Exemption for municipal services: consultancy and project management for fire station and parking qualify as GST-exempt.

Consultancy and project management services for construction of a fire station, staff quarters and multi-level parking were assessed against the three conditions of Sl. No. 3 of Notification No. 12/2017-(1) whether the supply is a pure service (not a works contract or composite supply involving transfer of goods), (2) whether the recipient is a local authority, and (3) whether the service relates to a function entrusted to a Municipality under Article 243W. The contract evidence shows no transfer of property in goods, the recipient is a municipal authority, and fire services and public parking appear in the Twelfth Schedule; accordingly the services satisfy all conditions and are exempt from GST under Sl. No. 3.

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Issues: (i) Whether consultancy and project management services provided by the applicant to Ahmedabad Municipal Corporation for construction of Danapith Fire Station, staff quarters and multi level parking qualify as "pure services" relating to functions entrusted to a Municipality under Article 243W and are exempt under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

Analysis: The exemption in Sl. No. 3 requires (a) the supply to be a pure service (excluding works contract or composite supplies involving supply of goods), (b) the recipient to be Central/State/Union territory/local authority, and (c) the service to be by way of any activity in relation to a function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W. The supply agreement dated 13.11.2019 shows scope limited to architectural and structural drawings, detailed estimates, tender documents, consultancy for MEP/firefighting/electrification, supervision, certification of bills and related advisory and project management services, with no transfer of property in goods; accordingly it is not a works contract or composite supply involving goods and falls within the concept of pure services. The recipient is Ahmedabad Municipal Corporation, which is a local authority under Section 2(69)(b) of the Central Goods and Services Tax Act, 2017. The twelfth schedule to Article 243W includes fire services (clause (7)) and public amenities including parking lots (clause (17)). The staff quarters in this contract are provided for accommodation of fire personnel and are located within the fire station premises; historical and regulatory material (Standing Fire Advisory Committee recommendations and auditing observations) indicate provision of living accommodation on fire station premises is integral to fire services, supporting treatment of the staff quarters as part of the municipal function of fire services. Applying these legal tests to the facts, all three conditions of Sl. No. 3 are satisfied for the services in question.

Conclusion: The consultancy and project management services supplied by the applicant to Ahmedabad Municipal Corporation for the Proposed Construction of Danapith Fire Station and Staff Quarters & Multi Level Parking are exempt from GST under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

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