Exemption on services provided to Local Authority
A. Facts of the Case
Golconda Hospitality Services and Resorts Limited, are in the business of providing accommodation and related hospitality services in the course of the business, they have supplied their services of boarding and lodging facility for the officials of Greater Hyderabad Municipal Corporation (Local Authority).
B. Contention of the applicant
• Services related to accommodation has been provided to GHMC during 2018 elections.
• In their opinion the supply of service so rendered to GHMC is exempted as it is covered under 243W of Constitution of India and therefore covered under Sl.No.3 of Notification 12 of 2017.
- As per Sl.No.3 of Notification 12 of 2017
- Pure services (excluding works contract service or other composite supplies involving supply of any goods) 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.
- Under the Article 243W of Constitution of India, municipalities may be entrusted with the responsibilities for:
- Preparation of plans for economic development and social justice.
- Performance of functions and implementation of schemes in relation to matters listed in 12th schedule such as Urban planning, slum improvement, urban poverty alleviation, etc.
C. Decision of Advance Ruling Authority
- The applicant has provided accommodation services to GHMC in relation for conduction General Elections to the Legislative Assembly of Telangana State.
- It is not in 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.
Source: ADVANCE RULING TSAAR Order No.32/2021, A.R.Com/11/2021, Dated 29th December, 2021
Mridul Agrawal, Audit Associate, SW India
