In the Erstwhile Service tax Act, Notification No. 25/2012-ST (Entry No. 60) provides for exemption from Service tax for following:
"Services by Government, local authority or a government authority by way of any activity in relation to function entrusted to Panchayat under Article 243G of Constitution"
The above exemption is continued in GST vide understated provision in CGST Act.
Sec 7(2) Notwithstanding anything contained in sub-section (1),––
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.
"Services To" Govt......were not exempted in erstwhile Service Tax Act, which has been recently introduced vide Notification No. 12/2017-CGST dated 28.06.17, but for Pure Services only and that too for services performed which is in relationto function entrusted to Panchayat under Article 243G of Constitution. (Specific Restriction)
- Agriculture, including agricultural extension.
- Land improvement, implementation of land reforms, land consolidation and soil conservation.
- Minor irrigation, water management and watershed development.
- Animal husbandry, dairying and poultry.
- Fisheries.
- Social forestry and farm forestry.
- Minor forest produce.
- Small scale industries, including food processing industries.
- Khadi, village and cottage industries.
- Rural housing.
- Drinking water.
- Fuel and fodder.
- Roads, culverts, bridges, ferries, waterways and other means of communication.
- Rural electrification, including distribution of electricity.
- Non-conventional energy sources.
- Poverty alleviation programme.
- Education, including primary and secondary schools.
- Technical training and vocational education.
- Adult and non-formal education.
- Libraries.
- Cultural activities.
- Markets and fairs.
- Health and sanitation, including hospitals, primary health centres and dispensaries.
- Family welfare.
- Women and child development.
- Social welfare, including welfare of the handicapped and mentally retarded.
- Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes.
- Public distribution system.
- Maintenance of community assets.]
(Article 243W)
1. Urban planning including town planning.
2. Regulation of land-use and construction of buildings.
3. Planning for economic and social development.
4. Roads and bridges.
5. Water supply for domestic, industrial and commercial purposes.
6. Public health, sanitation conservancy and solid waste management.
7. Fire services.
8. Urban forestry, protection of the environment and promotion of ecological aspects.
9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.
10. Slum improvement and upgradation.
11. Urban poverty alleviation.
12. Provision of urban amenities and facilities such as parks, gardens, playgrounds.
13. Promotion of cultural, educational and aesthetic aspects.
14. Burials and burial grounds; cremations, cremation grounds; and electric crematoriums.
15. Cattle pounds; prevention of cruelty to animals.
16. Vital statistics including registration of births and deaths.
17. Public amenities including street lighting, parking lots, bus stops and public conveniences.
18. Regulation of slaughter houses and tanneries.
CONCLUSION
Lets say if Querist is into supply of Manpower to GST Office, would it get covered under Article 243G / 243W . No, as the service is not in relation to function entrusted in relation to Panchayat / MC.
Concern of Govt is whether they provides services as stated under respective articles as above or is outsourced by Govt, both will be subject to NIL Tax, which was not the case earlier and Govt, stands to loose.
Hope I have been able to address the issue as desired.
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