Renting services provided to Government GHMC, not covered by functions entrusted under Article 243W and hence taxable under GST

Facts of the Case: – In this case, the the applicant, entered into a rental agreement with the Scheduled Castes Development Department for a property intended to house a social welfare hostel, Government social welfare college boys hostels (Govt. SWCBH.). The applicant is one the opinion that they are providing pure services by way of renting the building property to the Government and therefore the same is exempt under entry 3 of Notification 12/2017.

Issue:- The Applicant sought an Advance Rulings on the question as to whether rent received from the Govt. SWCBH is taxable or not.

Held:- The AAR, Telangana observed that under serial no. 3 of Notification No. 12/2017 pure services provided “in relation to any function” entrusted to a municipality under Article 243W of the Constitution of India is eligible for exemption from GST. The exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed under 12th schedule. The Schedule 11 to the constitution of India contains “Education including primary and secondary schools” at serial no. 17. However the Schedule 12 does not contain such specific entry. Therefore the applicant is not eligible for this exemption.

The AAR ruled that the applicant is providing renting of buildings to GHMC and in municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017.

To read the complete judgment 2024 Taxo.online 245