GST Exemption Allowed Only for Consultancy Linked to Panchayat/Municipality Functions | AAR

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  • Last Updated on 25 November, 2025

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GST exemption for consultancy services

Case Details: Devendra K Patel, In re - [2025] 180 taxmann.com 72 (AAR-GUJARAT)

Judiciary and Counsel Details

  • Sushma Vora & Vishal Malani, Member
  • Anish Goyal, CA for the Applicant.

Facts of the Case

The applicant provides works contract services and engineering consultancy services to various State Governments. It was submitted that these activities qualified as pure services rendered to the State Government in relation to functions entrusted to a Panchayat or Municipality under Articles 243G and 243W of the Constitution of India and were therefore exempt. It was contended that such services, when connected with public welfare, should fall within the ambit of functions listed under the Eleventh and Twelfth Schedules. The matter was placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that the exemption under Section 11 of the CGST is available only where the consultancy services have a direct nexus with functions entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W. It is interpreted that the applicant’s services would qualify for exemption only in respect of specific buildings and structures. It was observed that activities which are unrelated to constitutionally entrusted functions would not fall within the exemption entry. It accordingly ruled that the applicant’s services are exempt only to the extent expressly identified and taxable in all other cases.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied