The Gujarat Authority for Advance Ruling (AAR) addressed a case involving M/s Devendra Kantibhai Patel, who provided engineering consultancy and works contract services to the Roads & Buildings Department of the Government of Gujarat. The applicant sought an exemption from GST under Entry No. 3 of Notification No. 12/2017-CT (Rate), which pertains to "pure services" supplied to government authorities in relation to functions under Articles 243G or 243W of the Constitution.
The Authority initially denied the exemption due to unclear project details. However, after an appeal, the case was remanded for further consideration with specific project details provided by the applicant. The applicant linked the projects to functions under the Eleventh and Twelfth Schedules of the Constitution, which outline the responsibilities of Panchayats and Municipalities.
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In its order, the AAR clarified that the exemption applies only if services directly relate to functions under these schedules. While projects involving schools, hostels, and libraries were deemed relevant to local functions like education and public welfare, those related to higher education institutions, residential quarters, and offices were not, as they do not fall under local body functions. The Authority concluded that the consultancy services were part of broader state infrastructure development rather than specific local body functions, thus not qualifying for the exemption.
Ultimately, the AAR ruled that the consultancy services provided by the applicant are not exempt under the specified notification and are subject to GST.
Authority: Gujarat Authority for Advance Ruling
Applicant: M/s Devendra Kantibhai Patel
Date of Order: 31 October 2025
Facts -
- The applicant, registered under GST, provided engineering consultancy and works contract services to the Roads & Buildings (R&B) Department of the Government of Gujarat.
- The services included preparing plans, estimates, and Draft Tender Papers (DTPs) for construction of various government buildings such as schools, hostels, offices, libraries, and quarters.
- The applicant sought exemption under Entry No. 3 of Notification No. 12/2017-CT (Rate), which provides relief for “pure services” supplied to government authorities in relation to functions under Articles 243G or 243W of the Constitution.
- The Authority had earlier denied the exemption for lack of clarity on project details. On appeal, the Appellate Authority remanded the matter for reconsideration after submission of specific building-wise details.
- Upon remand, the applicant furnished lists of projects linking them to functions under the Eleventh and Twelfth Schedules of the Constitution.
Issue -
- Whether the consultancy services provided to the R&B Department qualify as pure services in relation to functions entrusted to Panchayats or Municipalities under Articles 243G or 243W, thereby exempt under Notification No. 12/2017-CT?
Order -
- The Authority held that the exemption under Entry 3 applies only if the services are directly connected to functions under the Eleventh or Twelfth Schedules.
- Projects related to colleges, engineering and B.Ed institutions were held not covered since higher education is not a local body function. ITIs, schools, hostels, and libraries were accepted as relatable to local functions such as education and public welfare.
- Residential quarters, offices, and courts were excluded as they did not relate to Panchayat/Municipality functions. Animal husbandry and cattle development centers were held covered under Article 243G.
- Since the consultancy services were provided as part of composite departmental activities for the State’s infrastructure development rather than specific local body functions, the Authority concluded that the applicant’s services did not qualify for exemption.
- The Authority ruled that the applicant’s consultancy services are not exempt under Notification No. 12/2017-CT (Rate) and are liable to GST.
