TaxTMI 
TaxTMI 
2026 (6) TMI 835
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....dra Nagar, DEHRADUN, Dehradun, Uttarakhand, 248001, (herein after referred to as the "applicant"/ "DSCL") and registered with GSTIN 05AAGCD3672G1ZR under the CGST Act, 2017 read with the provisions of the UKGST Act, 2017. 2. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act 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 also mean a reference to the same provisions under the SGST Act. 3. The Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. 4. As per the said sub-section (2) of Section 97 of the Act advance ruling can be sought by an applicant in respect of: (a) Classification of any goods or services or both (b) Applicability of a notification issued under the provisions of this Act, (c) Determination of time and ....
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....een Dehradun Smart City Limited (DSCL), Uttarakhand Jal Sansthan (UJS) and M/s GCKC Projects and Works Private Limited (Contractor), DSCL performs supervisory, financial agency and monitoring functions in relation to the implementation of energy-efficient pumping infrastructure forming part of the municipal water supply system. In view of the nature of the arrangement and the flow of consideration between the parties, certain questions have arisen regarding the status of DSCL as a Governmental Authority, the applicability of exemption under Notification No. 12/2017-Central Tax (Rate), and the valuation implications under Rule 33 of the CGST Rules. 5.1.2 Questions on which the Advance Ruling is sought: In view of the above facts, 'the applicant' under section 97(2) of the CGST / SGST Acts is seeking advance ruling as to; Q1. Whether Dehradun Smart City Limited ("DSCL") : qualifies as a "Governmental Authority" as per the Explanation to notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017 ? Q2. Whether the services provided by DSCL in relation to execution of smart city/ESCO projec....
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....S and PCS officers along with nominees from state departments and entities. The Chairman is the Divisional Commissioner, Garhwal Division (IAS); CEO & Director is District Magistrate, Dehradun (IAS); and directors include IAS/PCS officers (Additional Director Urban Development, Vice Chairman MDDA, Municipal Commissioner) plus government officials from UPCL, PWD, and other state departments These government officials, appointed through official government orders and serving ex-officio in their administrative capacities, exercise complete management, strategic direction, and operational control over DSCL's projects, funding, and execution, ensuring direct and unqualified state government control over the company. 5.3 Transactions in respect of which Ruling is sought 5.3.1 Overall nature of the project Pursuant to the consideration and approval of the Expenditure Finance Committee ("EFC") of the Government of Uttarakhand for the project titled "Supplying, Installation, Operation & Maintenance of Energy Efficient Pumping Machinery including Electrical & Mechanical Installations Works and Complete SCADA System at Various Tube Wells & Booster Pumping Stations Under PPP Mod....
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....ons and to the satisfaction of DSCL to prepare them to take over the Works and to operate & maintain the automation and SCADA system efficiently after expiry of 10 years O&M period. iii. The system shall include a Central Management System, which aggregates data about the fleet of RTUs (Remote Terminal Unit), allows enabling or disabling of onboard interfaces, and a web services interface so that this data can be consumed by external applications. iv. At present, supervision of Operation & Maintenance of Automation and SCADA system for 10 years including operation & maintenance of all software, hardware, sensors, analyzers, monitors, electrical equipment & wiring, actuators, flow meters, pressure sensors, energy meters, automated chlorinators etc. installed under this contract is being carried out. B. GCKC Projects and Works Private Limited (Contractor) i. The overall scope of this project covers supply, installation, commissioning & testing of automation system comprising of the entire network of RTUs (Remote Terminal Unit), instruments, cabling etc., in order to facilitate logical, sequential and automatic operations of the tube wells. ii. E....
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....ut, and approval shall be obtained from the Employer and Engineer-in-charge. iii. Log books, records and maintenance history shall be maintained and produced periodically for proper monitoring and log books of previous month shall be deposited to the DSCL/UJS concern every month. iv. Pump sets in the pumping station are to be operated for 24 hours a day or as per direction of Engineer in charge. 5.3.4 Energy-savings mechanism and sharing arrangement a) Pursuant to the implementation of automation, SCADA and energy efficiency measures under the project, reduction in electricity consumption, compared to the baseline, results in monetary savings in the electricity expenditure. b) As per the agreed sharing mechanism, and as also provided in the ESCO Model, supra, the energy savings achieved comprise of two components viz., Compulsory Saving and Additional Saving. c) In this regard, DSCL in accordance with the calculation methodology specified in the Tripartite Agreement and the approved bid of the lowest (L1) Contractor, determines and computes: i. Compulsory Saving: The Compulsory Saving shall be equivalent to 10% of the baselin....
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....e (SPV) under the Smart Cities Mission for implementation of the Smart Cities Mission in Dehradun pursuant to directions issued by the Government of Uttarakhand. It has been contended that DSCL was established by the Government through Mussoorie Dehradun Development Authority (MDDA) and Nagar Nigam Dehradun (Urban Local Body) in terms of Government Order dated 22.08.2017 and, therefore, qualifies as an entity "established by Government" within the meaning of Explanation (zf) to Notification No. 12/2017-CT (Rate) as amended. 6.1.3 90% and more participation of Government by way of equity or control : The applicant has further submitted that the condition of 90% or more Government participation by way of equity and control stands satisfied in their case. It has been stated by the applicant that the entire paid-up share capital of DSCL is held by nominees of MDDA and Nagar Nigam Dehradun (NND) in their official capacity, and not in personal capacity, therefore the beneficial ownership vests with such statutory public authorities functioning under the administrative and functional control of the Government of Uttarakhand. 6.1.4 Participation of Government by way of control : It h....
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....nstitution. In view of the above the applicant further submits that: • DSCL is a body established by the Government of Uttarakhand; • Participation of Government is established both by way of equity and control; and • DSCL has been established to carry out functions entrusted to a Municipality under Article 243W of the Constitution, as expressly provided in its Memorandum of Association and as evidenced by its statutory mandate and operational functions. Accordingly, the applicant submits that DSCL qualifies as a "Governmental Authority" under Explanation (zf) to Notification No. 12/2017-CT (Rate), as amended by Notification No. 32/2017-CT (Rate). In support of the above contention, the applicant has placed reliance upon advance rulings/orders in the cases of Tirupati Smart City Corporation Limited, Tirunelveli Smart City Limited and Jaipur Smart City Limited, wherein Smart City SPVs were held to be "Governmental Authorities" for the purposes of GST notifications. 6.2 Eligibility of the DSCL's Services for Exemption under Serial No. 4 of Notification No. 12/2017-Central Tax (Rate): Further, the applicant has submitted that the service....
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.... has submitted that the arrangement under the Tripartite Agreement involves two distinct supplies of services, each of which is required to be examined separately for the purposes of valuation and determination of GST liability under the CGST/SGST Acts. It has been submitted that: i. DSCL functions primarily as a financial-cum-supervisory agency for UJS, responsible for receiving and managing the energy-savings proceeds, retaining its own share (Compulsory 10% plus 25% of additional savings), and overseeing the project on behalf of the State Government and the Municipal Corporation. ii. The Contractor's role is that of the implementation-cum-O&M contractor, responsible for supply, installation, commissioning and 10-year operation and maintenance of the ESCO-based automation and SCADA-enabled pumping-station infrastructure for UJS. The applicant has further submitted that DSCL is not the principal recipient of the Contractor's services and that the benefit and title in such implementation and O&M activities vest with UJS, while DSCL merely receives the amounts from UJS and remits the Contractor's contractual share. 6.4 DSCL as a Pure Agent: The applicant h....
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....Contractor's 75% share to M/s GCKC Private Limited. This arrangement constitutes authorisation by UJS to DSCL to make payment to a third party (Contractor) on its behalf. The Contractor's implementation-cum-O&M services are effectively procured by UJS, and DSCL merely receives and passes on the Contractor's share of savings without initiating or controlling the Contractor-related component. Thus, DSCL acts as a pure agent of the recipient of supply (UJS) when making the payment to the Contractor, satisfying the first condition under Rule 33. ii. Payment is separately indicated in the transaction-chain The Tripartite Agreement and DSCL's internal records clearly distinguish between: • the Compulsory 10% savings; • the 25% contractual share retained by DSCL; and • the 75% share payable to the Contractor. The Contractor's 75% is treated as pass-through funds, not as part of DSCL's own consideration, and is separately tracked in the records. The Essential Requirements and Explanation to Rule 33 are interpreted to require that the payment to the third party be clearly identifiable and separate in the transaction-chain; the functional segre....
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....al precedents: i. Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India ii. Bharti Cellular Ltd. v. Assistant Commissioner iii. Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India Accordingly, the applicant has submitted that DSCL satisfies all the conditions prescribed under Rule 33 of the CGST/UKGST Rules, 2017 and that the amounts remitted by DSCL to the Contractor on behalf of UJS constitute expenditure incurred as a pure agent and not consideration for DSCL's own supply. Therefore, such amounts are liable to be excluded from the taxable value of supply under Section 15 of the CGST/UKGST Acts read with Rule 33 of the CGST/UKGST Rules. 7. PERSONAL HEARING 7.1 To meet the ends of natural justice, opportunity of personal hearing was granted to the applicant on 07.05.2026. Sh. Harpreet Singh Sabharwal, FCA, on behalf of the applicant appeared online for personal hearing on the said date and re-iterated the submission already made in their application. 7.2 Ms. Maneesha Saini, Deputy Commissioner, Concerned Officer from the State GST was also present during the hearing proceedings. She submitted that the a....
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....ax (Rate), as amended. (c) Whether the arrangement under the Tripartite Agreement constitutes two distinct supplies of services, namely: (i) supervisory/financial agency services by DSCL to UJS; and (ii) implementation and O&M services by the M/s GCKC Projects and Works Private Limited (Contractor) to UJS. (d) Whether DSCL qualifies as a "pure agent" under Rule 33 of the CGST/UKGST Rules, 2017 in respect of amounts received from UJS for onward remittance to the Contractor, and consequently, whether such amounts are excludible from the value of taxable supply under Section 15 of the CGST/SGST Acts, 2017. 8.3 Now we examine the issue one by one: 8.3.1 The first issue to examine is, whether the applicant, Dehradun Smart City Limited is a "Government Authority"? The definition of 'Government Authority', as per Explanation to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, which is reproduced as under: Notification No. 12/2017-Central Tax(Rate) dated 28.06.2017 (zf) "Governmental Authority" means an authority or a board or any other body, - (i) set up by an Act of Parliament or a State Legi....
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....hradun, Dehradun. 199988 50001-99997 250001-399991 6 Senior Finance Officer, Nagar Nigam, Dehradun 4 99998 399992- 399994 7 Chief Municipal Health Officer, Nagar Nigam, Dehradun 4 99999 399995 - 399997 8 Health Officer, Nagar Nigam, Dehradun 4 100000 399998- 400000 On perusal of the above it is noticed that the nominees of MDDA and Nagar Nigam Dehradun are the subscribers to the MOA of DSCL having 50:50 equity shareholding, which together substantiate 100% of participation by way of equity of the Government. We note that the Officers of MDDA are appointed by the Government of Uttarakhand and Nagar Nigam Dehradun being local authorities are incorporated by Uttarakhand State Government. From the above discussion and examination of facts on record, we find that DSCL is not set up by an Act of Parliament or State Legislature. However, DSCL has been established by the Government of Uttarakhand as a Special Purpose Vehicle (SPV) under the Smart Cities Mission framework for implementation of functions entrusted to Urban Local Bodies. Further, the equity participation in DSCL is held entirely by Government bodies, namely Mussoorie Dehradun De....
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....h 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 deaths. 17. Public amenities including street lighting, parking lots, bus stops and public conveniences. 18. Regulation of slaughter houses and tanneries" (II) In this connection, we have gone through the submissions made by the Deputy Commissioner, State GST, wherein it has been contended that the activities undertaken under the ESCO model are not eligible for exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and is not a supply of "pure services". The relevant portion of the Notification is appended as under: Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 3 Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply o....
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....vancy; (d) solid waste management; and (e) slum improvement and upgradation. Nil Nil (III) From the foregoing, it is observed that the concerned State GST Officer, in her submission, has not clearly specified the status of the recipients of the services, i.e., whether they qualify as the Central Government, State Government, Union Territory, or a Local Authority. Further, it is noted that specific services provided to a Government Authority are exempted under Serial No. 3B, inserted vide Notification No. 13/2023-Central Tax (Rate) dated 19.10.2023. It is also observed that the concerned State GST Officer has not provided any justification or reasoning as to why the exemption available under Serial No. 4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 would not be applicable in the present case. (IV) We find that the applicant in the application filed has not sought any ruling on the applicability of Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) or on the question whether the activities undertaken qualify as "pure services" or otherwise. Therefore, the scope of the present proceedings is confined to the specific questions r....
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....artite Agreement gives rise to two distinct supplies between different parties does not pertain to the applicability of any notification under clause (b). Further, the said question does not involve determination of the time of supply or value of supply under clause (c). Also the issue does not seek a determination as to whether any particular activity undertaken by the applicant amounts to or results in a supply within the meaning of clause (g). Further, the applicant has also sought the advance ruling on issues arising from the contractual arrangement between UJS and the Contractor i.e. M/s GCKC Projects and Works Private Limited, the both are separate and independent entities. It appears that applicant has no power to ask for advance ruling in relation to other independent entities. Accordingly, we find that the aforesaid question does not fall within the scope of any of the categories selected by the applicant under Section 97(2) of the CGST Act, 2017. In view of the same, the said issue is not maintainable for consideration in the present proceedings and, therefore, we refrain from examining the merits thereof or recording any finding thereon. 8.3.4 The last issue to ....
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....t of those fees. Therefore, A' s recovery of such expenses is a disbursement and not part of the value of supply made by A to B. From the terms of the Tripartite Agreement, DSCL emerges not merely as a channel for payment, but as an active and integral participant in the overall execution, supervision, financial management and implementation of the project. The Contractor has been engaged under a contractual framework in which DSCL itself is a principal party, and the payments made to the Contractor i.e. M/s GCKC Projects and Works Private Limited are essentially linked with DSCL's own obligations and responsibilities under the Agreement. Further, DSCL exercises monitoring, evaluation and supervisory functions in relation to the execution and performance of the Contractor, thereby indicating substantial involvement and interest in the underlying supply. Thus, DSCL does not qualify as a "pure agent" within the meaning of Rule 33 of the CGST/UKGST Rules, 2017 in respect of the amounts received from UJS and remitted to the Contractor, as the essential conditions prescribed under the said Rule is not satisfied in the present arrangement. Moreover, the arrangement represents an in....