The Authority of Advance Ruling (AAR), Uttar Pradesh has ruled that the service rendered under contract with state urban development authority regarding functions entrusted to municipalities and panchayats are pure services and exempted from GST.
M/s KDS Services (P) Ltd, is a registered assessee under GST having GSTN: 09AADCK2144H2ZN. State Urban Development Authority (SUDA), Lucknow invited technical and financial proposals from eligible Consultancy Firms / Agencies/ Companies for Preparation of Detailed Project Report (DPR) and providing Project Management Consultancy Service (PMC) services under Pradhan Mantri Awas Yojna (PMAY) for Projects under Beneficiary Led Construction in 635 ULBs in Uttar Pradesh by its Request for Proposal (RFP).
The applicant is providing no other services to the main contractors other than the services mentioned in the scope of work mentioned in section 5 of RFP No. 708/01/29/HFA/2016-17 for the preparation of DPR and providing Project Management Consultancy (PMC) Service with the main contractors.
It was contended that the main contractors have entered into an agreement with SUDA for providing “Preparation of Detailed Project Report” and providing “Project Management Consultancy Service” under Pradhan Mantri Awas Yojna, the service which was further sublet to the applicant by the main contractors.
As per entry no. 3 of notification No. 12/2017- Central Tax (Rate) dated 28 June 2017, the service should be pure service, supplied to a specific class of recipient, and should be about any function entrusted to panchayat or municipality under article 243G or 243 W of the constitution.
The authority observed that the Consultancy services rendered by the Applicant under the contract with SUDA, and for PMAY are about functions entrusted to Municipalities / Panchayats under Article 243 W / 243G of the Constitution of India.
It was observed that the applicant was providing services of Project Development Service and Project Management Consultancy services CPMCS)/Supervision Services to SUDA as a subcontractor. The Services rendered under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are about functions entrusted to Municipalities under Article 243 W and Panchayats under Article 243G of the Constitution of India. Shri Rajendra, Kumar member (Central Tax ) and Shri Vivek Arya, member (State Tax) ruled that services rendered by the applicant would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods)” and accordingly exempt from the payment of GST duly covered in SI. No 3 of Notification No. 12/2017-Central Tax (Rate), dated 28th June 2017 issued under Central Goods and Services Tax Act, 2017 (CGST/Act).
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