in re BCITS Pvt Ltd (GST AAR Haryana)
BCITS Pvt Ltd (GST AAR Haryana) provides taxable services, including water billing software and database maintenance, to Municipal Corporation Gurugram.
It is observed that in the present matter the water distribution system is under the control of Municipal Corporation, Gurugram. The function of water supply to the public at large has been entrusted to MCG by the Government of Haryana. In the notification no. 12/2017 CT (Rate) dated 28.06.2017 nil rate of tax is applicable on pure services provided to the Local Authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution of India. The functions are listed in the 12th Schedule of the Constitution (Under Article 243 W). In the present matter, MCG has further sought services related to activities of design and development electronic billing and distribution of the bills and collection system for water supply and sewerage bills from the applicant. These services includes spot billing i.e. taking reading, generation and delivery of the bills to the end consumers and AMC of the software to the applicant i.e. M/s BCITS Pvt. Ltd. The manpower is also provided by the applicant for the said activity.
The nature of services rendered by the applicant is like a software tool operated by its staff. The said services include creation and maintenance of data base of the consumers and the web based spot billing and collection of payments on behalf of Municipal Corporation. These services cannot be termed as pure services as defined under the provisions of the GST Act, 2017. So, these are not covered in the clause 5 of 12th Schedule i.e. water supply for domestic, industrial and commercial purposes. This function of water supply has been entrusted to a Municipality under Article 243W of the Constitution of India and these services provided by the applicant to the MCG are not in relation to the water distribution system per se.
Water supply system necessarily requires procurement, transmission and supply of water to the consumers and meter installation but these functions are being done by the MCG. Whereas the applicant has provided the software services along with manpower to the MCG for the support of water distribution services. It enhances the effectiveness of the services provided by the MCG to the consumers (public at large).
The main function of water distribution services is of MCG and the same can be considered as pure services. But the services received by MCG from the applicant are not in the nature of Pure Services and not the support services as these are support services and not in relation to any function which is entrusted to the MCG. The goods (tangible and Intangible) and services provided by the applicant cannot be regarded as an integral part of the water distribution system itself. These are add on activities. The definition of the Scope of Supply and Business under the CGST Act, 2017 is quite extensive. The taxability of any supply of goods and services is covered under these definitions. There should be an express/explicit provision for the availment of any exemption under the CGST Act, 2017. Exemptions are not optional and the conditions/constrained prescribed under the provisions must be fulfilled. And in the present case, it is clearly observe that the said services provided by the applicant to the MCG are not part and parcel of the water supply system.
So, it is concluded from the above discussion and legal provisions that the services provided by the applicant to MC, Gurugram is a taxable supply.
1. Engagement of system integrator for implementation water revenue management system, creation and maintenance of database, spot billing/meter reading and bill distribution (MRBD) services for water supply & sewerage connections under the jurisdiction of Municipal Corporation, Gurugram is covered under which SAC of the GST Act, 2017?
SAC Code 998633
2. Determination of the liability to pay tax on the above services means the rate of output tax liability on above mentioned services?
18%
3. Is this service exempt under clause 3 of notification 12/2017 dated 28.06.2017?
No.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, HARYANA
APPLICANT’S ELIGIBILITY FOR SEEKING AN ADVANCE RULING
To file an application before the Authority of Advance Ruling, the applicant must satisfy the conditions prescribed under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act, 2017) and Haryana Goods and Services Tax Act, 2017 (hereinafter referred to as HGST Act, 2017). Since the provisions of both the Acts are parimateria, any reference to provisions of CGST Act, 2017 in this order should be construed as a reference to corresponding provisions of the IGST Act, 2017/HGST Act, 2017 as well.
Sections 97(2) of the CGST Act, 2017 prescribes that Advance Ruling may be sought inter alia on the question of (b) Applicability of a notification issue under the provisions of this Act. (e) Determination of the liability to pay tax on any goods or services or both, (g) Whether any particular thing done by the applicant with respect to any goods and/or services or both amounts to or results in a supply of goods and/or services or both, within the meaning of that term.
Proviso with reference to the Section 98(2) of CGST Act, 2017 states that where the questions raised in the application is already pending or decided in any proceedings in the case of the applicant under any provision of this Act, the application may be rejected by the Advance Ruling Authority after providing an opportunity of being heard to the applicant. And in this case, the applicant has undertaken in form ARA-01 that the issue is neither pending nor decided in any proceedings under any of the provisions of the Act. Besides the applicable fees in the case has also been deposited. So, he is eligible to seek an Advance Ruling under the above provisions and the case is being heard on merits.
Statement of facts as per ARA-01
The applicant is a registered taxpayer under CGST Act, 2017 with GSTIN no. 06AACCB4891M1ZB. They are providing maintenance of Data base, spot billing, meter reading and bill distribution services to the Municipal Corporation, Gurugram for water supply and sewarge connections. A person is deputed area wise and provide an android device like mobile phone and printer. He visits every house in that area and generates the water bill by taking the reading in water meter and will hands over the bill to the consumer. The company provides software to install in the mobile phone to enable the consumers to generate the bills. The scope of work includes all the services of Water Revenue Management System. The details is briefed as following:-
