In re Akshara (GST AAR Kerala)
In the case of In re Akshara, the Kerala Authority for Advance Ruling (AAR) examined the applicability of Goods and Services Tax (GST) on the services provided by the applicant, a partnership firm engaged in the maintenance and repair of public street lighting infrastructure. The applicant entered into an agreement with Kayamkulam Municipality and sought an advance ruling on whether their services are exempt under Notification No. 12/2017-Central Tax (Rate), which pertains to “pure services” and certain composite supplies provided to government bodies. The applicant claimed that their work qualified for GST exemption since it involved the execution of a function assigned to Municipalities under Article 243W of the Constitution, namely public street lighting, and in some cases, included goods not exceeding 25% of the contract value.
The AAR reviewed the agreement between Akshara and the Municipality, which included services using ISO-certified materials and manpower for timely streetlight maintenance. While such services generally fall under Service Accounting Code (SAC) 9987 and attract 18% GST under Notification No. 11/2017, the AAR acknowledged the need to examine relevant exemptions. Entry 3 of Notification No. 12/2017 provides GST exemption for pure services related to functions listed in the Eleventh and Twelfth Schedules of the Constitution when provided to local authorities. Additionally, Entry 3A of the same notification (inserted via Notification No. 2/2018) extends exemption to composite supplies involving goods up to 25% of the total value. The AAR reaffirmed that a Municipality qualifies as a local authority under Section 2(69) of the CGST Act and that public street lighting is a listed municipal function under Entry 17 of the Twelfth Schedule.
