The Maharashtra Authority for Advance Ruling ( AAR ) recently ruled that 0% or Nil Goods and Services Tax ( GST ) is applicable in respect of work allotted by the Maharashtra Jeevan Pradhikaran ( MJP ) as part of the Jal Jeevan Mission, a Government of India operation.
The Application was filed by M/s Fortress Infracon Limited and Yash Innovative Solutions LLP (JV), a partnership firm engaged in the business of providing technical consultancy to various Governments, Semi-Government, Government Corporations & Quasi-Government Institutions.
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In light of the functions vested on the Government machinery by the Constitution of India, State Governments and Panchayat Raj Institutions are required to establish proper facilities of sewage and used water disposal for villages, towns and cities. The implementation of such schemes requires extensive planning, engineering, and designing and for the same consultants such as the Applicant are hired by the Government.
The Maharashtra Jeevan Authority Act, 1976 (MJA Act) empowers the Government to initiate and implement supply/drainage/sanitation/stormwater schemes utilizing consolidated funds as per budget allocations from the Government.
An amendment to the MJA Act was notified by Notification No.16/2021 – Central Tax (Rate) dated 18.11.2021 where the words “or a Governmental Authority or a Government Entity” came to be omitted from Sr. 3 and 4 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017.
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In light of such an amendment, there arose a confusion whether the activity of the Applicant is not exempt from GST but now chargeable at 18%, further effectuated by the lack of uniformity in the application of the Tax . The present Application has been filed seeking clarification on the rate of tax applicable to “pure services in the nature of project management consultancy provided to Central/State Governments/Local Authority/ Government Authority/Entity” before 01.01.2022 and after 01.01.2022.
It was noted that the Applicant qualifies as a ‘Governmental Authority’ for the purpose of exemption under Notification No.16/2021 – Central Tax (Rate) and for the Services rendered by the Applicant towards the MJP before 31.12.2021.
The Decision was rendered by the AAR after recognizing that “Technical Consultancy for Project Development and Management support services” provided by the Applicant to MJP as part of Jal Jeevan Mission by the Government of India qualifies as “pure services” for the period prior to 01.01.2022.
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In light of the observation, the authority Bench held that Nil tax is payable by the Applicant for the work allotted by MJP as part of Jal Jeevan mission and performed and invoiced before 01.01.2022; alternatively, a GST rate of 18% shall be levied on any work performed, allotted and invoiced after 01.01.2022, being covered by Entry at Sr. No 21 Heading 9983, (ii) of the Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017.
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