EGIS INDIA CONSULTING ENGINEERS PRIVATE LIMITED
The Applicant is engaged in providing engineering, project structuring and operations services in various sectors like transport, urban development, building, industry, water, environment and energy. The Applicant has been appointed as Project Development and Management Consultant (‘PDMC’) to provide necessary services to the State/ULBs to ensure implementation of the AMRUT Scheme. Further the Applicant has been appointed as Project Management Consultant (‘PMC’) for the PMAY Scheme.
The Applicant sought Advance Ruling on following two issues:
1. Whether PDMC provided by Applicant to recipient under the Contract for AMRUT; and PMC under the Contract for PMAY would qualify as an activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India?
2. If answer to first is affirmative would such services provided by the Applicant qualify as “Pure services (excluding works contract service or other composite supplies involving supply of any goods)” as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 as amended by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under CGST Act and corresponding notifications issued under MPGST Act, where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service, and, thus, be eligible for exemption from levy of CGST and MPGST, respectively?
The major components of the AMRUT Scheme are Water Supply system, Sewerage, Septage, Storm Water Drainage, Urban Transport, Green Space and Parks, Reforms management and support, Capacity building, etc.
Similarly, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private participation, and Affordable Housing in Partnership.
Thus, the various objectives of both the above Schemes are covered in more than one clauses of the Eleventh and Twelfth Schedule referred in Article 243G and 243W of the Constitution, including Housing, drinking water, sanitation, Park, etc.
Accordingly, the Consultancy services rendered by the applicant under the Agreement with Urban Administration & Development, Government of Madhya Pradesh, Bhopal for implementation of AMRUT and PMAY are in relation to functions entrusted to Municipalities under Article 243-W and to Panchayats under Article 243-G of the Constitution of India.
The Contract awarded to the applicant for PDMC and AMRUT including Project Management of other Notified Schemes in Project Area” is a Pure Service Contract. It is not covered in exclusion clause pertaining to “works contract service” or “composite supplies involving supply of any goods”. It is evidently in relation to the functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution, and therefore, it is exempt from tax being covered in Sr. No. 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 (as amended from time to time) issued under Central Goods and Services Tax Act, 2017 (CGST Act), and corresponding notifications issued under issued under Madhya Pradesh Goods and Services Tax Act, 2017 (MPGST Act).
But purchases of equipments, furnitures, etc. would neither make the said contract of consultancy as a works contract, nor a composite contract, and therefore, due to purchase of Equipments, Furnitures, etc. by the applicant, and getting reimbursement of their costs from the employer will not affect eligibility of the applicant for NIL rate of tax in Sr. No. 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 and corresponding notification issued under Madhya Pradesh Goods and Services Tax Act, 2017 (MPGST) Act in respect of Consultancy services rendered under the contract in question.
However, the question about liability of tax on disposal of Equipments, Furnitures, etc. purchased by the applicant under the contract in question has not been applied for by the applicant, and therefore, the Authority is neither obliged nor required to venture into that subject. Though it may not be out of place to mention that disposal of such goods shall be governed by the provisions of CGST Act 2017/MPGST Act 2017/IGST Act 2017, as the case may be.
CRUX : The Project
Development and Management Consultancy services (‘PDMC’) provided by Applicant
to recipient under the Contract for AMRUT; and the Project Management
Consultancy services (‘PMC’) under the Contract for PMAY would qualify as an
activity in relation to function entrusted to Panchayat or Municipality under
Article 243G or Article 243W respectively, of the Constitution of India.
The services provided by the Applicant would qualify as “Pure services
(excluding works contract service or other composite supplies involving supply
of any goods)” as provided in s. no. 3 of Notification
No. 12/2017- Central Tax (Rate) dated 28 June, 2017 as
amended by Notification
No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued
under Central Goods and Services Tax Act, 2017 (‘CGST’) and corresponding
notifications issued under Madhya Pradesh Goods and Services Tax Act, 2017 (MPGST
Act) in respect of the cost of service rendered along with reimbursement of cost
of procurement of goods for rendering such service, and, thus, be eligible for
exemption from levy of CGST and MPGST, respectively. However, the disposal of
tangible goods at the end of contract shall be subject to GST depending upon the
circumstances and manner of disposal of such tangible goods.