IMPORTANT CASE LAWS

Goods and Services Tax

(a) The Appellant is engaged in providing services of renting of immovable property. The Appellant along with five co-owners hold proportionate share in property and such property is let out to Social Welfare department, Nashik Division of Maharashtra Government (Social Welfare Department) for residential accommodation of underprivileged girls.

The Applicant sought advance ruling as to whether (i) services provided to Social Welfare Department for residential accommodation of underprivileged girls is exempt from payment of Tax? (ii) Tax Deduction at Source (TDS) provisions specified under GST laws would be applicable?

The Authority of Advance Ruling (the AAR) held that the services provided by the Appellant to Social Welfare Department is not exempted from payment of GST and TDS provisions under GST shall be applicable in instant case. Being aggrieved by the order of the AAR, the Appellant filed appeal before Appellate Authority of Advance Ruling (the Appellate AAR).

The Appellate AAR held that Social Welfare Department is department of Maharashtra state government and further, services provided by the Appellant to Social Welfare Department in relation to residential accommodation of girls/women belonging to backward class/scheduled tribes shall fall under ambit of responsibilities/functions entrusted to panchayats and municipalities. Therefore, it can be concluded that renting of immovable property provided by the Appellant to Social Welfare Department shall be construed as an activity in relation to function entrusted to a Panchayat under Article 243G of the Constitution or in relation to function entrusted to a Municipality under Article 243W thereof. Therefore, the Appellant is eligible for exemption from Tax in terms of entry No. 3 of Notification No. 12/2017-CT(R) dated June 28, 2017. Further, it has been held that TDS provisions under GST laws shall not be applicable as services provided by the Appellant to Social Welfare Department is exempted from levy of GST.

Takeaway: Services provided to government department in relation to residential accommodation of unprivileged girls is exempted from payment of GST

[M/s Shital Tukaram Borade, Order No. MAH/AAAR/AM-RM/05/2022-23 dated April 1, 2022 (Appellate AAR, Maharashtra)]

(b) The Applicant is engaged in business of providing technical consultancy services in marine, nuclear, oil and gas sector. Vedanta Limited (Vedanta) was awarded exploration licenses for blocks as part of Government of India's Open Acreage Licensing Policy (OALP) in 2018. Subsequently, Vedanta identified contractors for execution the project across entire spectrum and appointed the Applicant for planning, monitoring and tracking project progress and validate execution contractor deliverables.

Accordingly, the Applicant was required to manage the projects right from detail design to commissioning and also required to review, monitor, manage and control all aspects of execution of the Project.

The Applicant sought advance ruling as to whether GST@12% is payable on services provided in relation to project management consultancy services provided by the Applicant to Vedanta under heading 9983 to scheme of classification of services in terms of Serial No. 21(ia) of Notification No. 11/2017-CT (R) dated June 28, 2017 (Notification No. 11/2017) which provides for other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both.

The AAR held that the services provided by the Applicant cannot be considered as either geological/geophysical consulting services or mineral exploration/evaluation services and thus, not covered under Serial No. 21(ia) of Notification No. 11/2017. Further, it has been held that services provided by the Applicant shall be covered under Serial No. 21(ii) of Notification No. 11/2017 which provides for professional technical and business services other than exploration, mining or drilling of petroleum crude or natural gas or both and subject to GST@18%.

Takeaway: GST @18% is applicable on supply of project management consultancy services
[M/s Lloyds Register Consulting Energy Private Limited, GST-ARA-04/2020-21/B-37 dated March 31, 2022 (AAR, Maharashtra)]

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