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Pure Consultancy Services provided to local bodies are Exempted but 18% GST applicable on Consultancy Services provided to private individuals, says AAR [Read Order]

AAR - GST - pure consultancy services - Municipalities - consultancy services - GST - Taxscan

The Karnataka Authority of Advance Ruling (AAR) ruled that the pure consultancy services provided to Municipalities and Corporations are exempted but 18% GST applicable on consultancy services provided to private individuals.

The Applicant, Vimos Technocrats Pvt Ltd is a private limited company rendering pure consultancy services like project management consultancy services including construction, supervision, quality control, rejuvenation, and development of lakes.

Further applicants also involved in the preparation of detailed project reports for pumping treated water, scientific landfills at Bengaluru quarries, construction of Raja Nala and Other development civil works etc.

The Applicant is providing these services mainly to the Municipalities, Corporations, and also to Government Departments and only in a few cases, a pure consultancy service is being provided to private parties.

The applicant sought advance ruling on the issue of whether pure consultancy services provided to the Municipalities and Corporations are exempt from GST as per the serial number 3 of the notification 12/2017-Central tax (Rate) dated 28.06.2017.

The other issue raised was whether pure consultancy services provided to the private individuals are taxable. If yes, what is the rate of tax and relevant notification.

Lastly, the applicant sought advance ruling on whether the input tax paid on the purchase of capital goods like furniture, computer, lab equipments, drone cameras, total station, auto level instruments, etc., and on certain services can be claimed to the extent of taxable supply of services.

The two-member bench of Dr. M.P. Ravi Prasad and Mashood ur Rehman Faruqooi ruled that pure consultancy services without supply of goods provided by the applicant to the Municipalities and Corporations (local bodies) and State Government Departments, as enumerated in the application, are exempt from GST as per the serial number 3 of the Notification No. 12/2017-Central Tax (Rate) Dated 28.06.2017.

The Authority further said that pure consultancy services provided to the private individuals are taxable 9% under CGST and 9% under GST as per the entry No.21 of the Notification No. 11/2017 Central Tax (Rate) Dated 28/06/2017.

“Input tax paid on the purchase of capital goods like furniture, computer, lab equipments, drone camera, total station, auto level instruments, etc., and on certain inputs services shall be restricted to so much of the input tax as is attributable to the taxable supplies made by the applicant as per subsection 2 of section 17 of the CGST Act 2017,” the AAR said.

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