Municipal Corporation Pratapgarh (“the applicant”) is a local authority constituted under the provisions of Article 243W of Constitution of India, and provides various civic services directly or indirectly residing in pratapgarh like cleaning of road, garden, toilets and waste collection etc. The applicant further hires various contractors and receives the services from contractors on rate basis and is not able to clarify that the aforesaid services received on rate basis are taxable or exempted.
The Applicant has sought advance ruling in respect of the following matter: –
- Whether the services received by the local authority such as cleaning of road, garden, toilets and waste collection etc on rate basis is liable for payment of GST TDS?
- If yes, then at what rate the TDS need to be deducted and deposited?
The Hon’ble Rajasthan Authority for Advance Ruling vide Advance Ruling No. RAJ/AAR/2018-19/37 dated March 14, 2019 held that the applicant is a local authority and nature of services rendered by the applicant is not only pure services but also involves supply of goods viz. construction of toilets involves supply of manpower services along with goods like bricks, pipes etc. Further, on examination of submissions it was observed that the applicant falls under Section 51 of the CGST Act, 2017 and is thus eligible to become a TDS deductor.
Furthermore, Entry 3A of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017 in case of composite supply of goods or services, if the value of supply of goods does not exceeds 25% of the total value of supply and service if provided to State Government or a local authority and the supply is by way of an activity in relation to functions entrusted to Municipality under Article 243W of the Constitution then no GST is applicable.
Therefore, if the applicant is undertaking only ‘pure services’ then it will attract nil rate of GST and TDS will not be applicable. In other activities which is composite supply of goods and services where supply of goods is less than 25% out of total supply then also it attracts nil rate of duty and the provision of GST TDS will not be applicable.