TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 435
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....has submitted that their services are covered by SAC Code 99832-Architectural services, urban and land planning and landscape architectural services liable to tax at 18% (9% SGST + 9% CGST); that presently they have received work orders from various local authorities like the Surat Municipal Corporation, Ahmedabad Urban Development Authority, Pune Municipal Corporation, State Government of Maharashtra (through Executive Engineer, Public Works Division, Pune), for Government projects namely Rajkot Smart City Development ltd. and from Government Entity namely Gujarat Technological University. The applicant has submitted the details of the project as follows: (i) Surat Municipal Corporation: Providing Design and Comprehensive Consultancy services from concept to completion for State-of-Art High rise office building for Surat Municipal Corporation at T.P.S.No:6(Majura-Khatodara) FP No:235, Ring Road, Surat. (ii) Ahmedabad Urban Development Authority: Preparation of Design and Detailed Estimation of Town Hall at Dehgam." (iii) Pune Municipal Corporation: Appointment of a Medical Consultant for Establishment of Medical College, Teaching Hospital and Nursing College for Pune Municip....
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....d serial No.38 below). 9 --- Entry No.3 of Notification No.12/2017-Central Tax(Rate) appears as under: Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 3. Chapter 99 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 or a Governmental authority or a Government entity 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. NIL NIL 4. The applicant has submitted that if pure services are rendered to private organization, rate of tax is 18% but when pure services are rendered to any of the authorities mentioned in Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017, these services are covered under the said exemption notification wherein the following aspects are needed to be examined: (i) Whether the said consultancy services can be considered as 'pure servi....
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....h powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. (c) The Twelfth Schedule reads as under: 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 d....
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....'s services to Ahmedabad Urban Development Authority, stated to be design consultant(Pure services) for various projects like (a)Preparation of design and detailed estimation of Town hall at Dehgam.(b) Preparation of Local Area Plan for Transit Oriented Zone(TOZ), can be covered by Entry No.3 of Notification No.12/2017 dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. (3) The applicant's services to Executive Engineer, Public Works(East) Division, Pune, State of Maharashtra and local municipality for "Planning & Designing of Medical college, Teaching hospital and Nursing college for providing services like feasibility study, master planning, Architectural, MEPF, Green Building, Interior, land scape etc., whether it can be covered by entry No.3 of Notification No.12/2017 dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. (4) The applicant's services of design consultant (Pure services) for 'Preparation of MP and PMC of Green Field areas for the development of Rajkot Smart city at Rajkot under Smart City Mission (urban renewal and retrofitting program by GOI)" rendered to Rajkot Smart City Development Limited,....
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....g drawing, Structural analysis and drawings, electrical drawings and details of all services for phase wise construction of building for proposed project can be covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. 8. The applicant has given additional submission vide letter dated 05.08.2020 which is as under: (i) The word "Pure Services" referred in notification has nowhere been defined in the Act, Rules or notification. The Notification also does not specifically name the services which are eligible for exemption and which are excluded. However, CBEC vide FAQs on Government Services, has clarified: Question 25: What is the scope of 'pure services' mentioned in the exemption notification No.12/2017-Central Tax(Rate) dated 28.06.2017? Answer: In the context of the language used in the notification, supply of services without involving any supply of goods would be treated as supply of 'pure services'. For example, supply of manpower for cleanliness of roads, public places, architect services, consulting engineer services, advisory services, and like services provided by busin....
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....ded to the Local Authority. Yes 03. Activity in relation to any function of the Municipality under Article 243W No (b) Ahmedabad Urban Development Authority(Annexure C of Paper Book Page 98): Preparation of Design and Detailed Estimation of Town Hall at Dehgam. Sr.No. Conditions Yes/No Remarks 01. Pure Service Yes Covered at Sr.No.13 of List. As per judgement of Consulting Engineers Group ltd. Order dated 13.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 350 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH. 02. Provided to the Local Authority. Yes 03. Activity in relation to any function of the Municipality under Article 243W Yes (c) Pune Municipal Corporation: (Annexure D of Paper Book-Page 99 to 156): Appointment of a Medical Consultant for Establishment of Medical College, Teaching Hospital and Nursing College for Pune Municipal Corporation at Pune. Sr.No. Conditions Yes/No Remarks 01. Pure Service Yes Covered at Sr.No.6 and 13 of List. As per judgement Consulting Engineers Group ltd. Order dated 13.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 350 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH 02. ....
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....il on 01.09.2020) for the following projects, as under: 1. Ahmedabad Urban Development Authority. (Annexure C of Paper Book) Page No 98 "Preparation of Design and Detailed Estimation of Town Hall at Dehgam." Sr.No. Conditions Yes/No Remarks 1. Pure Services Yes Covered at Sr.No.13 of list. As per judgement of Consulting Engineers Group ltd. Order dated 13.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 350 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH. 2. Provided to Local Authority Yes 3. Activity in relation to any function of Municipality under Article 243W Yes 10. The applicant has submitted that they have provided consultancy work order of AUDA, which is on page 98 of paper book, for "Preparation of Design and Detailed Estimation of Town Hall at Dehgam.", as work order is one pager, hon'ble member has asked for further details to understand whether the same is covered as per list provided in twelfth schedule of constitution or not. The applicant have submitted that they have designed the project with below specifications: 1. Area Statement: i. Plot Area - 4,526.4 Sqm ii. Built Up Area -8,092 Sqm iii. Parking Area: a) Baseme....
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....157 to 303: "Work of Preparation of Master Plan of Green Field Areas for the Development of Green Field Area - Rajkot Smart City at Rajkot;Project Management Consultancy Work Of Master Plan of Green Field Areas for the Development of Green Field Area - Rajkot Smart City at Rajkot" Sr.No. Conditions Yes/No Remarks 1. Pure Services Yes Covered at Sr.No.1 and 8 of list. As per judgement of Zigma Global Environ Solutions pvt.ltd. dated 05.05.2020 of Andhra Pradesh Advance Ruling Authority. 2. Provided to Local Authority Yes 3. Activity in relation to any function of Municipality under Article 243W Yes The applicant has submitted that they have given reference of Zigma Global Environment Solutions P Ltd advance ruling judgment in their additional submission. It is in context to Tirupati Smart city corporation limited, a special purpose vehicle (SPV)created by the Government of Andhra Pradesh vide G.O.M.S. No. 258, Municipal Administration and Urban development (UBS) department dated 21.10.2016 (attached Government Order);they have referred to following website of Smart Cities Mission, of Ministry of Housing and Urban Affairs, Government of India.ref: http://smartc....
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....ament or a State Legislature; or (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function; (b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860); (c) public sector undertakings. Has to deduct tax at source on taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees. In the instant case, Rajkot Smart City Development Ltd., falls within the above notification as specified persons. As per the judgment, the Hon'ble Advance Ruling Authority of West Bengal in the following cases has taken a similar view. 1. Singh Transport 2. Mahendra Roy 3. Time Tech Waste Solutions Private Limited 4. Indrajit Singh, carrying on business under the trade name M/s Maruti Enterprise. 14. The applicant has further stated that they need to examine whether the service recipient is a Government authority? (i) Whether the applicant is set up by an act of Parliament or State Legislature? The applicant does not fall under this category. (....
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....ortal, the applicant is providing different services such as Architects services, Consulting Engineer services, Interior Decorators/Designers services and Works Contract Services. (7) The applicant is providing services to Surat Municipal Corporation, Pune Municipal Corporation, Ahmedabad Urban Development Authority and Rajkot Municipal Corporation and from the information available it cannot be decided whether the service provided is pure service or not. DISCUSSION & FINDINGS: 16. We have considered the submissions made by the applicant in their application for advance ruling, additional submissions made by them dated 05.08.2020 and 01.09.2020 as well as the arguments/discussions made by their representative Shri Priyam Shah, C.A. at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 17. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would al....
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....ly of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government entity 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. NIL NIL 19.1 As can be seen from the above, Entry No.3 of aforementioned Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 exempts 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 or a Governmental Authority or a Government Entity 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. Hence, three conditions are required to be satisfied for a service to be covered under subject entry of the notification which is as below: (1) It must be pure service not involving any supply of goods. (2) It must b....
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....prehensive Consultancy Services from Concept to Completion but not limited to Conceptual design, Architectural services, Estimate, Specifications, Tender preparation, Civil Structural designs and all other engineering services like Electrical, HVAC etc., Sanitary system, Fire safety system, Communication system, LAN, Access control, Surveillance Security system, Power backup, Signage, Interiors of High Rise office Building and design of Landscaping of campus for all works involved in the proposed new main Administrative High Rise Office Building." (b) Para 2.5.4(Electrical System) of above referred Tender Notice (Page-33) reads as under: "Scheme includes preparation of DBRs for all high voltage and low voltage electrical systems as per SMC's requirement including energy sources planning, optimization and implementation. This includes providing internal and external electrification system with necessary electrical rooms, cablings, power supply network including sub-station (building-specific), back up generators, external lighting, alternate electrical energy systems, telephone, computer cable, LAN TV and all other systems. Detailed DBRs shall be submitted to SMC for review and ....
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....cy Services and all other engineering services like Electrical, HVAC etc., Sanitary system, Fire safety system, Communication system, LAN, Access control, Surveillance Security system, Power backup, Signage, Interiors of High Rise office Building and design of Landscaping of campus for all works involved in the proposed new main Administrative High Rise Office Building" and clause(b) above which states that "the supply of service includes providing internal and external electrification system with necessary electrical rooms, cablings, power supply network including sub-station (building-specific), backup generators, external lighting, alternate electrical energy systems, telephone, computer cable, LAN TV and all other systems", and looking to the terminology and words used in the said clauses, it is very difficult to conclude that it pertains purely to services only. In fact, on going through the same, we get the impression that this does not appear to be a supply of pure service only but also includes supply of goods along with supply of services. Further, as reported by the concerned officer and as per the GST portal, the applicant supplies Works Contract Service also besides sup....
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....ion of second paragraph of the aforementioned letter(original letter is in Gujarati) reads as under: "with reference to the above subject, the work order related to consultancy for construction of Town hall at Dehgam T.P.Scheme No.2, FP No.338 such as Survey, Planning, Estimate, Draft tender papers etc. is being given. It is informed that the whole work is to be done as per the conditions of the agreement. Also an amount equivalent to 2% of the bills pertaining to your work will be deducted as Security deposit." From the above, it is crystal clear that an agreement has materialised between the applicant and AUDA in respect to the above work which has not been submitted by the applicant even though this fact was brought to the notice of his representative during the course of personal hearing. In absence of the agreement/contract and without going through the terms and conditions of the contract, it would not be possible for us to analyse as to whether the services provided by the applicant are pure or otherwise since this involves the construction of a Town Hall and only after going through the agreement can it be confirmed whether the services supplied by the applicant are pure....
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....ing plan, Fire detection, Fire-fighting systems, Solid waste water management(SWM) including Bio-medical waste management, Furniture layout for all units and its specification, Medical equipment layout plan and details." (3) Point (g) in Para 1.2(Architectural Design) under the head '1.Scope of Work' in Page 5 of the agreement reads as under: "Prepare complete Architectural, Structural and services design and drawings, working details, schedules, specifications including Architectural design, Structural details, Electrical services, HVAC system, Sanitary and plumbing details, Medical gas system, BMS, CSSD, Kitchen and catering, Laundry System, CCTV Surveillance, Communication and networking plan, Fire detection, Fire-fighting systems, Solid waste water management(SWM) including Bio-medical waste management, Furniture layout for all units and its specification, Medical equipment layout plan and details." From a plain reading of the clauses (b) and (c) above, which reads as "Prepare complete Architectural, Structural and services design and drawings, working details, schedules, specifications including Architectural design, Structural details, Electrical services, HVAC system, S....
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....ted. We have gone through the letter of acceptance dated 05.06.2018 issued by Rajkot Smart City Development limited to the applicant regarding acceptance of their offer of Rs. 5,52,40,000/- for the work of Urban Planning and Infrastructural planning as well as the agreement made between Rajkot Smart City Development limited and the applicant. On going through the terms and conditions of the said agreement, we found that there are certain clauses of the agreement which raise a question mark as to whether the above services supplied by the applicant are eligible for exemption by virtue of entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 or otherwise. The same are as under: (1) Para 2.1 of the agreement coming under Article-2: Contract Price and Payment Terms, reads as under: "Contract Price(Reference GCC Clause 1.1(v) and GCC Clause "Price"). The Client hereby agrees to pay to the Consultant the Contract Price in consideration of the performance by the Consultant of its obligations under the Contract. The Contract Price shall be Rupees Five Crores Fifty Two Lakhs Forty Thousand only(Rs. 5,52,40,000/-), as specified in the Price Schedule. The Contract Price....
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....ment, GST is to be paid to the Government. This, in itself, proves that the applicant is ineligible for exemption by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. In view of the above, we conclude that the applicant is not eligible for the benefit of exemption by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 on the aforementioned grounds itself. 20.5 The applicant has stated that the service provided by them to Executive Engineer, Public Works(East) Division, Pune is for "Design and PMC Services for Baramati Hospital. On going through the agreement made between Executive Engineer, Public Works(East) Division, Pune and the applicant, it is seen that the said agreement was signed on 10.02.2014 i.e. in the pre-GST era when services provided by the applicant was covered under the Finance Act, 1994. We also find that the said contract is for a duration of 66 months and commenced in the year 2014. We have gone through the provisions of the Finance Act, 1994 as well as the related notifications of Service tax and find that there was no such provision available for assessees for availing exemption from Service tax ....
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....cking system, Security system, Landscape Design(Site Planning Land form and grading, surface drainage, Irrigation, Hard and soft copy, garden furniture, illumination), schedule of finishes, bill of quantities as per PWD schedule of rates to describe the whole project adequately and get them approved from Competent Authorities and from all the local bodies etc. The PMC will provide 10 sets of drawings to the employer. Fee of the consultants engaged in scope of services will be the part of PMC fee and not the project cost. On a plain reading of the aforementioned clause (1), especially the portion "arrange water supply connection, Drainage connection, Electrical Connection and shifting of High Tension towers, utility shifting and other necessary approvals and clause(2), especially the portions "specifications including Architectural, Facade Design, Structural details, Electrical details, HVAC system, Acoustic designs, sanitary and plumbing details, Medical gas system, BMS, CSSD, Kitchen system and catering, Housekeeping, Laundry System, HIS, HIMSS, Communication and network plan, call system, fire detection, Fire protection and fighting systems, water supply and sewerage details, En....
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....ed agreement, we find that there is a certain clause of the agreement which raises a question mark as to whether the above services supplied by the applicant are pure services or otherwise. The same are as under: (1) Point (a) under the head '3.Scope of work' in Page 2 of the aforesaid agreement reads as under: "Preparation and submission of detailed "Master Plan" of entire area, Location of building in the Master Plan and providing connectivity to neighbouring buildings in the campus at the designated location of all the phase wise buildings, obtaining necessary approvals from client and statutory bodies wherever required including preparation, submission of models, photographs and other documents required in connection with approval from client and Statutory Bodies wherever required. On a plain reading of the aforementioned clause and looking to the terminology and words used in the said clause, especially the part "and providing connectivity to neighbouring buildings in the campus at the designated location of all the phase wise buildings", it is very difficult to conclude that the contract/agreement pertains purely to services only. In fact, on going through the same, we g....