The appellant Ms. Jayshreeben Rameshchandra Kothari (Proprietor of Dimple Colour Lab) has submitted that she is engaged in providing ‘hiring service’ where she provides equipments such as live videography tools with LED and LCD screens, live telecast appliances, cameras etc. on hire basis to the Central Government, State Government, Union Territory, Local Authorities, Village Panchayat etc. It has been submitted that the appellant is responsible for erecting and installing such equipments at event place as per the directions of the Engineer in-charge and also responsible for operating the said equipments during the event as per the agreed terms. It has been further submitted that as per the ‘work orders’, the said equipments given on hiring basis should be used in specified manner as per the agreed terms and for specified events only, meaning thereby, there is no transfer of effective control and possession of equipments given on hire basis to the Government Department at any point of time. The appellant receives consideration in the form of ‘Hire Charges’ from the Government Department against the service provided by way of renting of equipment for cultural and social events. Once the event is complete, all the equipments deployed at the event sites are required to be dismantled and brought back by the staff of the appellant.

2. The appellant filed an application before the Gujarat Authority for Advance Ruling (hereinafter referred to as the ‘GAAR’) and raised the following questions for advance ruling –

(i) : Whether or not, the aforesaid services fall under the scope of clause 5 (f) of the Schedule II to the Central Goods and Services Tax Act, 2017?

(ii) : Whether or not, the Service related to collection of Hire Charges for temporary transfer of right to use goods from “Central Govt., State Govt. or Union Territory or Local Authority or a Government Authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243-G of the Constitution or in relation to any function entrusted to a Municipality under Article 243-W of the Constitution” are covered and exempted under the scope of Sr. No. 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017?

3. The GAAR, vide Advance Ruling No. GUJ/GAAR/R/37/2020 dated 03.07.2020 answered in negative in respect of both the aforesaid two questions.

4. Aggrieved by the aforesaid Advance Ruling, the appellant has filed the present appeal.

5.1 The appellant has submitted that the goods are used only for providing hiring service and neither transfer of goods is involved, nor any construction activity is carried out by the appellant, but a temporary iron platform structure is developed, which is not in the form of immovable property. After completion of the event, this structure is again dismantled and equipments are taken back by the appellant. The appellant has submitted that there is no supply of goods whatsoever in the course of supply of hiring of equipment services. It has been submitted that even the tender document, as available on the website, states “Annual Hire Charges for providing temp. LED & Videography for various VVIP Programmes to be held under Vadodara electrical (R&B) Division, Vadodara”.

5.2 The appellant has submitted that the term “pure service” has not been defined under the Goods and Services Tax Law. The appellant has referred to the Question 25 and its answer given in Frequently Asked Questions (FAQs) published by the Central Board of Indirect Taxes & Customs (CBIC). It has been submitted that in the instant ‘work orders’ involved, the intention of the Government is not to receive the goods, but the ultimate requirement is to enable the audience to see the event and videography can be done. Further, the equipments and accessories used by the appellant are generally in the nature of capital goods, hence it is not possible that an equipment is solely used for one event, rather these equipments are used again and again for different sort of contracts.

5.3 It has been submitted that the GAAR was under a wrong impression that any contract that involves goods cannot be treated as a contract of pure service, however, involvement of goods does not signifies that a contract is not a pure service contract, rather supply of goods must have taken place to conclude that a contract is not a pure service contract.

5.4 The appellant has submitted that she does not provide works contract service or composite supply involving goods.

6.1 The appellant has further submitted that the Road & Building Department is a department of the Government of Gujarat and hence it is covered within the definition of the State Government. It has further been submitted that any State government is supposed to carry out function entrusted upon it by the Constitution of India, therefore, it cannot be, even vaguely said that any State Government is not carrying out functions entrusted upon it by the Constitution of India.

6.2 As regards the work allotted by the “Zilla Saheri Vikas Yojana, Bharuch (District Urban Development Agency – DUDA)”, the appellant has submitted that the Work Order dated 28.08.2018 states that it is an agency of the Government hence Goods and Services Tax is not applicable on the said transaction. It has also been submitted that the service given to “Zilla Saheri Vikas Yojana, Bharuch” also falls within the meaning of ‘pure service’.

7. The appellant has analysed the type of event or programme held by the Government and the purpose behind organizing the same and has submitted summary of the same showing relevant entry of Eleventh or Twelfth Schedule of the Constitution against type of event involved in each work order / agreement. It has been submitted that the nature of work undertaken by the appellant in all the work orders fall under the respective entry of the Schedule of the Constitution of India.

8. The appellant has submitted that she fulfills all the three conditions which are pre-requisite for entry at Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding Notification No. 12/2017-State Tax (Rate) dated 30.06.2017 (the Central Tax (Rate) Notification herein after referred to includes the reference to corresponding State Tax (Rate) Notification also), therefore the appellant is eligible to claim exemption from levy of Goods and Services Tax on the said contracts.

FINDINGS :-

9. There has been change in one of the two Members of this authority consequent upon the transfer and posting of the Chief Commissioner, Central Goods and Services Tax, Ahmedabad Zone after Personal Hearing has been held in this case. However, the appellant has specifically requested vide letter dated 02.12.2020 to decide the appeal on the basis of their submissions and the discussion held at the time of personal hearing.

10. We have considered the submissions made by the appellant in the appeal filed by them as well as submissions at the time of personal hearing and Ruling given by the GAAR.

11. The appellant has submitted that it has provided ‘pure service’ to the State Government / Government Agency (entity) in relation to 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, and therefore the services being provided are exempted under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate). It would, therefore be appropriate to refer to the relevant entry at Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which reads as follows :-

12.1 It is apparent that the aforesaid exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) is admissible only in case of ‘Pure Services’ excluding ‘works contract service’ or other ‘composite supplies’ involving supply of any goods.

12.2 As submitted by the appellant, the activities being carried out involves erection and dismantling of TV sets along with cables; installation of LED and LCD screens at the venue on iron platform structure, back support of iron H frames and wiring etc., with 16 pitch resolution; to run DTH system with enough size disc for proper digital signal and Set-Top box. The erection and installation is done on a temporary basis, no permanent infrastructure is constructed and once the event is complete, all the equipments are to be dismantled and taken back by the appellant which may be used for another event as per the work schedule. The appellant receives consideration in the form of ‘Hire Charges’ towards the aforesaid services provided.

12.3 It appears from the aforesaid nature of activities described by the appellant that the appellant is required to temporarily deploy various equipments at specified places to provide ‘live videography’ of the events organized by the department of the State Government or by a Government Entity. Thus, it cannot be said that the appellant is supplying goods to the State Government or to a Government Entity. In fact, what emerges from the submissions of the appellant is that the appellant is required to temporarily deploy various goods in order to supply the service of ‘live videography’ to the department of the State Government or Government Entity.

12.4 The appellant has specifically submitted that in no case any goods are supplied to the Government of Gujarat for providing such live videography service of events. The appellant has also submitted that she does not provide ‘works contract’ service inasmuch as activity in relation to ‘immovable property’ and the ‘transfer of property in goods’ are the essential requirements of ‘work contract’ as per definition of the said term whereas the structure developed by the appellant is temporary in nature which is dismantled once an event is over and the ownership of the goods never gets transferred to the recipient. It is under these circumstances that we are of the view that use of required goods and equipments by the appellant in order to provide service of ‘live videography’ to the Government of Gujarat and Government Entity would not change the nature of service from ‘pure service’ to supply of ‘service with goods’.

13.1 The exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) is admissible when ‘Pure Services’ is provided to the Central Government, State Government or Union Territory or local authority or a Governmental authority or a Government Entity.

13.2 As submitted by the appellant, 15 out of 16 ‘work orders’ have been issued by the Road & Building Department, Vadodara which is a part of the State Government. As the State Government consists of various Ministries and Departments, we hold that the service provided to the Road & Building Department has to be considered as the services provided to the State Government.

13.3 Further, the appellant has submitted that one Work Order has been issued by the District Urban Development Agency, Bharuch, wherein it has mentioned in the Work Order itself that it is an agency of Government. It appears that the District Urban Development Agency, Bharuch is a Governmental authority or a Government Entity, though it has not been specifically mentioned so by the appellant.

14.1 In order to substantiate the claim that the services provided by the appellant are 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 Artcile 243W of the Constitution, the appellant has analyzed the type of events or programmes held by the Government, purpose behind organizing such events or programmes by the Government and identified relevant entry of Eleventh Schedule or Twelfth Schedule of the Constitution under which such events or programmes may fall.

14.2 However, we are concerned with the issue whether the service of ‘providing equipments on hire’ for ‘live videography’ of the appellant can be termed to be services by way of any activity in relation to any function entrusted to a Panchayat or a Municipality under Article 243G or Article 243W of the Constitution, rather than the nature of events or programmes held by the Government. Therefore, we do not find it necessary to discuss the nature of events or programmes of the Government wherein the appellant is providing services of ‘equipments on hire’ for ‘live videography’.

14.3 The appellant has provided ‘equipments on hire’ for ‘live videography’ during the events or programmes held by the Government Department for which ‘Hire Charges’ have been paid by the Government Department to the appellant. The activity of ‘providing equipments on hire’ or ‘live videography’ is not an activity in relation to any function entrusted to a Panchayat or a Municipality under Article 243G or Article 243W of the Constitution. The phrase ‘in relation to any function’ refers not to what activities the recipient of the service is engaged in, but to what service the supplier is providing. In order to be covered under entry at Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate), service by the appellant should relate to an activity listed in Article 243G or Article 243W read with Eleventh Schedule and Twelfth Schedule of the Constitution of India. The service of providing ‘equipments on hire’ for ‘live videography’ does not have any direct and proximate relationship with any of the activities listed in Article 243G or Article 243W read with Eleventh Schedule and Twelfth Schedule of the Constitution of India

14.4 In view thereof, we hold that the exemption provided vide Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) is not admissible to the appellant for providing service of ‘equipment on hire’ for ‘live videography’ to the State Government.

15. Therefore, we confirm the Advance Ruling No. GUJ/GAAR/R/37/2020 dated 03.07.2020 of the Gujarat Authority for Advance Ruling, to the extent it has been appealed before us, by holding that the services being provided by the appellant Ms. Jayshreeben Rameshchandra Kothari are not covered under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended and Notification No. 12/2017-State Tax (Rate) dated 30.06.2017, as amended and reject the appeal.