TaxTMI 
TaxTMI 
2021 (1) TMI 435
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and Civic projects. 2. The applicant 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 C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment in print media. 2.5 -- (ii) Other professional, technical and business services other than (i) above (and 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s for economic development and social justice. (ii) The performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule. (b) The Committees with such 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.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f tax of pure services, which are rendered to municipality for work which is in the nature of administrative building and according to their understanding, it is not covered under any activity in relation to any function entrusted to Municipality under Article 243W of the Constitution read with 12th Schedule of Entry 3 of Notification No.12/2017 dated 28.06.2017 and Gujarat State Notification No.12/2017-ST(Rate) dated 28.06.2017. (2) The applicant'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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ded to Rajkot Smart City Development ltd. covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. (5) Whether Consultancy Services for Architectural and Engineering design/working drawing of Baramati Hospital provided to Executive Engineer, Public Works(East) Division, Pune covered under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017. (6) Whether Consultancy service to Gujarat Technological University for Architectural design/engineering design, working 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, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sic conditions of notification for considering them as exempt which are detailed hereunder: (a) Surat Municipal Corporation(Annexure B of Paper book-Pages17 to 97): 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) F.P.No:235, Ring Road, Surat." Sr.No. Conditions Yes/No Remarks 01. Pure Service Yes Not covered under list of 243W of Constitution. In the case of Shri Jayesh Anilkumar Dalal, it is held that all conditions of 243W need to be satisfied for claiming pure service as exempt. 02. Provided 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rvices for Architectural design/Engineering design, Working drawing, Structural analysis and drawings, Electrical drawings and details of all services for phase wise construction of building for proposed project. Sr.No. Conditions Yes/No Remarks 01. Pure Service Yes Covered by definition of Govt. Entity as per (zfa) of Notification. Covered by Sr.No.13 of List. As per judgement of Zigma Global Environ Solutions pvt.ltd. Order dated 05.05.2020 of Andhra Pradesh Advance Ruling Authority = 2020 (7) TMI 448 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH.. 02. Provided to the Government Entity. Yes 03. Activity in relation to any function of the Municipality under Article 243W Yes 9. The applicant has given additional submission vide letter dated 01.09.2020(received by mail 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 Engineer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstruction Technology P Ltd ., reported in 2019 (25) GSTL 8(Bom) = 2019 (3) TMI 979 - BOMBAY HIGH COURT where question was whether construction of sports complex/stadium is taxable under "commercial or industrial construction services" or non-taxable services. Hon'ble high court, dismissing an appeal of department has observed that, stadium has been constructed is owned by Government and is meant for public welfare use and not for residential or commercial use - mere earmarking 1/3rd of entire area for using different sports facilities on specified rates would not make said complex/ stadium a commercial entity in its entirety. Dominant use of said complex/stadium or sports complex is not commercial and hence same is not covered under aforesaid services. 12. Regarding the services rendered to Rajkot Smart City Development limited, the applicant has submitted the following details: Rajkot Smart City Development Limited: (Annexure E of Paper Book) Page No 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 Devel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....attached 1. Central Govt. Approval; 2. Main Object and RMC Letter; 3.Minutes of First Board meeting of RSCDL. 13. The applicant has further submitted that Judgment of Zigma Global Environ Solutions Private Limited and other cases relied upon, the findings and decisions taken by Hon'ble AAR is squarely applicable to the instant case of Rajkot Smart City Development Ltd.; that from the above it is understood that, Rajkot Smart City Development Ltd., squarely falls under the definitions of "government authority" as per explanation to clause (16) of Section 2 of the Integrated Goods and Services Tax Act, 2017; that with reference to deduction of TDS as per the provisions of Section 51 of CGST Act, and Gujarat SGST Act, for the services rendered as stated in the application, they would like to refer to Sec 51(1) of the Act read with Notification no 50/2018 Central tax dtd: 13/09/2018, which reads as under: (a) an authority or a board or any other body, - (i) set up by an Act of Parliament 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 functi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reproduced hereunder in brief: (1) The applicant M/s. INI Design Studio pvt.ltd. is a service provider of consultancy services including Architecture, Engineering, Planning, Urban Design, Landscape etc. (2) As per the records available, the applicant files GSTR-3B on regular basis and so based on this, it can be decided that the activity/service is an ongoing activity. (3) As per Section 98(2) of the CGST Act, 2017, the applicant falls under the jurisdiction of Unit-9 of State GST and there are no questions/issues pending/decided from their office. (4) The applicant is providing services to Surat Municipal Corporation, Pune Municipal Corporation, Ahmedabad Urban Development Authority and Rajkot Municipal Corporation. (5) As per Article 243W service provided to local authority, State/Central Government or any Government entity may be called Pure Services. In 12th Schedule of Article 243W, nothing is specified about the mentioned services in application, so the confusion may have arisen whether service is pure service or not. So as per this view, the applicant may be granted for Advance Ruling. (6) As per the GST portal, the appl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss services (other than (i) above (and Serial No.38 below) are classifiable under Heading 9983 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 on which GST liability is 18%(9% SGST + 9% CGST) and reads as under: Sr.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Service Rate (percent) Condition (1) (2) (3) (4) (5) 21 Heading 9983 (Other Professional, technical and business services) (i) Selling of space for advertisement in print media. 2.5 -- (ii) Other professional, technical and business services other than (i) above (and serial No.38 below). 9 --- 19. Thereafter, we are required to refer to Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended by Notification No.02/2018-Central Tax(Rate) dated 25.01.2018) referred to by the applicant which contains a list of exempted services. Entry No.3 of the said notification reads 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 wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... go through each of the work orders/agreements of the applicant with the various entities to whom they provided services in order to verify as to whether all the 3 conditions mentioned in para 18.1 above are being satisfied or otherwise. Let us take each one of them chronologically. 20. On going through the agreement dated 20.02.2019 entered into between Surat Municipal Corporation and the applicant, it is mentioned under the head 'Name of work' that it pertains to "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 (MajuraKhatodara), F.P.No.235, Ring Road, Surat. However, there are certain clauses of the agreement which raise a question mark as to whether the above services supplied by the applicant are pure services or otherwise. The same are as under: (a) Para 1.5(Brief scope of work) in Tender Notice No: CE SP CELL/EO1/201617/01 (Request for Proposal) (Page-10)reads as under: "SMC desires to make its new Main Office Buildings as State of the Art High Rise Building. The successful architect to be selected from among the short listed archit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he course of execution of this Contract and the same shall be intimated/submitted/claimed within 30(thirty) Days from the date of payment with proof of GST paid to Government for reimbursement from SMC. 4.3.6:During the execution of execution of Contract, if there is any change in Rate of GST(Goods and Service Tax) by the Government, the same shall be reimbursed/recovered separately by SMC, subject to the submission of Original Receipt/Proof for the amounts actually remitted by the Successful bidder/Consultant to the Competent Authority along with a Certificate from Chartered Accountant of Contractor/Successful Bidder certifying that the amount of GST paid to the Government and the same shall be intimated/submitted/claimed within 30(Thirty) Days from the date of payment. Remittance of GST within stipulated period shall be the sole responsibility of the Successful Bidder /Consultant, failing which SMC may recover the amount due from any other payable dues with SMC and decision of Municipal Commissioner shall be final and binding on the Contractor/Successful Bidder in this regard. Further, the non-payment of GST to the Government may lead to the termination of the contract a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entral Tax(Rate) dated 28.06.2017 under which the rate of GST is NIL. In view of the above facts, we conclude that the aforementioned services supplied by the applicant to Surat Municipal Corporation are not Pure services. Since the applicant has failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 20.2 The applicant has stated that the services provided by them to Ahmedabad Urban Development Authority, as a 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. On going through the letter dated 18.08.2017 issued by the Ahmedabad Urban Development Authority, subject of the letter reads as "Preparation of design and Detailed Estimation of Town Hall at Dehgam falling under Auda" whereas the reference portion reads as "Empanelment of Consultant Urban Design and Architecture and Landscaping Design Service for A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer of Health, Pune Municipal Corporation) and the applicant, there are certain clauses of the agreement which raise a question mark as to whether the above services supplied by the applicant are pure services or otherwise. The same are as under: (1) Second last of Page 3 of the above agreement reads as under: "The consultant who is experienced and has the required professional skills, personnel and technical resources for Planning and Designing of such Medical Establishment and has offered to provide Consultancy Services in accordance to the requirements, terms and conditions as mentioned hereunder. The Consultant has quoted a fee of (currently estimated Project cost as INR 622 Crores) + GST amounting to 13,41,90,000/-(In Words Rupees Thirteen Crore Forty one Lakhs Ninety Thousand only) + GST in response to the tender no.52 Year 2017-18 dated 20.11.2017 issued by the PMC." (2) Point (f) in Para 1.1(Medical Planning) under the head '1.Scope of Work' in Page 4 of the agreement reads as under: "Facilitate to prepare complete Architectural, Structural and services design and drawings, working details, schedules, specifications including Archite....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... involved in the said contract. Also, from a plain reading of the clause mentioned at (a) above, which states that "The Consultant has quoted a fee of (currently estimated Project cost as INR 622 Crores) + GST amounting to 13,41,90,000/-(In Words Rupees Thirteen Crore Forty one Lakhs Ninety Thousand only) + GST in response to the tender no.52 Year 2017-18 dated 20.11.2017 issued by the PMC," it can be seen that the contract/agreement includes the GST amount and that GST is to be paid to the Government as per the terms and conditions of the Contract/Agreement. This, itself, proves, that the applicant are not eligible for the benefit of exemption of GST by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 under which the rate of GST is NIL. In view of the above facts, we conclude that the aforementioned services supplied by the applicant to Pune Municipal Corporation are not Pure services. Since the applicant has failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 20.4 The applicant has stated that he has provided the services of design consultant (Pure se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rformance of the Contract, an equitable adjustment to the Contract Price shall be made to fully take into account any such change by addition to or reduction from the Contract Price, as the case may be." Clause(1) above, specifically mentions that the Contract Price shall be understood to reflect the terms and conditions used in the specification of prices in the detailed price schedules, including the taxes, duties and related levies which means that the contract amount will be including of all the taxes, duties and related levies which will also include GST. Clause(2) above, specifically states that the Contract Price Specified in Article 2(Contract Price and Terms of Payment) of the Contract Agreement is based on the taxes, duties, levies and charges prevailing at the date thirty(30) days prior to the date of proposal submission and if any tax rates are increased or decreased, a new Tax is introduced, an existing Tax is abolished, or any change in interpretation or application of any Tax occurs in the course of the performance of the Contract, an equitable adjustment to the Contract Price shall be made to fully take into account any such change by addition to or reduction fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ater supply connection, Drainage connection, Electrical Connection and shifting of High Tension towers, utility shifting and other necessary approvals, NOCs and permissions required for the Project at any stage of the project. The fee for such clearances will borne by the Employer." (2) Point No.(iii) and (iv) under the Head '(d)Detailed Design Stage' under "Scope of Services' (in Annexure-1 of agreement-Page 17)reads as under: (a) Prepare complete Building Design, Structural and Services design and drawings, working details, schedules, 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, Environment sustainability, Rain water harvesting, EIA and clearance, Solid waste water management(SWM), including (b) Bio-medical waste management, Detailed Furniture layout for all units and its specifications, Medical equipment layout....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f services. Besides, as discussed earlier, the applicant supplies Works Contract Service also other than supplying design and consultancy services and few other services and looking to the facts mentioned hereinabove, there appears to be a distinct possibility of Works Contract Service being involved in the said contract. In view of the above facts, we conclude that the aforementioned services supplied by the applicant to Executive Engineer, Public Works(East) Division, Pune are not Pure services. Since the applicant has failed to satisfy the very first condition in order to be eligible for the exemption, there is no need for us to discuss other conditions at all. 20.6 The applicant has stated that the services supplied to Gujarat Technological University is for Architectural design/engineering design, working drawing, structural analysis and drawings, electrical drawings and details of all services for phase wise construction of building for proposed project. On going through the agreement dated 12.12.2019 made between Gujarat Technological University and the applicant, it is observed that the applicant is required to provide a complete and Comprehensive Consultancy service for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....conclusion that the exemption under Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 is not available to the applicant in any of the aforementioned agreements/contracts entered into, by them. 22. In light of the foregoing, we rule, as under - R U L I N G Questions asked by the applicant M/s. INI Design Studio pvt.ltd., Ahmedabad. Question-1: Whether Design and Comprehensive Consultancy Services from concept to completion for State-of-Art High rise office building provided to Surat Municipal Corporation covered under Entry No.3 of Notification No.12/2017Central Tax(Rate) dated 28.06.2017? Answer: Answered in the negative for the reasons discussed hereinabove. Question-2: Whether Consultancy Services for preparation of design and detailed estimation of town hall at Dehgam, provided to Ahmedabad Urban Development Authority covered under Entry No.3 of Notification No.12/2017Central Tax(Rate) dated 28.06.2017? Answer: Answered in the negative for the reasons discussed hereinabove. Question-3: Whether Medical and Design Consultancy Services for establishment of Medical College, Teaching Hospital and Nursing College at Pune, provided to Pune....