06 November 2020
Thanks Sir for your reply. I have seen some AAR decisions which say that the Consultancy Services can also be treated as "Pure Services" and exempt from GST as per as per the serial number 3 of the notification 12/2017-Central tax (Rate) dated 28.06.2017? The case is as mentioned below:
In re Vimos Technocrats Private Limited (GST AAR Karnataka)
06 November 2020
Please clarify in detail the nature of these consultancy services.Then only evaluation can be done.Only specific consultancy is exempted.
The Consultancy Service is being provided as a PPP Expert(Public, Private Partnership Expert) to the Government of Andhra Pradesh and includes Procurement appraisal and advice on projects referred by the other departments to finance department of Government of AP. This service is provided on a full time basis to the finance dept.
Can you please confirm whether services provided above is exempt from GST?
10 August 2024
Under the Goods and Services Tax (GST) regime in India, whether consultancy services are classified as "pure services" and hence exempt from GST can depend on several factors, including the nature of the services provided and the specific notification under which the exemption is claimed.
### **Exemption for Pure Services under GST**
**Notification 12/2017-Central Tax (Rate) dated 28.06.2017** provides exemptions for certain categories of services. Specifically, **Serial Number 3** of this notification deals with exemptions for "pure services."
Here’s a detailed analysis based on the notification and relevant case law:
### **Key Points from the Notification:**
**Serial Number 3:** - **Exemption:** Services provided by a government or a local authority are exempt from GST, provided they are "pure services" and not involving any goods or services. - **Definition of Pure Services:** Pure services are generally defined as services that do not involve the supply of goods and are rendered in relation to the functions of the government or local authority.
### **Applicability to Consultancy Services**
**Vimos Technocrats Private Limited Case:** - **Context:** In this case, the applicant was providing consultancy services as a PPP expert to the finance department of the Government of Andhra Pradesh. This included procurement appraisal and project advice. - **Decision:** The Authority for Advance Ruling (AAR) in Karnataka ruled that the consultancy services provided by the applicant were indeed "pure services" under the GST law and were exempt from GST.
### **Criteria for Pure Services:** 1. **Nature of Service:** The service must be purely advisory and must not include the supply of goods. 2. **Recipient:** The service should be provided to a government entity or local authority, or in connection with their functions. 3. **Contract Terms:** The contract should be with a government department or a local authority and should not include any element of supply of goods.
### **Application to Your Case:** - **Consultancy Services as PPP Expert:** The consultancy services provided to the finance department of the Government of Andhra Pradesh for procurement appraisal and project advice, being purely advisory and related to government functions, qualify as pure services. - **Exemption Status:** Based on the AAR decision and the provisions of Notification 12/2017-Central Tax (Rate), these services would generally be exempt from GST as they fall under the exemption category for pure services provided to government departments.
### **Conclusion:** Yes, consultancy services provided by an individual to the finance department of a State Government, especially when it involves advisory roles like PPP expertise and does not include any supply of goods, can be considered "pure services" and are exempt from GST under Serial Number 3 of Notification 12/2017-Central Tax (Rate).
**To ensure compliance:** 1. **Documentation:** Maintain clear documentation and contracts that specify the nature of the services and the recipient. 2. **Consult A Tax Expert:** Since the applicability can depend on specific facts and interpretations, it is advisable to consult with a GST professional to confirm the exemption status for your particular case.
This approach aligns with the principles outlined in the Vimos Technocrats Private Limited case and the general guidelines for pure services under GST.
CAclubindia
