No GST On Supply Of Pure Services Consultation - AAR

The Tamil Nadu Authority of Advance Ruling (AAR) has ruled that supply of pure services by rendering Consulting Services for Programme Management and accompanying measures for implementation of integrated storm water is exempted from GST.

The applicant is the Managing Partner in the partnership and firm having certain properties in his name. The firm in which he is a partner is carrying out the business in those properties at free of rent.

As per the Income Tax Act when the partner uses his property for business carried out by the firm, then deemed rent does not arise.

The Applicants have been awarded a contract by GCC, Government of Tamil Nadu for providing Consulting Services for Programme Management and Accompanying Measures for implementation of Integrated Storm Water Drain for M1 & M2 Components of Kovalam Basin in the extended area of Greater Chennai Corporation. They undertake this project along with members of the Joint Venture. The supply of services are in the nature of Consulting Engineer, Architects Services and Technical Testing, Inspection, Certification, etc.

The applicant has sought the advance ruling on the issue of whether the Pure Services, supplied by M/s GITEC-IGIP, GmbH, Cologne, Germany, having an office at Chennai, by way of rendering Consulting Services for Programme Management and Accompanying Measures for implementation of Integrated Strom Water Drain for M1 & M2 Components of Kovalam Basin in the extended area of Greater Chennai Corporation, supplied to the Superintending Engineer, Strom Water Drain Department, Greater Chennai Corporation, Chennai are exempted from payment of GST.

The two members of the bench of K.Latha (Member SGST) and T.G. Venkatesh (Member CGST) has ruled that "Pure Services", provided to Central Government/State Government/Union Territory/Local authority/Governmental authority; by way of any activity in relation to any function entrusted to a Panchayat under Article 243 G of the Constitution/ Municipality under Article 243 W of the Constitution are exempted from GST.

The AAR has noted that the applicant under the contract is tasked with providing various activities of technical expertise, financial planning, training, supervision, etc, which are supply of various services for effective implementation of the project and as seen from the submissions, the activity does not involve 'Supply of any Goods'. Also, it is seen that the project undertaken is in relation to improving the 'Storm Water Drain' along the Kovalam basin, as a part of 'Urban Infrastructure Development' of Greater Chennai and the services are provided to the Greater Chennai Corporation represented by its Storm Water Division.

The Authority added that the GCC being a Municipal Corporation, constituted by the State, is a "Local authority" by the definition of local authority' at S.2(69) of the GST Act and the services rendered by the applicants are the services rendered to a local authority.

"From the 'Overall Programme Concept' found in the contract, the project is undertaken as a part of the Programme "Sustainable Urban Infrastructure Development" in India; and this commitment, to be implemented with the support of a Programme Management Consultant (PMC) shall be used to finance stormwater management measures for Kovalam Basin and Accompanying Measures (AM) to support the sustainability of the Programme. Thus, it is established that the project is undertaken to improve the 'urban Infrastructure of the Chennai City'. 'Urban Planning' is one of the activities stipulated under the Twelfth Schedule' of the Constitution. Therefore, the activities of the applicant are 'in relation to' the activity of 'Urban Planning', an activity under Article 243W of the Constitution," the AAR observed