In re Tamilnadu Water Supply And Drainage Board (GST AAR Tamilnadu)
Q1. Applicability of the following Act Rule: “Pure Services (testing of materials for quality) by TWAD Board which is the Governmental Authority relating to water supply and sewerage schemes to urban and rural beneficiaries which are covered under Twelfth Schedule of Article 243 W of the constitution. Therefore, the services (Quality material testing charges) rendered by the TWAD Board are exempted from CGST under Sl.No.3 of the Notifications No.12/2017 CT(Rate) dated 28.06.2017 as amended and exempted from SGST under Sl.No.3 of the G.O(Ms) No.73 dated 29.06.2017 No.II/CTR/532(d-15)/2017 as amended.
A1. The services provided by the applicant, namely, Quality material testing works is not exempted from Goods and Services Tax in terms of entry no.3 of the Notifications No.12/2017 CT(Rate) dated 28.06.2017 as amended and
Q2. Applicability of Notification for conducting Geological surveying and testing (Pure Services) to identify the water potentiality by TWAD Board which is Governmental Authority relating to water supply schemes to urban and rural beneficiaries which are covered under Twelfth Schedule of Article 243W of the constitution. Therefore, the services (Geological surveying and testing charges) rendered by the TWAD Board are exempted from CGST under SL.No.3 of the Notifications No.12/2017 CT(Rate) dated 28.06.2017 as amended and exempted from SGST under Sl.No.3 of the c No.II/CTR/532(d-15)/2017 as amended.
A2. The service of Geophysical survey investigation is exempted from Goods and service Tax terms of entry no.3 of the Notifications No.12/2017 CT(Rate) dated 28.06.2017 subject to conditions stated in Para 9.7 below.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, TAMILNADU
Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
Tamilnadu Water Supply and Drainage Board, No.31, TWAD House, First Kamarajar Salai, Chepauk, Chennai-600005 (hereinafter called ‘the Applicant’ or TWAD’) are registered under GST with GSTIN 33AAALT0834FBZ1. The applicant has preferred an application seeking advance ruling on the following questions:-
1. Applicability of the Notification issued under the provisions of the CGST Act,2017:- Rendering “Pure Services” (testing of materials for quality) by TWAD Board which is the Governmental Authority relating to water supply and sewerage schemes to urban and rural beneficiaries which are covered under Twelfth Schedule of Article 243 W of the constitution. Therefore, the services (Quality material testing charges) rendered by the TWAD Board are exempted from CGST under SI.No.3 of the Notifications No.12/2017 CT(Rate) dated 28.06.2017 as amended and exempted from SGST under SI.No.3 of the G.O(Ms) No.73 dated 29.06.2017 No.II/CTR/532(d-15)/2017 as amended.
2. Applicability of Notification issued under the provisions of the CGST Act,2017:- For conducting Geological surveying and testing (Pure Services) to identify the water potentiality by TWAD Board which is Governmental Authority relating to water supply schemes to urban and rural beneficiaries which are covered under Twelfth Schedule of Article 243W of the constitution. Therefore, the services (Geological surveying and testing charges) rendered by the TWAD Board are exempted from CGST under SL.No.3 of the Notifications No.12/2017 CT(Rate) dated 28.06.2017 as amended and exempted from SGST under SI.No.3 of the G.O(Ms) No.73 dated 29.06.2017 No.II/CTR/532(d-15)/2017 as amended.
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/-each under sub-rule (1) of Rule 104 of CGST Rules, 2017 and SGST Rules, 2017.
2.1 The applicant has stated that they are a Governmental Organization/Authority executing the water supply and underground sewerage works for urban local bodies/village panchayats. They have established totally 4 nos of material quality testing labs to ensure the quality of materials used by the contractors under Turnkey system in the works executed by TWAD. Quality control laboratories in TWAD Board comprising one for each region at Coimbatore (established in 1999), Madurai(2001), Trichy(2014) and Tindivanam (2014) with test facilities as per IS standard specifications are functioning. The laboratories are fully equipped with necessary machineries, equipments and instruments for conducting the parametric tests as per the procedures postulated in the relevant Bureau of Indian Standards. The test facilities adorning the Laboratories include the testing of following materials for quality and conformity to Indian Standards:-
> Construction materials like Ordinary Portland cement, Sulphate Resistant Portland cement, steel rods, sand, coarse aggregates, bricks and concrete cubes, Filter media, Hollow blocks, Paver blocks, PVC Pipes, UPVC Pipes, HDPE pipes, GI pipes, DI pipes, DWC pipes and Stoneware pipes, Mix design of concrete for the M30 grade and Electric Cables.
The applicant has stated that the materials received from local bodies and private agencies are also tested for quality in these laboratories. TWAD Board has fixed Material quality testing charges for various materials under Turnkey system, for various schemes allotted to contractors by the TWAD Board. During execution of works, the contractor submits materials samples such as cement, steel, bricks, sand, pipes, etc. to TWAD Board LAB for testing the quality of material for which testing fee is collected from the contractor and the same will be added by contractor to the cost of the scheme which is reimbursed by TWAD Board and the testing charges are booked in the scheme expenditure only.
2.2 The applicant has stated that the basic testing charges during 2019 have been approved by MD/TWAD Vide is No: F 7161/Testing charges/LAB / AEE/ SQMS/2019/ DT 06.12.2019, the orders were communicated to the field engineers and with effect from 1.1.2020 GST is exempted for TWAD Board works and 18% GST is charged for other than TWAD Board Material testing works. The applicant has made reference to Notifications No.12/2017 CT(Rate) dated 28.06.2017 as amended and Sl.No.3 of the G.O (Ms) No.73 dated 29.06.2017 No.II(2)/CTR/532(d-15)/2017 as amended. The applicant has sought the authority to clarify whether to adopt and continue the same procedure in the above cited order dated 06.12.2019 for adopting Material testing basic charges with exemption from GST for testing of materials used in the works executed by TWAD Board by way of any activity 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 and for Material Testing charges for all Private works GST@ 18%. (Other than above said Material testing works.)
2.3 In respect of the Q.No.2 the applicant has stated that they are providing the service of Geophysical survey investigation works to identify the source for user departments like Rural Development, Public Works Department, Tamil Nadu Police Housing Corporation, Tamil Nadu Slum clearance Board, SIPCOT etc. Geophysical survey is being conducted for the identification of Bore well, Open well source by utilizing high quality, precise and sophisticated instrument by engaging labourers for the survey works. Conducting Geophysical Surveying and testing charges of Rs.2500/-per point has been approved vide MD/TWAD Lr No: 9087/ AHG7/ HG/ 2007/ DT 12.8.2015, which is being collected for Geophysical survey investigation works from the user departments. They have stated that as per SI.No.3 of Notifications No.12/2017 CT(Rate) dated 28.06.2017, Pure services provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity 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 are exempted. They have stated that Governmental authority provides support in relation to any function entrusted to a Municipality under Article 243W of the constitution or to a panchayat under Article 243G of the constitution. These bodies are usually entrusted support functions to the Government or local authority in carrying out such functions. For eg. Housing Boards in some states are formed under respective Acts to help government in construction and welfare activities for poor as they are covered under Article 243W. Such activities when provided to government shall be exempt.
2.4 In view of the aforesaid facts, the applicant wants to clarify whether to exempt GST for Geophysical survey testing charges for identification of borewell locations by way of any activity 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.(Corporation, Municipality, Town panchayat, Rural panchayat) i.e Urban and Rural Local body as per SI No 3 of the Notifications No.12/2017 CT(Rate) dated 28.06.2017 and to charge GST 18% for Geophysical survey investigation works for all other departments expect Corporation, Municipality, Town Panchayat, and Rural Development Department.
2.5 The applicant has relied upon the following case laws to substantiate their contentions:-
> Order No.22/AAR/2018 dated 28.11.2018 of Tamilnadu AAR in the case of Dr.Amin Controllers Private limited, Chennai.
> CESTAT Chennai Order No. 41526/2018 dated 01.05.2018 in the case of The Executive Engineer, Urban Division, TWAD vs The Additional Commissioner, O/o the Commissioner of Central Excise, Madurai
The applicant has Lr. No. F.7161/Testing Charges/LAB/AEE/SQMS/2019 dated 06.12.2019; Lr. No. 9087/AHG7/HG/2007 dated 12.08.2015; TWAD online material quality Monitoring Information System Chronological Order; copies of sample test request, format for collection of samples & test certificate issued by their material testing laboratories.
3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media vide e-mail dated 05.02.2021. The applicant consented and the hearing for admission of the application was held on 12.02.2021. The authorised representative participated in the hearing and reiterated their submissions and requested that the activities being covered under Twelfth Schedule Article 243 G are to be exempted under Sl.No.3 of Notifications No.12/2017 CT(Rate) dated 28.06.2017 They were asked to furnish:-
i. Copy of the test samples for private and Government agencies
ii. Trail of documents in respect of geophysical activity undertaken by them for private and Government agencies.
3.2 The applicant vide their letter dated 15.02.2021 submitted that there are no request forms from private agencies in respect of material testing charges and geophysical survey testing charges so far and hence no documents available. They submitted the following documents in respect of services rendered to Government agencies/ Local body:-
> Request forms, Format-C-III- Collection of steel samples for the project 429/implementation of 24×7 water supply system for the city of Coimbatore-Execution by Coimbatore City Municipal Corporation; Test report – Steel Test Certificates issued to the Commissioner, Coimbatore City Municipal Corporation;
> Copy of DD No.505156 issued for an amount of Rs. 16,520/- to the Executive Engineer, Maintenance Division (Pillur), TWAD Board, Coimbatore.
> Request forms, Format-C-I – Collection of PVC pipe sample for the project 13196/implementation of Jal Jeevan Mission to provide functional household tap connection to rural households in Vellimalaipattinam Panchayat in Thondamuthur Panchayat Union in Coimbatore District for the year 2020-21(Pkg. No. 24/JJM/2020-21).; Test report for PVC Pipe Test Certificate dated 13.02.2021 issued to AE/Thondamuthur Union/ Coimbatore District
> Copy of cheque issued to the Executive Engineer TWAD for an amount of RS.5546/-
> Letter No.SW/AGT/TBM issued by Senior Section Engineer/ Work, Southern Railway, Tambaram requesting to test stoneware pipe samples for the project -Improvement to underground drainage system at Chengalpattu and Tambaram Colonies; Stoneware pipe test certificate dated 09.01.2021 issued to Assistant Divisional Engineer/Southern Railway Tambaram
> Letter No.3068/2018 dated 24.04.2019 of the Regional Development Officer, shoolagiri issued to Executive Engineer, TWAD, Krishnagiri, requesting for geophysical survey sketch.
4.1 The Centre Jurisdictional authority who has the administrative jurisdiction over the applicant has stated the following:-
