INI Design Studio (P.) Ltd., In re – [2021] 123 taxmann.com 435 (AAR – GUJARAT)[17-09-2020]

The applicant is engaged in providing a wide range of professional consulting services including Architecture, Engineering (MEPF), Planning, Urban Design, Landscape, Research and Art, Building Design, Interior Design, etcHe received work orders from Surat Municipal Corporation, Ahmedabad Urban Development Authority, Pune Municipal Corporation, Executive Engineer, Public Works Division, Pune and Rajkot Smart City Development ltd. for providing Designing, Architectural, Consultancy services. It has sought an advance ruling to determine whether the said services can be covered under Entry No. 3 of Notification No. 12/2017 – Central Tax (Rate), dated 28-6-2017 i.e., can be exempted from GST.

The Authority for Advance Ruling (‘AAR’) observed that to claim the exemption, the services provided should be pure services. Supply of services without involving any supply of goods would be treated as supply of ‘pure services’. Further, the same services shall be provided to the Government and in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. On examining the contract with the Surat Municipal Corporation, Ahmedabad Urban Development Authority, Pune Municipal Corporation, Executive Engineer and Public Works Division Pune, it appears that the services like Construction of town hall or building, electrification services, Architectural services, etc. involved supply of goods also and are not pure services. Further, the contract made between the appellant and Rajkot Smart City Development ltd specifies that the Contract Price is inclusive of all taxes and thus GST is to be paid to the Government. The AAR did not examine the other two conditions i.e., the recipient is a state government or not and the function are entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.

Thus, The AAR ruled that exemption cannot be available for any of the above contracts and hence the appellant cannot avail the benefit of exemption and liable to pay the GST.