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

AAR Maharashtra ruled that technical consultancy services for water supply schemes under Jal Jeevan Mission are classifiable under SAC 998399 and taxable at 18% GST. Services supplied to Maharashtra Jeevan Pradhikaran with time of supply before 01.01.2022 qualify for exemption under notification entry 3, while services after 01.01.2022 do not qualify due to deletion of "Government Authority" from the exemption entry. The argument that services are effectively supplied to Central/State Government through PFMS payment system was rejected as speculative and unsupported by evidence.

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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.

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