2024 (10) TMI 1213 - AAR - GST

Technical consultancy services for water supply schemes under Jal Jeevan Mission taxable at 18% GST under SAC 998399

IN RE: M/s. THE NISARGA CONSULTANCY

AAR Maharashtra ruled that technical consultancy services for water supply schemes under Jal Jeevan Mission are classifiable under SAC 998399 and taxable ... Rate of tax - work allotted by Maharashtra Jeevan Pradhikaran (MJP) as a part of Jal Jeevan Mission which is a mission of Government of India allotted, performed & invoiced before and after 01.01.2022 - work allotted by Maharashtra Jeevan Pradhikaran (MJP) as a part of Jal Jeevan Mission which is a mission of Government of India which is performed & invoiced after 01.01.2022 but which is allotted before 01.01.2022 - service receiver within the meaning of Sec.2(93) of CGST/MGST Act in respect of amounts received as grants by MJP which are paid to the applicant on services provided before and after 01.01.2022 - appointment of MJP as an agency to implement water Supply schemes - legation of sovereign function enumerated in Sch. XI & XII with in the frame work of Constitution of India so as to hold that MJP has performed the function entrusted under Article 248G & 243W of the Constitution of India or not. What is the classification of the services supplied to Maharashtra Jeevan Pradhikaran (MJP) as a part of Jal Jeevan Mission which is a mission of Government of India allotted, and its HSN/SAC Code and applicable entry in Notification No. 11/ 2017- Central Tax (Rate) dated 28th June 2017? - HELD THAT:- The services supplied by the applicant are in nature of “Technical Consultancy for Project Development and Management support services, and hence classifiable under SAC code -998399- Other professional, technical and business services n.e.c., under the head Business and Production Services covered at Sr No 21 (ii) in the Notification No 11/2017- Central Tax (Rate)- dated 28th June 2017 and are taxable at rate of 18% (9% CGST & SGST each), wherever exemption is not applicable. Wherever exemption is not applicable. Whether Services provided to MJP for the Constitutional function of State & Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies are in fact made to the Central & State Government? - HELD THAT:- The argument of the applicant that services provided to MJP for the Constitutional function of State & Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies are in fact made to the Central & State Government. Hence, even after deletion of the word “Government Authorities “with effect from 01-01-2022, from the notification entry number 3, the services provided by the applicant shall be eligible for benefit of exemption services provided by it to MJP, is not based on evidence, far-fetched and based on conjectures and surmises and very specious argument and hence rejected. Supply of services where Time of supply is on or before 31-12-2021 - HELD THAT:- Supply of services where Time of supply is on or before 31-12-2021. After Considering all the aforesaid facts, provisions of Law, issues and decision therein, there are no hesitation in holding the “Technical Consultancy for Project Development and Management support services”, provided by the applicant to the MJP for its Water supply schemes where time of supply is on or before 31-12-2021, are covered by the exemption entry at Sr No. 3 of the exemption notification No 12/2017-Central Tax (Rate), dated 28th June 2017. Supply of services where Time of supply is on or after 01-01-2022 - HELD THAT:- There are no hesitation in holding the “Technical Consultancy for Project Development and Management support services”, provided by the applicant to the MJP for its Water Supply schemes where time of supply is on or after 01-01-2022, are not covered by the entry at Sr No. 3 of the Notification No 12/2017-Central Tax (Rate), dated 28th June 2017. As the words “or a Government Authority or a Government Entity’, are omitted from the aforesaid Entry at Sr. No. 3. Whether appointment of MJP as an agency to implement water supply schemes amounts to delegation of sovereign function enumerated in Sch. XI & XII within the framework of Constitution of India so as to hold that MJP has performed the function entrusted under Article 243G & 243W of the Constitution of India? - HELD THAT:- Not answered, being out of purview of provisions of section 97 (2) of the GST ACT, 2017. Issues Involved:1. Rate of tax for work allotted by Maharashtra Jeevan Pradhikaran (MJP) before and after 01.01.2022.2. Identification of the service receiver under Section 2(93) of the CGST/MGST Act for services provided before and after 01.01.2022.3. Classification of services supplied by the applicant.4. Applicability of exemption under Entry No. 3 of Notification No. 12/2017-Central Tax (Rate).5. Delegation of sovereign function by appointing MJP as an implementing agency.Issue-wise Analysis:1. Rate of Tax for Work Allotted by MJP:- Before 01.01.2022: The services provided by the applicant to MJP under the Jal Jeevan Mission are exempt from tax under Entry No. 3 of Notification No. 12/2017-Central Tax (Rate), as they qualify as 'pure services' provided to a 'Governmental Authority.'- After 01.01.2022: Due to the deletion of the words 'Governmental Authority or a Government Entity' from the exemption notification, the services are taxable at 18% (9% CGST and 9% SGST) as per Entry No. 21 of Notification No. 11/2017-Central Tax (Rate).2. Identification of the Service Receiver:- Before 01.01.2022 and After 01.01.2022: The Maharashtra Jeevan Authority (MJP) is considered the service receiver under Section 2(93) of the CGST/MGST Act, as it is the entity responsible for making payments to the applicant.3. Classification of Services Supplied by the Applicant:- The services provided by the applicant are classified under SAC code 998399 as 'Other professional, technical and business services n.e.c.' These services are taxable at 18% unless exempted under specific notifications.4. Applicability of Exemption under Entry No. 3 of Notification No. 12/2017-Central Tax (Rate):- Before 01.01.2022: The services qualify for exemption as 'pure services' provided to a 'Governmental Authority' under the notification.- After 01.01.2022: The exemption is not applicable due to the removal of the words 'Governmental Authority or a Government Entity' from the notification, making the services taxable.5. Delegation of Sovereign Function by Appointing MJP:- The question of whether MJP's appointment as an agency to implement water supply schemes amounts to the delegation of sovereign functions is not addressed, as it falls outside the purview of Section 97(2) of the GST Act, 2017.Conclusion:The judgment clarifies that services provided by the applicant to MJP before 01.01.2022 are exempt from GST, while services provided after this date are taxable at 18%. MJP is identified as the service receiver for both periods. The classification of services remains consistent under SAC code 998399. The question of sovereign function delegation is not within the scope of the Advance Ruling Authority's decision.