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Activity in relation to any function entrusted to a Panchayat or Municipality are Exempted from GST: AAR [Read Order]

Municipality - Exempted - GST - Taxscan

The Authority for Advance Ruling (AAR) in Goa held that activities in relation to any function entrusted to a Panchayat or Municipality are exempted from Central Goods and Services Tax (CGST) Act.

The applicant shall be responsible for the overall management of all components of the project on technical, financial and contractual matters during the implementation of the sewerage projects. The services shall include the deployment of a team of experts, engineers, and other support staff which shall remain involved until the execution of the projects. The scope would broadly include appointments of contractors and consultants, review and finalization of contractor’s and consultant’s submissions in relation to project planning and execution, periodic review of progress report, rendering advice on countermeasures/corrective actions required for overcoming bottlenecks/problems encountered during the execution of the project.

The nature of services provided by the applicant falls under the 12th Schedule, Article 243W of the Indian Constitution, the activities listed under the 12th Schedule are enumerated as under Public health, sanitation conservancy, and solid waste management. The services provided by the applicant appear to fall in the list of services enumerated under serial no. 6 of the 12th Schedule of Article 243W of the Indian Constitution, thus qualifying the admissibility criteria.

The Authority noted that “Pure Services” are provided to a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat or Municipality under Article 243G or Article 243W of Constitution of India.

Government with 90 percent or more participation by way of equity or control to carry out any function entrusted to a Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India, then the same is exempted.

The AAR observed that the services provided by the applicant appear to fall in the list of services enumerated under serial no. 6 of the 12th Schedule of Article 243W of the Indian Constitution, thus qualifying the admissibility criteria.

The AAR also said that Supervision fees received towards such services provided by the applicant qualify as “Pure services” provided to a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat or Municipality under Article 243G or Article 243W of the Constitution of India and are exempted from CGST.

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