The Telangana State Authority forAdvance Ruling has recently, in an application filed before it, held that the supply of telecommunication services to the local authority, is taxable under GST.
The aforesaid observation was made by the Authority for Advance Ruling when an application was preferred before it by M/s. Vodafone Idea Limited, the applicant, who is engaged in providing telecommunication services, who in the course of its businessis also providing these services to GHMC by way of data/voice telecommunication services SAC 9984.
According to the submissions of the applicant, these services provided to GHMC are not related to any specific project or specific scheme of the Government and are provided to GHMC to be used by employees for general office and administrative purposes. Further under serial no.3 of Notification No. 12/2017 dated 28.06.2017, their services qualify to be pure services rendered in relation to functions entrusted to a municipality under Article 243Wof the constitution of India. And in light of the said notification, the applicant finds that such services are exempt from tax under GST, thereby excluding it from the liability of tax payment.
The question involved in the application being as to whether the supply of ‘telecommunication services’ to local authority (Greater Hyderabad Municipal Corporation) by applicant is a taxable services under Section 9(1) of the CGST Act, 2017 and/or exempted vide Sr. No. 3 (Chapter 99) of Table mentioned in Notification No. 12/2017- Central Tax (Rate) dated 28 June 2017,the Telengana State Authority for Advance Ruling, consisting of its members Sri B. Raghu Kiran, IRS, Additional Commissioner (Central Tax) and Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax), observed :
“The Hon’ble Supreme Court of India in the case of Doypack Systems Pvt. Ltd. vs. Union of India (UOI) and Ors., has clarified the meaning of the expression “in relation to”.
“Similarly the Hon’ble Supreme Court of India in the case of Madhav Rao Jivaji Rao Scindia Vs Union of India, has also observed that the expression “relating to” means to bring into relation or establish a relation.”
“It was further clarified that there should be a direct and immediate link with a covenant and that there cannot be any independent existence outside such covenant”, the Bench of the Telangana State Authority for Advance Rulingadded.
Thus, pronouncing its ruling, the Authority for Advance Ruling held:
“The applicant is providing data and voice services to GHMC and to the employees of the municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore, these services do not qualify for exemption under Notification No. 12/2017, and for the reasons mentioned above, the supply of telecommunication services to local authority is a taxable service”.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
