PMAY consultancy services to District Urban Development Agency qualify for GST exemption under Notification 12/2017

The AAR UP held that project development and management consultancy services provided to District Urban Development Agency for PMAY qualify for GST exemption under Notification No. 12/2017-Central Tax (Rate). The Authority determined that DUDA, being a subordinate district office of SUDA with government-appointed officials, falls under government category. The consultancy services relate to functions entrusted to municipalities/panchayats under Articles 243G and 243W of the Constitution. These services qualify as pure services excluding works contracts or composite supplies, making them eligible for the exemption under serial number 3 of the notification.

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Issues Involved:

1. Whether the Project Development Service (i.e., Detailed Project Report Service and Project Management Consultancy services) provided by the applicant to the recipient under the Contract from District Urban Development Agency (DUDA) qualifies as an activity in relation to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India.
2. If the first question is affirmative, whether such services qualify as Pure services (excluding works contract service or composite supplies involving supply of any goods) provided to the Central Government, State Government, or local authority, thus eligible for exemption from CGST and UPGST.

Issue-wise Analysis:

1. Qualification of Services under Article 243G and 243W:

The applicant provides Project Development Service (Detailed Project Report Service and Project Management Consultancy services) under the Pradhan Mantri Awas Yojana (PMAY) to DUDA, a district-level agency of SUDA. SUDA is a nodal agency under the Department of Urban Employment and Poverty Alleviation by the Uttar Pradesh Government. The services aim to uplift the urban poor by preparing detailed project reports and managing project consultancy. The functions of SUDA and DUDA align with the functions entrusted to Municipalities and Panchayats under Articles 243W and 243G of the Constitution, which include urban planning, poverty alleviation, and slum improvement.

2. Qualification as Pure Services and Exemption from GST:

The services provided by the applicant are considered "Pure services" as they exclude works contract service or other composite supplies involving the supply of any goods. The services are provided to a governmental authority (DUDA/SUDA) by way of activities in relation to functions entrusted to Panchayats and Municipalities under Articles 243G and 243W. Therefore, these services qualify for exemption from GST under serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017, as amended by Notification No. 2/2018-Central Tax (Rate) dated 25 January 2018.

Discussion and Findings:

The Authority for Advance Ruling (AAR) examined the applicant's submissions and the detailed scope of work under the contract. The AAR found that the services provided by the applicant are in relation to functions entrusted to Municipalities and Panchayats under Articles 243W and 243G of the Constitution. The services include physical verification, data collection, preparation of architectural designs, project management, and supervision, which are essential for the successful implementation of PMAY. These services qualify as "Pure services" and are exempt from GST as per the relevant notifications.

Ruling:

Question 1:

The services rendered under the contract with DUDA 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.

Question 2:

Such services qualify as "Pure services" (excluding works contract service or other composite supplies involving supply of any goods) and are exempt from the payment of GST under serial number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017, and corresponding notifications under the UPGST Act.

Validity:

This ruling is valid only 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 and unless declared void under Section 104(1) of the Act.

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