The West Bengal Authority of Advance Ruling (AAR) has ruled that supplies made for survey, design, drawing, estimate and preparation of comprehensive plan related to water supply schemes to the State Government and the local authorities are exempted from payment of tax except services provided to Madhya Pradesh Jal Nigam Maryadit which cannot be regarded either as the State Government or local authority.
The bench of Dr Tanisha Dutta (Joint Commissioner, CGST & CX) and Joyjit Banik (Additional Commissioner, SGST) has observed that the functions entrusted to a Panchayat or to a Municipality as listed in the Eleventh and/or Twelfth Schedule includes the functions like drinking water or water supply for domestic, industrial and commercial purposes. Thus, the services provided by the applicant for survey, design, drawing, estimate and preparation of comprehensive plan related to water supply schemes application is found to be a matter as listed in the Eleventh and/or Twelfth Schedule in relation to functions entrusted to a Panchayat under article 243G and/or to a municipality under article 243W of the Constitution of India.
The applicant, Shyama Chatterjee is awarded several contracts from different local bodies/municipalities for survey, design, drawing, estimate and preparation of comprehensive plan related to water supply schemes, undertaken by those local bodies/municipalities.
The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under seeking an advance ruling whether the works being undertaken by the applicant can be classified as “Pure Service” as specified in serial number 3 of the Notification No. 12/2017 – Central tax (Rate) dated 28.06.2017.
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The applicant sought the advance ruling on the issue whether works of survey, design, drawing, estimate and preparation of comprehensive plan related to water supply schemes of local bodies/municipalities being undertaken by the applicant can be classified as ‘Pure Service’ as specified in serial number 3 of the Notification No. 12/2017 – Central tax (Rate) dated 28.06.2017.
The applicant has submitted that the scope of work as executed by him towards survey, design, drawing, estimate and preparation of detailed report in respect of water supply schemes in rural or municipalities areas, doesn’t involve any supply of goods. In support of his submission, the applicant has submitted samples copies of five (5) work orders issued by the Taki Municipality, Ramjibonpur Municipality, Golaghat division of PHE, Govt of Assam, Madhya Pradesh Jal Nigam Maryadit (A Govt of Madhya Pradesh Undertaking), Directorate of Urban Administration and Development, Govt of Madhya Pradesh and State Mission director, Amrut, West Bengal. On going through the work schedule, it appears that the scope of work involves survey, design, drawing, estimate and preparation of detailed reports in respect of water supply schemes which doesn‟t involve any supply of goods. The supply being provided by the applicant can be regarded as pure services.
Clause (b) of sub section 69 of section 2 of the GST Act, 2017 defines “Local Authority” to mean “a Municipality as defined in clause (e) of the article 243P of the Constitution.” Thus, supplies made to Taki and Ramjibon Municipalities in West Bengal qualifies to be a supply made to a local authority. Further, supplies made to the Public Health Engineering, Government of Assam is a supply made to the State Government.
However, Madhya Pradesh Jal Nigam Maryadit (MPJNM) is a Govt. of Madhya Pradesh undertaking which is incorporated under the Company‟s Act 1956 with an objective to ensure safe drinking water availability to all household with adequate quantity on sustainable basis by tap connection within household premises throughout the year and also ensure proper treatment and disposal of sewage in the urban and rural areas.
MPJNM is a wholly owned State Government Company under the Chairmanship of Chief Minister, Govt. of Madhya Pradesh where share capital of the company is held by the State Government in the name of Governor. It acts as a nodal agency of the State Government for executing group water supply and sewerage schemes and allied infrastructure projects and is responsible for design, execution, implementation, operation and maintenance of rural water supply schemes in the state to ensure safe, adequate drinking water to every household with tap connection in the areas of the state.
The AAR ruled that the supplies made by the applicant to MPJNM does not qualify to be supplied either to the State Government or to a local authority.
Case Details
Applicant’s Name: Shyama Chatterjee
Date: 29.07.2024
