Exemption of services provided to Government- AAR Compilation | LogiTax

Exemption of services provided to Government- AAR Compilation

01-04-2024

GST

Mrudula Joshi

Exemption of services provided to Government- AAR Compilation

As per Notification No. 12/2017 - Central Tax (Rate), certain services provided to the Government are exempted under GST. Following is the list of services as mentioned in the said notification:

Pure services (excluding works contract service or other composite supplies involving the supply of any goods) provided to the Central Government, State Government Union territory, or local authority by way of any activity about any function entrusted to a Panchayat under article 243G of the Constitution or about any function entrusted to a Municipality under article 243W of the Constitution.
Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 percent. of the value of the said composite supply provided to the Central Government, State Government or Union territory, or local authority by way of any activity about any function entrusted to a Panchayat under article 243G of the Constitution or about any function entrusted to a Municipality under article 243W of the Constitution.
Services provided to a Governmental Authority by way of -
1. Water supply
2. Public health
3. Sanitation conservancy
4. Solid waste management
5. Slum improvement and upgradation.
Also, certain services provided by the Government are exempted under GST. Following is the list of services as mentioned in the said notification:
1. Services by governmental authority by way of any activity about any function entrusted to a municipality under article 243 W of the Constitution.
2. Services by a Governmental Authority by way of any activity about any function entrusted to a Panchayat under Article 243G of the Constitution.
3. Services by the Central Government, State Government, Union territory, or local authority excluding the following services:
  1. Services by the Department of Posts and the Ministry of Railways (Indian Railways)
  2. Services about an aircraft or a vessel, inside or outside the precincts of a port or an airport
  3. Transport of goods or passengers
  4. Any service, other than services covered under entries (a) to (c) above, provided to business entities.
4. Services provided by the Central Government, State Government, Union territory or local authority to a business entity with an aggregate turnover of up to such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017).
5. Services provided by the Central Government, State Government, Union territory, or local authority to another Central Government, State Government, Union territory, or local authority.
6. Services provided by the Central Government, State Government, Union territory, or a local authority where the consideration for such services does not exceed five thousand rupees.
There are many advance rulings about GST on services provided by or to the Government. We have compiled it for you!

Sr No.	Name of the applicant	Order Date	State	Ruling
1.	REGIONAL AGRICULTURAL RESEARCH STATION PILICODE	06/10/2023	Kerala	Applicability of GST on ticket charges collected as part of an exhibition collected by the Government Authority: Applicant is eligible to claim exemption from payment of GST on ticket charges vide SI. No. 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time, subject to the condition that the services provided by the applicant on receipt of ticket charge shall be the activities about the functions enlisted under Article 243G of the Constitution. Otherwise, the activities are taxable at 18% GST.
2.	NAVYA NUCHU	09/02/2024	Telangana	Providing of property on rent to the Government: The applicant is providing renting of buildings to GHMC and in municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with Schedule 12 to the Constitution of India. Therefore, these services do not qualify for exemption under Notification No. 12/2017.
3.	ALL INDIA INSTITUTE OF MEDICAL SCIENCES	08/02/2024	Telangana	Whether the applicant India Institute of Medical Sciences (AIIMS) is eligible to claim GST exemption on pure services such as Manpower services, Housekeeping services, and consultancy services received from vendors? The Sl. No. 3 & 3A of Notification 12/2017-CT(Rate) as amended with effect from 01.01.2022 omitted the phrase 'Governmental Authority' from the description of the services. Hence the applicant is not eligible for exemption under entry 3 & 3A of Notification 12/2017-CT(Rate).
4.	DREDGING AND DESILTATION COMPANY PRIVATE LIMITED	20/12/2023	West Bengal	Whether Irrigation and Flood Control Department, Government of Delhi comes under the purview of Union Territory and instant supply be covered by Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017? The instant work falls within the ambit of matter listed at Sl. No. 6 of the Twelfth Schedule of 243W of the Constitution of India, i.e. "Public health sanitation conservancy and solid waste management". Supply of services being undertaken by the applicant for removal of the hump (silt/ earth/ manure/ sludge etc.) by dredging of the drain as awarded by the Irrigation and Flood Control Department, Government of Delhi shall be covered under Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and therefore shall be exempted from GST.
5.	RAGHUBALA CONSTRUCTION CO.	01/09/2023	Rajasthan	Whether Urban Improvement Trust (UIT) Kota is a "Government Entity" and whether constructing a Community Hall by the applicant by the works contract allotted by UIT Kota is taxable under GST law. UIT Kota was established by Govt. of Rajasthan under The Rajasthan Urban Improvement Act 1959 and it was established by Govt. of Rajasthan with 90% or more participation by way of equity or control to carry out a function entrusted by the State Government. Thus UIT, Kota falls under the category of "Government Entity". Applicant is liable to pay GST on supply of this service and there no exemption and deduction is available to applicant in respect of aforesaid service provided to UIT Kota.

Conclusion :

Taxpayers must scrutinize multiple advance rulings concerning this matter to firstly ascertain if the assessee aligns with the Government's definition, and secondly, whether its functions are enumerated in either Article 234W or 234G of the constitution.