In re Crystal Infosystems and Services (GST AAR Karnataka)
The GST AAR Karnataka addressed queries regarding the exemption of services provided by Crystal Infosystems and Services to BBMP schools and colleges. The analysis delves into the applicability of CGST and SGST to these services.
Crystal Infosystems and Services provide teachers and lecturers to BBMP schools and colleges on an outsourcing basis, characterizing the service as pure with no goods involved. Despite billing with 18% GST, BBMP claims exemption, citing its status as a municipality and the nature of the service falling under exempt categories.
The crux of the issue lies in the interpretation of relevant GST notifications, particularly Entry No. 3 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. This entry exempts pure services provided to local authorities for functions entrusted to them under Article 243W of the Constitution.
The AAR examined three conditions for exemption eligibility:
1. Nature of Service: The service provided by Crystal Infosystems qualifies as pure service, devoid of any goods involvement.
2. Recipient Status: BBMP, being a municipality under Article 243P of the Constitution, qualifies as a local authority.
3. Function Relation: The service of providing teachers/lecturers aligns with the function of “Promoting educational aspects” entrusted to municipalities under Article 243W.
