Consultancy service provider's GST exemption application rejected for completed 2019 services filed in 2022 under Section 98(2)

AAR Karnataka rejected the application filed by a consultancy service provider seeking GST exemption clarification for services rendered to KUIDFC under NKUSIP program. The applicant completed consultancy services in 2019 but filed the advance ruling application in 2022. AAR held the application was not maintainable as advance rulings can only be sought for ongoing or proposed supplies, not completed transactions. The authority ruled it lacked jurisdiction over completed supplies and rejected the application under Section 98(2) of CGST Act 2017.

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Issues:
1. Whether KUIFDC is eligible for GST exemption under Notification No.12/2017 for services provided by the applicant from July 2017 to June 2019.
2. Whether the services provided by the applicant as Supervision and Programme Management Consultants for the NKUSIP program of KUIFDC are exempt from GST under pure services category.

Analysis:

Issue 1:
The applicant, a premier society providing consultancy services, sought an advance ruling on the eligibility of KUIFDC for GST exemption under Notification No.12/2017. KUIFDC, a State Level Nodal Agency, acts as a financial intermediary providing funds and technical assistance to Urban Local Bodies. The applicant claimed that KUIFDC qualifies as a "Government Entity" under Notification No.32/2017 due to its shareholding structure and functions. However, there was a contention that KUIFDC, being constituted under the Companies Act, may not be directly exempted as a Government Body. The applicant's interpretation emphasized KUIFDC's role and composition to support their claim for exemption.

Issue 2:
The applicant provided consultancy services to KUIFDC for the NKUSIP program, involving supervision and project management. The applicant entered into an agreement with KUIFDC and completed the project by 2019. The applicant inquired whether the services rendered to KUIFDC are exempt from GST. The Authority examined the maintainability of the application as per Section 95(a) of the CGST Act 2017. It was noted that the questions raised were related to completed supplies, not ongoing transactions. Therefore, the application was deemed beyond the authority's jurisdiction and rejected under Section 98(2) of the CGST Act 2017.

This judgment highlights the importance of the timing of seeking advance rulings in relation to ongoing or completed transactions. The interpretation of legal provisions and notifications played a crucial role in determining the eligibility for GST exemption. The ruling underscores the need for clarity in the application process and aligning the queries with the scope of the authority's jurisdiction.

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