority disagreed, concluding that road cutting followed by cable laying constitutes a composite supply, as both activities are interdependent and run in tandem.

Issue 4: Regularization of Tax Collection Method
The AAR did not admit the question on regularizing tax collected under direct charge instead of reverse charge, stating it is beyond their purview as per Section 97(2). The Appellate Authority upheld this decision.

Issue 5: Exemption Status of Renting of Immovable Property
The AAR ruled that renting of immovable property services to another Central/State Government/Union territory or Local authority is exempt under SI No. 8 of Notification No. 12/2017-CT(R). Services to other entities, such as cooperative societies and nationalized banks, are not exempt.

Ruling:
- The appeal on SI No. 6 and 9 is not entertained.
- Locker rent in bus stands is an activity under 243W and exempt from GST.
- Transactions between the corporation and contractors for SI No. 1 to 9 and 13 (except SI No. 5A, 5C, and 7) are covered under Notification No. 14/2017-CT(R).
- Services like TV advertisement charges, flower shops, and bunk stalls are covered under SI No. 7 of Notification No. 12/2017-CT(R) and subject to reverse charge mechanism.
- Road cutting and cable laying by telephone companies are composite supplies.

The appeal is disposed of accordingly.

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