Tax on upkeep of communities built by the Chhattisgarh Housing Board (CGHB)
Fact and issue of the case
The Applicant herein is engaged in Manpower Supply, Contract staffing, Security Guards and Business Auxiliary Services.
The Applicant has been awarded a contract by Chhattisgarh Housing Board (herein referred to as CGHB) for providing services in relation to maintenance of various colonies developed by Chhattisgarh Housing Board at Atal Nagar, Naya Raipur and not handed over to the local authority for its maintenance.
Contentions of the applicant:–
That, CGHB is a public sector undertaking of the Government of Chhattisgarh. It is a board constituted under Chhattisgarh Housing Board Act, 1972 (No. 3 of 1973). After formation of the state of Chhattisgarh in November 2000, Housing Board was among the several Boards and Corporations liquidated by the Government. Later, however, the Government in 2004 revised its earlier decision and formed Chhattisgarh Housing Board vide notification no. 177/3236/32/2003 dated 12/12/2004. Chhattisgarh Housing Board is the main arm of the Government of Chhattisgarh for giving effect to its housing schemes and for implementing the Government’s schemes under social housing.
That, since CGHB is a board constituted in terms of Chhattisgarh Housing Board Act which carries out functions entrusted by the State Government, the same would qualify as per the definition of “Local Authority”.
Further that, CGHB is also engaged in performing various functions required to be performed by Municipality under article 243W of the Constitution like slum improvement, up gradation and also facilities like solid waste management, water supply for domestic purpose etc. till the time the developed areas are officially handed over to the local authority for maintenance.
That, Since CGHB carries out the functions required to be performed by the municipality till the time the developed areas are officially handed over to the local authority for maintenance, therefore CGHB is acting as a municipality. Hence CGHB should also be considered as a municipality i.e. local authority.
That, so the pure service contracts awarded by the CGHB for providing service.
The legal position, analysis, and discussion: –
At the very outset, we would like to make it clear that the provisions for implementing the CGST Act and the Chhattisgarh GST Act, 2017 [hereinafter referred to as “the CGST Act and the CGGST Act”] are similar and thus, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the CGGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case.
Observation of the court
In the aforesaid context, it is seen that the phrase “pure services” has not been specifically defined in the CGST Act, 2017, however in common parlance any supply which is either deemed as supply of services under Schedule II of CGST Act, 2017 and which is not covered under the definition of “goods” shall be categorized as “pure services”. The applicant has in their application informed that they have been awarded a contract by Chhattisgarh Housing Board (CGHB) for providing services in relation to maintenance of various colonies developed by Chhattisgarh Housing Board at Atal Nagar, Naya Raipur. Thus, the aforesaid activities can be categorized as “pure services” subject to the adherence of the exclusions mentioned therein in the notification viz. the same is not works contract service and other composite supplies involving supply of goods. This authority also finds on perusal of the copy of the documents furnished by the applicant relating to said tender notice issued by Chhattisgarh Housing Board(CGHB) that the said tender wasfor maintenance work for various colonies of CGHB. Further for the said provision of he applicant is supposed to provide related items / goods like ID cards, uniforms cleaning instruments, safety belts, mops, cutter, spincer, chain saw, wire brush, spade, dumpcart, gumboot, gloves, trolley-rickshaw, water sprinkling apparatus, etc. along with related services. We also observe that with a view to broaden this category, with effect from 25.1.2018 vide Sr. no. 3A to Notification no. 2/2018-Central Tax (Rate), composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply provided has been included. Thus, from 25.1.2018 composite supply of goods and services has also been included for the said benefit of Nil tax rate with the stipulation that the value of supply of goods constitutes not more than 25 per cent of the total value of the composite supply has been provided with principal supply of services. However, from the application it is unclear as to how much percentage of the value of composite services provided by the application consists of supply of goods.
Now coming to the second criterion, we find that the said supply of services should be provided to the Central Government, State Government or Union territory or local authority. It would not be out to place to mention here that services provided to Governmental authority, or a Government Entity stands excluded/omitted from Sr. no. 3 (and 3A) of the said Notification No. 12/2017- Central Tax (Rate) New Delhi, the 28th June, 2017 with effect from 1s1 of January 2022 vide Notification no. 16/2021-Central Tax (Rate) dated 18.11.2021.
The applicant is of the view that they are exempt from the liability of GST in terms of clause 3 of the Notification No 12/2017 supra, as they are providing services which are activities in relation to functions entrusted to a Municipality under article 243W of the Constitution. Municipalities and Panchayats and other local authorities listed in Section 2(69) of the Central Goods and Services Tax act, 2017 carry out functions entrusted to them under articles 243W & 243G of the Constitution respectively. As discussed above, functions that may be entrusted to panchayats and municipalities are listed in Schedule 11 & 12 of the Constitution. Based on the work order furnished by the applicant, it is evident that the services in relation to maintenance of various colonies of Chhattisgarh Housing Board / provision of security guards can in no way be equated to the functions 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. Also supply of security guards as is forthcoming from the tender documents cannot be termed as functions 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.
In the result, appeal of the assessee is allowed and ruled in favour of the assessee