Maintenance and security services to Housing Board ineligible for GST exemption under Notification 12/2017

The AAR, Chhattisgarh ruled that services provided by the applicant for maintenance of colonies developed by Chhattisgarh Housing Board (CGHB) and security guard services do not qualify for GST exemption under Notification No. 12/2017-Central Tax (Rate). The authority determined that CGHB cannot be classified as "Government" or "local authority" as required for exemption, being merely a government entity whose exemption benefit was withdrawn from January 1, 2022. Additionally, the services provided do not constitute functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W of the Constitution, failing to meet the third criterion for exemption.

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Issues Involved:
1. Whether the services provided by the applicant in relation to maintenance of colonies developed by Chhattisgarh Housing Board (CGHB) and not handed over to the local authority are exempt under SI. No. 3 of the Exemption Notification GST Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 as amended.

Issue-wise Detailed Analysis:

1. Applicability of Exemption Notification:
- The applicant, M/s Call Me Services, sought an advance ruling on whether their services related to the maintenance of colonies developed by CGHB, which have not been handed over to local authorities, are exempt under SI. No. 3 of the Exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017.
- The applicant contended that CGHB qualifies as a "local authority" since it performs functions similar to those of a municipality under Article 243W of the Constitution until the developed areas are handed over to the local authority.

2. Legal Position and Analysis:
- The Authority for Advance Ruling clarified that the CGST Act and the Chhattisgarh GST Act, 2017 have similar provisions, and the ruling would be based on these provisions.
- Section 97(2) of the CGST Act, 2017 covers the question of the applicability of a notification issued under the Act, and thus, the application was admitted for consideration on merits.

3. Examination of CGHB's Status:
- The jurisdictional Assistant Commissioner and Deputy Commissioner opined that CGHB does not fall under the category of Central Government, State Government, or local authority. Therefore, the services provided by the applicant are not covered under the exemption.
- The Authority observed that for the exemption under SI. No. 3 of Notification No. 12/2017 to apply, three conditions must be met: (i) the service should be pure services, (ii) provided to the Central Government, State Government, Union territory, or local authority, and (iii) related to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution.

4. Definition and Interpretation:
- The term "pure services" has not been specifically defined but generally includes services not involving any goods.
- CGHB, formed under the Chhattisgarh Housing Board Act, 1972, is considered a "Government Authority" or "Government Entity," and not a "local authority" or "Government."
- The exemption benefit to "Government Authority" or "Government Entity" was withdrawn effective from 1st January 2022.

5. Functions Entrusted under Articles 243G and 243W:
- The functions listed under Articles 243G and 243W were examined. The services provided by the applicant, such as maintenance of colonies and provision of security guards, do not align with these functions.
- The Authority concluded that the services provided by the applicant do not qualify as activities in relation to functions entrusted to a Panchayat or Municipality.

Conclusion:
- The applicant did not meet any of the three mandatory conditions specified in the exemption notification.
- Therefore, the services provided by the applicant to CGHB in relation to the maintenance of various colonies and provision of security guards do not qualify for the benefit of Nil rate of GST under Sr. No. 3/3A of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 as amended.

Order:
- The services provided by the applicant in relation to the maintenance of colonies developed by CGHB and not handed over to the local authority are not eligible for the benefit of Nil rate of GST under the specified exemption notification.

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