Services rendered under contract with State Urban Development Authority in relation to functions entrusted to Municipalities and Panchayats are exempt from GST

Case details:  Authority for Advance Rulings, Uttar Pradesh Snow Fountain Consultants, In re - [2021] 128 taxmann.com 65 (AAR- UTTAR PRADESH)

Judiciary and Counsel Details:

• • Ajay Kumar Misra and Dinesh Kumar Verma | Member

Facts of the Case

The applicant submitted application for advance ruling seeking to know taxability of Project Development Service provided by it to recipient under contract with State Urban Development Authority (SUDA) and Project Management Consultancy Services (PMC) under contract for Pradhan Mantri Awas Yojna (PMAY).

AAR Held

The Authority for Advance Ruling Authority observed that as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, 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.

As per scope of work under different contracts, as provided by the applicant, it showed that the services rendered by the applicant under the contract with State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243W and to Panchayats under Article 243G of the Constitution of India.

Moreover, as per serial number 3 of Notification No. 12/2017- Central Tax (Rate), dated 28 June, 2017, services provided by the applicant qualifies as pure services where the Project cost includes the cost of service rendered along with reimbursement of cost of procurement of goods for rendering such services. Thus, it was held that services provided by applicant would be eligible for exemption from levy of CGST and UPGST, respectively.