Fact: M/s Tamil Nadu Water Investment Company Limited (“the applicant”) is imparting Management Consultant and DPR services to Chennai Metro Water Supply and Sewerage Board (“CMWSSB”) for the water related projects at Chennai. They are also rendering Consultancy Services to others and pay CGST and SGST taxes duly, besides carrying on services to Common Effluent Treatment Plant.
Issue Involved: Whether the services rendered by them to CMWSSB is exempted under SI. No. 3 of Notification No. 12/2017-CT (Rate) dated June 28, 2017.
Applicant’s Interpretation of law: The Applicant has stated that in the pre-GST regime and as per the Special Conditions of the agreement entered into by Applicant with CMWSSB, the Service Tax paid by the Applicant was reimbursed by CMWSSB up to February 2017 and with the introduction of GST from July 01, 2017, the Applicant charged GST on the Invoices raised by it on CMWSSB.
However, CMWSSB is of the view that Project Management Consultancy Services rendered by the Applicant is exempted as per Sl.No.3 of Notification of 12/2017 CT(R) dated June 28, 2017, as the Project Management Consultancy (“PMC”) is within the ambit of “Pure Services” viz. is an activity in relation to any function entrusted to a Municipality under Article 243W of the Constitution, the function being Water Supply for domestic, industrial and commercial purposes. The CMWSSB denied to reimburse the GST component of the Invoice to the Applicant, even if they raise the same in the monthly invoice and remit the same to the Government.
Held: The Hon’ble AAR of Tamil Nadu vide its advance ruling order No. 21/AAR/2018 dated November 28, 2018 stated that the activity of the Applicant envisaged by the three agreements furnished by the applicant for construction management and supervision including off-site inspection for the proposed design, build, commission of 45 MLD capacity Tertiary Treatment Reverse Osmosis (TTRO) Plant at Kodungaiyur and Koyambedu and for Consultancy Services for preparation of detailed project report for providing smart water supply and sewerage services in T.Nagar under Smart City Mission is supply of ‘Pure Services’ to CMWSSB which is a ‘Governmental Authority” relating to water supply for industrial use and sanitation conservancy which are covered under Twelfth Schedule of Article 243 W of the Constitution.
Therefore, the services rendered by the Applicant are exempted from CGST under SI.No. 3 of the Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017 as amended and exempted from SGST under Sl.No. 3 of the G.O. (Ms) No. 73 dated June 29, 2017 No.II (2)/CTR/532(d-15)/2017 as amended.
Citation:  102 taxmann.com 33 (AAR – TAMILNADU)