The Authority for Advance Rulings (AAR), Karnataka has held that the services such as maintenance of parks provided by Societies to the State Government, Central Government or a Local Authority (including BBMP) or a Governmental Authority, not involving transfer of property in goods either as a component of a works contract or a composite supply is exempted from the Goods and Services Tax (GST).
The applicant society is a wing of Horticulture Department of Government of Karnataka. The works of formation of parks and landscaping on the lands belonging to the Government and other Government Undertakings is entrusted to this society and they execute the works of deweeding of the land, levelling of land, landscaping and formation of parks in the Lands belonging to the Government and other Government Undertakings.
The applicant approached the AAR for a clarification regarding their tax liability in connection with landscaping and gardening work for government departments like BBMP, KSRTC, etc, through works contract.
The authority noted that the activity of maintenance of Parks is covered under the entry 12 of the Twelfth Schedule to the Constitution of India which reads “Provision of urban amenities and facilities such as parks, gardens, playgrounds” and hence is an activity covered under article 243W of the Constitution.
“Admittedly, the activity of maintenance of parks done by the applicant for Government undertakings are not covered by the entry no. 3 of the Notification No. 12/2017 – Central Tax (Rate) dated 28th June 2017. So also the activities which are in the nature of works contract and composite supplies. It is only the pure services which are exempt from the levy of tax,” the authority said.
It was further held that “in the question raised, whether the KSRTC and other entities fall under the Government departments, the learned representative, at the time of personal hearing has accepted that they are not covered under the entry no. 3 of the Notification No. 12/ 2017 Central Tax (Rate) dated 28th June 2017 and hence there is no question of answering the same.”
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