In Re: Dr. Amin Controllers Private Limited
GST
2019 (2) TMI 186 – AUTHORITY FOR ADVANCE RULING, TAMILNADU – 2019 (21) G. S. T. L. 178 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, TAMILNADU – AAR
Dated:- 28-11-2018
Order No. 22/AAR/2018
GST
MS. MANASA GANGOTRI KATA, IRS AND THIRU S. VIJAYAKUMAR, M.SC., MEMBER
Note: Any appeal against the advance ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Subsection (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference t
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levy of 18% GST can be taken credit of SGST by issuing Credit Note.
The Applicant has submitted the Advance Ruling in Form GST ARA – 01 and had enclosed challan for payment of Fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017.
2.1 The Applicant has stated that they are a Third Party Inspection Services Agency empanelled with CMWSB and TWAD (Clients). They render Third Party Inspection Services as per the work orders issued to them by their Clients from time to time. The Applicant has stated that, when Goods/ Materials are ordered /procured by TWAD/CMWSSB from various contractors in connection with a function of Municipality entrusted to them under Article 243W of the Constitution. The contractor places the order for purchase of materials from Manufacturers/Suppliers. Before the supply / delivery of materials, the Applicant has to conduct Third Party inspection of materials and submit a report to TWAD/CMWSSB. On the material goods being re
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pplicant) was providing Third Party Inspection Services to M/s. CMWSSB and M/s. TWAD and when they raised Invoices along with Service Tax to the M/s. CMWSSB and M/s. TWAD, the clients denied to pay Service Tax dated 20/06/2012- “Services provided to the Government, a local authority or a government authority by way of construction, errection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of-“. The Applicant took the appeal before the Assessing Officer, Mumbai where an order was issued to them to pay the Service Tax stating that their services of Third Party Inspection are not covered under SI.No. 12(e) of Notification No. 25/2012 of Services Tax dated 20/06/2012.
In the light of the above, the applicant has now sought Advance Ruling to clarify, Whether the services rendered by them to M/s. CMWSSB and M/s. TWAD are exempted under SI. No. 3 of the Notification No. 12/2017-CT(Rate) dated 28th June, 2017.
3. The Applicant was heard i
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that the Applicant was empanelled for conducting Third party Inspection for procurements of Pipes, Open Well Submersible Pump sets, Panel Boards, Transformer, Water Meters and other equipment supplied by the L&T Ltd., Chennai to M/s. TWAD under CWSIS to Vellore Corporation and various Municipalities and Towns of Vellore district required for implementing Water Supply Schemes and Sewerage Schemes to ensure quality assurance. The Applicant will also submit a final report on the quality of the equipment based on their inspections. The Applicant will be paid as a percentage of the value of materials inspected at various slabs. The invoice indicates the charges towards “Professional Fees” of various equipment indicating dates and places of Inspection, Description of equipment/materials.
4.2 On verification of the Agreement , Work Orders with CMWSSB, it is seen that the Applicant was selected was empanelled for conducting Third party Inspection for procurements of Pipes, Pump sets, Electro
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ointing Directors of the CWSSB Board to carry out the functions of supplying water for Domestic, Industrial and Commercial purposes as well as Sanitation Conservancy by way of disposal which is entrusted to a Municipality under Article 243W of the Constitution. It is seen that the Minister and Secretary in charge of “Water Supply” are on the Board and on setting up of CMWSSB, the Local Authority was required to transfer all assets, liabilities, legal proceedings and properties relating to water and sewerage works to M/s. CMWSSB. It is seen from the Annual report that M/s. CMWSSB gets income from sale of water and charges on sewerage water by way of Water Tax, and Sewerage Tax, grants from the government etc.
4.4 The Applicant has also submitted TWAD Act, on verification of which it is seen that it is a Board constituted by an act of Tamil Nadu State Legislature called Tamil Nadu Water Supply and Drainage Board Act, 1970 with 100% contribution by way of Government and controlled by Gov
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t has stated that M/s. CMWSSB and M/s. TWAD are of the view that Third Party Inspection Service are within the ambit of “Pure Services”, as it is an activity in relation to any function entrusted to a Municipality under Article 243W of the Constitution and will not reimbursed the GST component of the invoice. The issue to be decided is Whether the Applicant is rendering “Pure Services” and Whether M/s. CMWSSB and M/s. TWAD are 'Governmental Authority' as defined in the Notification No. 12/2017 Central Tax (Rate) dated 28th. June 2017.
6.1 The relevant extract of Sl.No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and the relevant definitions are extracted below for ease of reference:
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Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in rela
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ii) in paragraph 2, for clause (zf),the following shall be substituted, namely: –
“(zf) “Governmental Authority” means an authority or a Board or any other body, -(i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90 percent or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution.”
From the above, it is evident that if any “Pure Services” are provided to a Governmental Authority by way of any activity in relation to any function entrusted to a Municipality under Article 243 W or a Panchayat under Article 243 G (from 13.102017) of the Constitution and that 'Governmental Authority' is an Authority or a Board set up by an Act of Parliament or a State legislature or established by the Government with 90 percent or more participation by way of equity or control to carry out any functio
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Directors of the TWAD Board entrusted with the development of Water Supply and Sewerage facilities in Municipalities and Panchayats in the State of Tamil Nadu, except Chennai Metropolitan Development. The Twelfth Schedule or Article 243W of the Constitution list, the functions of the Municipality at SI No 5 as “Water Supply for Domestic, Industrial and Commercial purposes “and at SI No 6 as “Public Health, Sanitation Conservancy and Solid Waste Management”. The Eleventh Schedule or Article 243G of the Constitution list the functions of the Municipality at SI. No. 5 as “Water Supply for Domestic, Industrial and Commercial purposes “and at SI No 6 as “Public Health, Sanitation Conservancy and Solid Waste Management”. Thus, it is clear that in the Constitution list, the functions of the Panchayat at SI. No. 11 as “Drinking Water” and at SI. No. 23 as. “Health and Sanitation”. Thus, it is clear that in respect of services received in relation to functions pertaining to Municipality, M/s.
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eir inspections. The Applicant will be paid as a percentage of the value of materials inspected at various slabs. Therefore, the Applicant is rendering pure services to TWAD in respect of its functions with respect to Municipalities.
In the other contract with CMWSSB, it is seen that the Applicant was selected was empaneled for conducting Third party Inspection for procurements of Pipes, Pump sets, Electronic Equipment, Chemicals of works involved in extension of Desalination , iron conveying water main from Medavakkam Junction to Alandur Water Distillation Station. The Applicant will also submit a final report on the quality of the equipment based on their inspections. The Applicant will be paid as a percentage of the value of materials inspected. Therefore, the Applicant is rendering “Pure Services” to M/s. CMWSSB in respect of its functions with respect to Municipalities.
6.4 In view of the foregoing, in the two agreements furnished by the Applicant, the Applicant is suppling '
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