TaxTMI 
TaxTMI 
2022 (1) TMI 747
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....called the Applicant) is registered under the GST Vide GSTIN 33AAAAH2788P1Z8. They have sought Advance Ruling on the following question:- 1. Whether the claim of expenses incurred to handle the Cost Free Distribution Sarees & Dhothies and Cost Free School Uniform Scheme and supply to Revenue Department/Social Welfare Department will attract 18% GST or not. 2. If yes whether the Handling Charges related to Pre-GST period 2015-16 and 2016-17 will also attract GST or not. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicants have contended that they have been appointed and acting as a Nodal Agency to inspect and procure Cost Free Distribution Sarees & Dhothies and Cost Free School Uniform under Government Flagship Schemes. The Cost Free Distribution of Sarees and Dhothies Scheme has been introduced during the year 1983 as one of the flagship schemes by the Government of Tamil Nadu. This scheme has been continued by the Government of Tamil Nadu with the twin ob....
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....ucation Department as furnished below: SI. No. Name of the loom Quantity of Uniform Cloth (in lakh metres) Production Value (Rs. in lakh) 1. Handloom 2.71 244.18 2. Pedalloom 86.83 5145.07 3. Powerloom 411.58 26188.17 TOTAL 501.12 31577.42 2.2 The Uniform cloth required by Adi Dravidar and Tribal Welfare Department, Backward Classes and Minorities Welfare Department and Most Backward Classes and De-notified Communities Welfare Department are also being supplied by the Department of Handlooms and Textiles. The uniform cloth requirements of various Departments for the academic year 2020 - 2021 are furnished below: Name of the Department Total cloth requirement (in lakh metres) Number of Students Social Welfare Department (I to VIII Std.) 501.12 3924848 Most Backward Classes and De-notified Communities Department (IV to X Std.) 3.51 17517 Backward Class and Minorities Welfare Department (Backward Classes Hostel Students from IV to X Std.) 3.56 19750 AdiDravidar Department (IX to XII Std. students) 13.20 65540 TOTAL 521.39 4027655 For which Handling Charges is being paid....
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....ribution systems" - through which Sarees/ Dhothies are distributed to the Ration Card holders and SI. No. 17- Education including primary and Secondary education, the students studying from 1st to 8th standard are given 4 sets Uniform under the Scheme Noon Meal programme every year. By the above schemes, both producer and beneficiaries are poor and their survival is ensured by these schemes. They have contended that "As per serial number 3 of the table given in GST Notification No. 12/2017 - Central Tax (Rate) Dated:28.06.2017, "Pure Services" (excluding working contract services or other composite supplies involving supply of any goods) provided to the state Government were exempted from payment of GST. As per the services rendered by M/s. Co-optex towards Handling of Dhothies and Sarees from Co-operative Societies to Public Distribution System / Revenue Department is a "Pure Service" rendered to the State Government, it is exempted from payment of GST. Therefore, handling charges, a pure service to the government, would not attract GST and the GST claim is inadmissible. 3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was ad....
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....e Society. 2. Examination of the proposals of Handling Charges as to whether the expenditure were actually incurred and claimed. 3. To find out whether the expenditure claimed as Handling Charges were incurred in connection with implementation of Free Distribution of Sarees and Dhoties Scheme and Free Uniform Scheme. 4. To find out correctness of the claim for Handling Charges with reference to manpower deployed and the salary and wages actually incurred etc., 5. To find out the correctness of usage of manpower as to whether more number of persons were deployed over and above the requirement. 6. To verify the rate of freight, cartage of cooly with reference to the quantum of Sarees and Dhoties and Uniform Materials handled and with reference to the connected vouchers and to find the correctness of the rates with reference to the rates prevailed during the last year and the market rate for the reference period. 7. To verify the claim made towards rent with reference to the number of Godowns operated, the actual requirement of Godowns, the rent agreement entered with the godown owners, the correctness of rent claimed with referenc....
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....re is no proceedings in respect of the applicant on the questions raised. They have further opined that the activities of the applicant of procurement, inspection of quality of the goods and distribution to the departmental units in every Taluk of the State is 'Pure Service' and they do not supply goods; these services are provided in relation to functions entrusted to a Panchayat under Article 243 G of the Constitution and functions entrusted to a Municipality under Article 243 W of the Constitution as enumerated in their application; thus, these services are eligible for the benefit of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 and thus no GST is Payable. 6.1 We have considered the application filed by the applicant and various submissions made by them as well as the comments of the State and Central Tax officers. The applicants have stated that they have been appointed and acting as a Nodal Agency to inspect and procure Cost Free Distribution Sarees & Dhothies and Cost Free School Uniform under Government Flagship Schemes. They have sought ruling on the following questions:- 1. Whether the claim of expenses incurred to handle the Cost Free Distribut....
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.... in respect of 'pure services' provided to the Tamil Nadu State Government. 7.2 The aforementioned entry is examined as under: SI. No Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 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 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 From the above, it is seen that the entry is applicable to,- • All Pure Services; • Provided to the Central/State Government or Union territory or Local authority; • By way of any activity; • In relation to any function entrusted to ;- o A Panchayat under Article 243G of the Constitution or ; o A Municipality under Article 243 W of the Constitution. Thus, the entry applies to Pure services provided to the....
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.... if the supply is a composite supply of such services. It is also seen that the supply is made to the Departments of Tamilnadu, therefore, supply is made to the State Government. 8.2 The only limb which is to be examined is whether the said activity is undertaken by the applicant 'in relation to' any function entrusted to a Panchayat under article 243G of the Constitution or Municipality under article 243W of the Constitution. The function entrusted to the Panchayat by Article 243G of the Constitution of India are listed here under:- Eleventh Schedule (Article 243-G) 1. Agriculture, including agricultural extension. 2. Land improvement, implementation of land reforms, land consolidation and soil conservation. 3. Minor irrigation, water management and watershed development. 4. Animal husbandry, dairying and poultry. 5. Fisheries. 6. Social forestry and farm forestry. 7. Minor forest produce. 8. Small-scale industries, including food processing industries. 9. Khadi, village and cottage industries. 10. Rural housing. 11. Drinking water. 12. Fuel and fodder. ....
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....ies. 8.3 We have gone through the Government orders, minutes of meeting of permanent standing committee and invoices raised as submitted by the applicant and the list of functions entrusted to,- • (i) the panchayats under Article 243G of the Constitution of India and • (ii) the Municipalities under Article 243 W of the Constitution of India. The applicant has claimed that their activity is 'in relation to' the activities at SI. No. 3 - Planning for social and economic development and sl. No. 9 - safe guarding the interest of weaker sections of Twelfth Schedule of Article 243W and sl.No.16 Poverty Alleviation Programme of eleventh schedule of Article 243G of the constitution in as much as the scheme promotes and provides work to the Handloomers and pedal loomers living in the village/Town and as at SI. No. 28 Public Distribution systems - through which Sarees / Dhothies are distributed to the Ration Card Holders and SI. No. 17 Education including Primary and Secondary Education in relation to distribution of School Uniforms to the Children availing 'Noon Meal Scheme'. The implications of the term 'in relation to' is more tilted....