QUESTION
We are contractor and providing services of maintenance of Common Effluent
Treatment plant to Government Agency `Delhi State Industrial and Infrastructure
Development Corporation Ltd. (DSIIDC)`. Our Question is: 1. Whether same is
exempt under S.No. 3 of Notification No. 12/2017 - Central Tax (Rate) dated
28.06.2017. 2. We are allowed and have engaged various sub-contractors to
provide the same service. Whether services of sub-contractors, providing
services to Government on our behalf is also exempt.
ANSWER
Facts of the case: Services of maintenance of Common Effluent Treatment plant
are provided to Government Agency DSIIDC by contractor/sub contractor is exempt
or not.
Law Applicable: Notification No. 12/2017- Central Tax (Rate)
(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 90per cent. 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.
(zfa) 'Government Entity' means an authority or a board or any other body
including a society, trust, corporation,
(i) set up by an Act of Parliament or State Legislature; or
(ii) established by any Government,
with 90per cent. or more participation by way of equity or control, to carry out
a function entrusted by the Central Government, State Government, Union
Territory or a local authority.'
3 Chapter 99 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 or a Government Entity by way of any activity in relation to any
function entrusted to a Panchayat under article 243G of the Constitution or in
relation to any function entrusted to a Municipality under article 243W of the
Constitution. Nil Nil
3A Chapter 99 Composite supply of goods and services in which the value of
supply of goods constitutes not more than 25 per cent. of the value of the said
composite supply provided to the Central Government, State Government or Union
territory or local authority or a Governmental authority or a Government Entity
by way of any activity in relation to any function entrusted to a Panchayat
under article 243G of the Constitution or in relation to any function entrusted
to a Municipality under article 243W of the Constitution. Nil Nil
Interpretation: If DSIIDC is covered under the definition of Government
Authority or Government Entity as defined above then the same service is exempt
otherwise taxable.
Further there is no restriction regarding the supplier, therefore if the supply
provided by contractor/sub contractor to Government and falls under s.no. 3/3A
of Notifcation No. 12/2017 Central tax (Rate), then it is exempt irrespective of
supplier of service.
Conclusion: In your case if your services falls under any of above situation
then it is exempt otherwise it will be taxable.(Reply dt.27-02-2020