TaxTMI 
TaxTMI 
ABC is a statutory body constituted under an Act by the legislature for Management of Transport Facility Projects involving Development of Roads and Bridges. ABC provides service to the State government by undertaking activities such as preparation of Detailed Project Reports (DPRs), technical scrutiny and sanction, tendering, project supervision and project management. centage charges are payable to ABC towards activities such as planning, designing, tendering, supervision and handing over of projects. ABC is providing such services for the development of State Highways. The Government selected ABC as Special Purpose Vehicle for implementing the projects.
As per Notification 12/2017, Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution are exempt.
So are the services provided by ABC covered by this exemption or does the exemption apply only to Panchayat and Municipal Roads. Further, what is the SAC for the services and the applicable rate of tax for services where the exemption doesn't apply ?
Kindly help
GST Liability on Pure Services provided in connection with Development of Roads
24 Jun 2026 
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Pure services for road projects may qualify for GST exemption when linked to constitutional functions and supplied to Government.
Pure services by a statutory body for road and bridge projects were considered under Entry 3 of Notification No. 12/2017-Central Tax (Rate), which exempts pure services supplied to Government when rendered in relation to functions entrusted to a Panchayat or Municipality under Articles 243G and 243W. The discussion focused on whether planning, DPR preparation, tendering, supervision, and project management for State Highways have a sufficient nexus with the constitutional functions concerning roads and bridges, and whether the exemption is limited to Panchayat or municipal roads. Where exemption is unavailable, the services were discussed as engineering or project management services under SAC 9983, taxable at the standard GST rate. (AI Summary)
Pure services by a statutory body for road and bridge projects were considered under Entry 3 of Notification No. 12/2017-Central Tax (Rate), which exempts pure services supplied to Government when rendered in relation to functions entrusted to a Panchayat or Municipality under Articles 243G and 243W. The discussion focused on whether planning, DPR preparation, tendering, supervision, and project management for State Highways have a sufficient nexus with the constitutional functions concerning roads and bridges, and whether the exemption is limited to Panchayat or municipal roads. Where exemption is unavailable, the services were discussed as engineering or project management services under SAC 9983, taxable at the standard GST rate. (AI Summary)