M/s. [Rudrabhishek Enterprises Ltd.] A-6, Sector 58, Noida, Uttar Pradesh, 201301 (hereinafter called the applicant) is a registered assessee under GST having GSTN : 1[09AAACR707L2ZD]
2. The applicant is engaged in providing all kinds of consultancy services related with infrastructure, environment, urban designing, urban planning, housing and project management, civil designing, construction management including civil, mechanical, electrical, and all other types of erection, commissioning projects, project trading and execution of projects on turnkey basis and carry out engineering, procurement and construction contracts and turnkey contracts including design services for all types of building, infrastructure and urban development projects for private and Government agencies.
3. The applicant has submitted application for Advance Ruling dated 29-10-2018 enclosing duly filled Form ARA-01 (the application form for Advance Ruling) along with annexure and attachment.
4. The applicant in his application sought clarification and Advance Ruling as follows :-
(1) Whether the Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (‘PMCS’) provided by the applicant to recipient under the contract for SUDA; and the Project Management Consultancy services (‘PMC’) under the contract for PMAY would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India?
(2) If answer to first question is in affirmative then, whether, such services provided by the applicant would qualify as “Pure services (excluding works contract service or other composite supplies involving supply of any goods)” as provided in Serial Number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018-Central Tax (Rate), dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (‘CGST’) and corresponding Notifications No. – KA.N.I.-2-843/X1-9 (47)/17-UP. Act-1 – 2017 – Order – (10) – 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Services Tax Act, 2017 (‘UPGST Act’), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.
5. The application for advance ruling was forwarded to the jurisdictional GST Officer to offer their comments/views/verification report.
6. The applicant was granted a personal hearing on 4-1-2019. Mr. Narendra Kumar, CA and Mr. Manoj Kumar CFO, Authorized representatives on behalf of applicant appeared for hearing. During the personal hearing they submitted/stated that they have already submitted views in their letter dated 29-10-2018 and they would like to reiterate the same.
Discussion and finding :
7. We have gone through the submissions made by the applicant and examined the detailed explanation submitted by them. We observe that the question sought by the applicant is whether the Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (‘PMCS’) provided by the Applicant to ‘SUDA’ and the Project Management Consultancy Services (PMCS) for ‘PMAY’ would qualify as an activity in relation to functions entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India. We have also examined the Notification No. 12/2017-Central Tax, dated 28-6-2017 as amended vide Notification No. 2/2018-Central Tax, dated 25-1-2018, issued by the Central Government and corresponding Notification No. – KA.N.I.-2-843/X1-9 (47)/17-UP. Act-1-2017 – Order – (10) – 2017 Lucknow, dated June 30, 2017 issued by the State Government, Uttar Pradesh.
8. Now we come to the first question placed before us as to whether the Project Development Service (i.e. Detailed Project Report Service) and Project Management Consultancy services (‘PMCS’) provided by the applicant to recipient under the contract for SUDA; and the Project Management Consultancy services (‘PMC’) under the contract for PMAY would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India? To proceed further, we need to examine the purpose and scope of work for which the applicant has gone into contract with State Urban Development Authorities (SUDA) and Pradhan Mantri Avas Yojna (PMAY).
9. SUDA has been established as a State level nodal agency, under the Department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government. This agency is registered under the ‘Registration of Societies Act’ since 20th November, 1990. As per the website of SUDA the main objectives of Society shall be – (a) To identify the urban poor in the State, (b) To draw the plans and scheme for the upliftment of the urban poor in the State, (c) To implement schemes for the benefit of the urban poor either directly or through other agencies engaged in this direction, whether private, public or cooperative, (d) To review the progress of the execution of these activities as well as effectiveness of the benefits directed towards the urban poor, (e) To set up or establish any specific service such as training facilities, infrastructural etc. in furtherance of the economic interest of the urban poor. Further, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and Affordable Housing in Partnership. Furthermore, the matters listed in the 11th and 12th Schedules to the Constitution (details 243G and 243W, respectively), as functions pertaining to Panchayats/Municipality, are inter alia :
(a) Safe water for drinking, (b) Maintenance of community assets, (c) Family welfare, (d) Markets and Fairs, (e) Poverty Alleviation Programmes, (f) Regulation of land use and construction of land buildings, (g) Urban planning including the town planning, (h) Planning for economic and social development, (i) Urban poverty alleviation, (j) Slum improvement and upgradation.
9.1 Now, we come to examine the scope of work awarded to the applicant under different contracts – The Scope of work awarded to the applicant includes –
Scope of work under preparation of DPR
Scope of work under Project Management Consultancy (PMC)
10. Accordingly we hold that the Consultancy services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.
11. Now coming to second question for consideration before us is a corollary to the first question in case the answer to first question is in affirmative. Since we have already made our findings in affirmative as far as first question is concerned, we now move to examine the second question as to whether, such services provided by the applicant would qualify as “Pure services (excluding works contract service or other composite supplies involving supply of any goods)” as provided in Serial Number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018-Central Tax (Rate), dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (‘CGST’) and corresponding Notifications No. – KA.N.I.-2-843/X1-9 (47)/17-UP. Act-1 – 2017 – Order – (10) – 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Services Tax Act, 2017 (‘UPGST Act’), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.
12. We have examined the contract awarded to the applicant by SUDA. Government of Uttar Pradesh for preparation of Detailed Project Report (DPR) and providing Project Management Consultancy for PMAY. After the examination of the agreement and scope of work we are of the opinion that services being rendered by the applicant qualify as “Pure Service (excluding works contract service or other composite supplies involving supply of any goods)” as provided in Serial Number 3 of Notification No. 12/2017-Central Tax (Rate), dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018-Central Tax (Rate), dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (‘CGST’) and corresponding Notifications No. – KA.N.I.-2-843/X1-9 (47)/17-UP. Act-1 – 2017 – Order – (10) – 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Services Tax Act, 2017 (‘’UPGST Act’), where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and UPGST, respectively.
13. In view of the above, both the members unanimously rule as under :
RULING
Question 1. We hold that the Consultancy services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.
Question 2. The Services being rendered by the applicant qualify as “Pure Service (excluding works contract service or other composite supplies involving supply of any goods)” are exempt from tax duly covered in Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 (as amended from time to time) issued under Central Goods and Services Tax Act, 2017 (CGST Act), and corresponding notifications issued under Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act).