TaxTMI 
TaxTMI 
2022 (2) TMI 1042
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....Tower, Malviya Industrial Area. Jaipur, Rajasthan. 302017. (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (b) & (e) given as under:- (b) applicability of a notification issued under the provisions of the Act. (e) determination of the liability to pay tax on any goods or services or both. Further, the applicant being a registered person (GSTIN is 08AAACC7519BIZ0 as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. A. SUBMISSION AND INTERPRETATION OF THE APPLICANT: Questions on which Advance Ruling is required 1. Whether the 'Project Management Consultancy' services provided to Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation (RUDSICO) under Rajasthan Secondary Towns Development Sector Project, where Invoice is raised by the Applicant to the Leading Member, who further raise invoice to RUDSICO of complete amount, can be termed as 'Pure Services' as referred in SI. No. 3 - (Cha....
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.... for schemes and programme relating to Infrastructure Development. * To receive amount as revenue from ULBs. * To distribute on behalf of Govt, grant-in-aid and financial assistance to ULBs. * lo arrange or raise funds from public, institutional investor. Banks or Financial Institutions. * To plan and financial monitor all type of project related to development of Urban Areas in Rajasthan. * To set up a Central Urban Data Center for collecting and updating of all information relating to urban development and urban Infrastructure for the urban areas of the state. * To act as nodal agency for implementation of affordable housing policy/scheme 2009 and as amended from time to time by the Government of Rajasthan. * To Plan, design, develop, construct, maintain, and manage the finance and to make or arrange all the works/Jobs/Services including incidental and ancillary for infrastructure development, housing, public utility services and all other works related to the construction. 4. A contract under Rajasthan Secondary Towns Development Sector Project (RSTDSP). (herein after called "project") has been awarded by RUDSICO - EAP (Eristwhile RUDIP) herein after client and on....
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....truction supervision. 7. As stated in the Joint Venture Contract Agreement, the Relationship between the Parties clause 2.1 to the Contract Agreement states the Relationship between the Joint Venture Members as under: "Nothing contained herein shall be construed as establishing a relationship of master and servant or of principal and agent as between the Client and the Consultant. The Consultant, subject to this Contract has complete charge of the Experts and Sub-Consultants, if any performing the services and shall be fully responsible for the Services performed by them or on their behalf hereunder." 8. As per the Joint Venture Contract Agreement, the taxes and duties on any goods or services shall be paid as per the following clause 43.1 and 43.2: "Taxes and Duties The Client shall either pay or reimburse any indirect taxes, duties, fees, levies and other impositions imposed, under the applicable law in the Client's country (as on date project Services are GST exempted), on the Consultancy contract in respect of:- (a) Any payment whatsoever made to the Consultant in connection with the carrying out of the services. (b) Any equipment, materials and supplies brought....
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....d financial progress against the milestones as per the contract so as to ensure completion on time. v. Monitoring and enforcing as detailed our in the contract QA & QC manuals, the quality or inputs and processes and outputs during all activities of construction to ensure the highest quality of works confirming to the specifications A drawings. vi. Scrutinize the Contractor's detailed work program and guide the Contractor in preparation of work plan for each contract package vii. Examining the Contractor's claims, variations. additional compensations etc. and recommending appropriate actions decisions. viii. Providing advice and guidance to the PIU on ADB's procedures and guidelines for project implementation and management in general. ix. Provide inputs towards enabling the advance preparations od subprojects and assist PMU and PIUs in identifying and preparing subprojects as per the subproject selection criteria and assist PMU in (a) appraising subprojects, (b) preparing subproject appraisals reports and (e) forming bid packages. Construction Supervision: i) Undertaking necessary surveys investigations as necessary in consultation with PMCBC/PMU (such as....
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....MCB and PMU vi) Identify any further resettlement requirements and costs that may be required and provide all information required in relation to right-of-way access as well as the relocation of existing utilities vii) Monitoring and Validation of baseline surveys environmental management plans and programs, initial environmental impact examinations (IEE) Social Safeguard compliances as may be required viii) Review and supervision of Implementation of ADB compliant resettlement plans if any based on the approved resettlement framework ix) Support in establishing grievance redress mechanism acceptable to ADB norms under the project x) Obtain all necessary permissions and complying with statutory requirements as required for all construction stages such as permissions form Railways. National Highways. Department of Archaeology. Department of Forests and National Parks xi) Monitor the Implementation of EMP during construction and pre/post construction phases xii) In compliance with the EMP. develop a strategy to overcome the difficulties of construction/traffic management in narrow streets and also prepare detailed plans for detour of traffic during excavation form pipe ....
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.... raise Invoice for its Project Management Consultancy Services to the Leading Member DHV, who further raise Invoice for complete amount to RUDSICO. The payment when received by the Lead member, is further disbursed to the Applicant and other members of the Joint Venture. 12. The Applicant further states that its client, RUDSICO is of the view that the Project Management Consultancy services provided by them are exempt from CGST and Rajasthan GST as per of Notification No. 12/2017-Central fax (Rate) dated 28/06/2017. 13. Given the above background, the present application is being preferred before the Hon'ble Authority of Advance Ruling to determine whether the Project Management Consultancy services provided to Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation for Rajasthan Secondary Towns Development Sector Project can be termed as 'Pure Services' as referred in SI. No. 3 - (Chapter 99) of Table mentioned in Notification No. 12/2017 - Central Tax (Rate) Dated 28/06/2017 and accordingly eligible for exemption from Central Goods and Service Tax and Rajasthan Goods and Service Tax, irrespective of the invoice being raised by the Applicant to the Lea....
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....following conditions are satisfied cumulatively:- * They are rendering Pure services; * To the Central Government, State Government or Union territory or local authority or a Governmental authority; and * Such services should be 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. I. Interpretation of 'Pure Services' 1.1 The services provided by the Applicant, CEG (GSTIN: 37AAACC7519B1ZZ) may be termed as 'Pure Services', provided they fulfill the following conditions:- i) It excludes works contract service ii) It excludes other composite supplies involving supply of any goods iii) It is supply of services without involving any supply of goods 1.2 The word 'Pure Services' referred in notification has nowhere been defined in the Act, Rules or notification themselves. 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 the scope of Pure Services as under:- Question 25: What is the ....
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.... the Exhibit-II, also states that the GST on Consultancy services is exempt. II. RUDSICO qualifies to be a Governmental Authority 2.1 Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation Limited (RUDSICO) is a Public incorporated company and is classified as a Stare Government company and is registered at Registrar of Companies, Jaipur. Its authorized share capital is Rs. 500,000,000 and its paid up capital is Rs. 486,699,936. 2.2 The definition of "Governmental Authority" as per the definitions given under Notification no. 11/2017 -Central tax (rate) and Notification no. 12/2017- Central tax (rate) dated 28th June 2017:- "Governmental Authority " means an authority or a board or any other body. - (i) set up by an Act of Parliament or a Slate Legislature: or (ii) established by any Government, with 90per cent, or more participation by way of equity or control, to carry out any function entrusted to a Municipality under Article 243W of the Constitution or to a Panchayat under Article 243G of the Constitution. 2.3 RUDSICO is a State Government Company where more than 90 percent of the equity or control to carry out any function is owned by the Government....
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.... the works/Jobs/Services including incidental and ancillary for infrastructure development, housing, public utility services and all other works related to the construction. 3.4 As stated, Rajasthan Sector Towns Development Sector Project (RSTDSP) will invest in the rehabilitation and expansion of water supply network, rehabilitation and expansion of sewerage network, modernization and construction of new water supply and wastewater treatment plants. Its main objective is improving the water and wastewater services in 42 secondary towns of Rajasthan. 3.5 Thus, the objectives of RUDSICO and the Project is broadly covered in the items stated in list of Article 243W of the Constitution. 3.6 The RUDSICO has been entrusted for implementing schemes for development of infrastructure and public utilities by providing financial aid and construction. 3.7 Hence, the PMC services provided by the Applicant for Rajasthan Sector Towns Development Sector Project (RSTDSP) are in relation to function entrusted to a Municipality or Committee under Article 243W of the Constitution. IV. Financial Administration of the Joint Venture Agreement 4.1 The project for development of water supply unit an....
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....t that invoice is raised to the Leading Member and not to RUDSICO directly. PRAYER IN ADVANCE RULING Given the facts and circumstances, the Applicant prays before the Hon'ble Authority that: * The 'Project Management & Consultancy services' provided by the Applicant has no component of supply of goods and is eligible to be a 'Pure Service'. * Considering the definitions of Governmental Authority and the facts of RUDSICO, RUDSICO qualifies to be a 'Governmental Authority', with more than 90 percent of state government equity. * The services provided by the Applicant to RUDSICO is Project Management & Consultancy Services is in relation to Rajasthan Sector Towns Development Sector Project (RSTDSP) for rehabilitation and expansion of water supply network, rehabilitation and expansion of sewerage network, modernization and construction of new water supply and wastewater treatment plants which is listed in Twelfth Schedule to Article 243W of the Constitution. Considering the abovementioned, the PMC services provided by the Applicant to RUDSICO is a 'Pure Service' eligible for exemption under Notification no. 12/2017-Cential Tax (rate) da....
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....work, modernization and construction of new water supply and wastewater treatment plants which is listed in Twelfth Schedule to Article 243 W of the Constitution. Considering the abovementioned, the PMC services provided by the Applicant to RUDSICO is a 'Pure Service' eligible for exemption under Notification no. 12/2017-Central Tax (rate) dated 28.06.2017. irrespective of the way of raising Invoice as stated in the Joint Venture Agreement." 3. Now the issue to be decided is whether the applicant is eligible for exemption under notification 12/2017central tax rate dated 28.06.2017 or otherwise. The relevant portion of the Notification No. 12/2017 -Central Tax (Rate) dated 28/06/2017 is reproduced as under: ........................... "In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-sect....
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.... The applicant has also declared that PMC services provided by them has no component of supply of goods. Since there is no involvement of supply of goods in the services, the services would be termed as 'pure services'. Hence, the first condition is fulfilled. Now, we come to second condition. The exemption is available only when pure services are provided 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. We find that under the aforesaid contract, the applicant has to provide Project Management Consultancy services to RUDSICO. The RUDSICO has launched a project under which, they will invest in the rehabilitation and expansion of water supply network for reduction of non-revenue water under (NRW),24x7 water supply, rehabilitation and expansion of sewerage network, modernization and new construction of water supply and waste water treatment plants and waste water pumping stations, faecal sludge management and decentralized waste water management systems in the projected towns. The project will include O&M embedded construction contracts....