Technical consultancy services to Maharashtra Jeevan Pradhikaran for water supply schemes exempt from GST under notification 12/2017 entry 3 until December 2021

The Maharashtra AAR ruled that technical consultancy services provided to Maharashtra Jeevan Pradhikaran (MJP) for water supply schemes under Jal Jeevan Mission qualify for GST exemption under notification 12/2017-Central Tax (Rate) entry 3 for supplies with time of supply on or before 31.12.2021. The AAR held MJP is a governmental authority as it was established by Maharashtra State legislature. However, services supplied after 01.01.2022 would not qualify for exemption due to amendment of the notification removing relevant exemption provisions.

---

---

Issues Involved:
1. Rate of tax for work allotted by Maharashtra Jeevan Pradhikaran (MJP) before 01.01.2022.
2. Rate of tax for work allotted by MJP before 01.01.2022 but invoiced after 01.01.2022.
3. Rate of tax for work allotted, performed, and invoiced by MJP after 01.01.2022.
4. Identification of the service receiver for services provided before 01.01.2022.
5. Identification of the service receiver for services provided after 01.01.2022.
6. Whether MJP's appointment as an agency to implement water supply schemes amounts to delegation of sovereign function under Articles 243G and 243W of the Constitution of India.

Detailed Analysis:

1. Rate of Tax for Work Allotted by MJP Before 01.01.2022:
The applicant provided technical consultancy services to MJP for water supply schemes under the Jal Jeevan Mission. The services were classified under SAC code 998399 and were considered "pure services."

Decision:
For services provided before 01.01.2022, the rate of tax is Nil, being exempt under Entry at Sr No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017.

2. Rate of Tax for Work Allotted by MJP Before 01.01.2022 but Invoiced After 01.01.2022:
The applicant argued that the rate of tax should remain Nil even if the invoicing was done after 01.01.2022, as the work was allotted before this date. However, the tax rate depends on the "time of supply" as per Section 13 of the CGST Act, which considers the earliest of the date of issue of invoice, date of provision of service, or the date on which the recipient shows receipt of services in their books.

Decision:
For services performed and invoiced after 01.01.2022 but allotted before 01.01.2022, the rate of tax is 18% (9% CGST and 9% SGST) under Entry at Sr. No. 21 Heading 9983(ii) of Notification No. 11/2017-Central Tax (Rate).

3. Rate of Tax for Work Allotted, Performed, and Invoiced by MJP After 01.01.2022:
The deletion of the words "Government Authority or Government Entity" from Entry No. 3 of Notification No. 12/2017-Central Tax (Rate) effective from 01.01.2022 implies that services provided to MJP no longer qualify for the exemption.

Decision:
For services allotted, performed, and invoiced after 01.01.2022, the rate of tax is 18% (9% CGST and 9% SGST) under Entry at Sr. No. 21 Heading 9983(ii) of Notification No. 11/2017-Central Tax (Rate).

4. Identification of the Service Receiver for Services Provided Before 01.01.2022:
The applicant contended that the service receiver should be the Central or State Government due to the nature of the Jal Jeevan Mission. However, the agreement and payment terms indicated that MJP was the entity responsible for making payments.

Decision:
The service receiver for services provided before 01.01.2022 is the Maharashtra Jeevan Authority (erstwhile Maharashtra Jeevan Pradhikaran).

5. Identification of the Service Receiver for Services Provided After 01.01.2022:
Similar to the argument for services provided before 01.01.2022, the applicant argued that the Central or State Government should be considered the service receiver due to the funding mechanism. However, the contractual terms and the nature of PFMS (Public Financial Management System) indicated that MJP was responsible for payments.

Decision:
The service receiver for services provided after 01.01.2022 is the Maharashtra Jeevan Authority (erstwhile Maharashtra Jeevan Pradhikaran).

6. Delegation of Sovereign Function:
The applicant questioned whether MJP's role in implementing water supply schemes constitutes a delegation of sovereign functions under Articles 243G and 243W of the Constitution. This issue was deemed outside the purview of the provisions of Section 97(2) of the GST Act, 2017.

Decision:
This question was not answered as it falls outside the jurisdiction of the provisions of Section 97(2) of the GST Act, 2017.

Final Order:
1. Question 1: Nil rate of tax for work allotted, performed, and invoiced before 01.01.2022.
2. Question 2: 18% tax for work performed and invoiced after 01.01.2022 but allotted before 01.01.2022.
3. Question 3: 18% tax for work allotted, performed, and invoiced after 01.01.2022.
4. Question 4: Service receiver is the Maharashtra Jeevan Authority for services provided before 01.01.2022.
5. Question 5: Service receiver is the Maharashtra Jeevan Authority for services provided after 01.01.2022.
6. Question 6: Not answered, being outside the purview of Section 97(2) of the GST Act, 2017.

---