2026-VIL-121-AAR
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SGST Advance Ruling Authority

GST – Uttarakhand AAR - Governmental Authority, Special Purpose Vehicle for Smart Cities Mission – Applicant is Special Purpose Vehicle (SPV) for implementation of smart cities project is established by the State Government through two public authorities holding equal equity shares, with its Bd comprising serving Government officials in ex-officio capacities, and exercises functions relating to urban development and infrastructure under the smart cities mission framework - Whether the SPV qualifies as a governmental authority within the meaning of the explanation to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017 – HELD - The Applicant qualifies as a Governmental authority as it is established by the Government of the State, has one hundred percent equity participation held by nominees of two public authorities in their official capacity functioning under State Government control, and is constituted to carry out functions entrusted to urban local bodies under the smart cities mission framework. Although not set up by legislation, the entity satisfies the second limb of the definition by meeting the requirements of Government establishment and participation both by way of equity and control. The complete Government ownership, along with the Board composition of serving government officers exercising management and strategic direction, demonstrates unqualified State Government control over the entity's functions, funding and execution, thereby fulfilling all conditions prescribed under the explanation to the Notification – The Applicant qualifies as a Governmental authority - Ordered accordingly - Exemption for Services by Governmental Authority relating to Municipal Functions under GST - Whether the services provided by the Applicant in relation to execution of smart city and energy savings company model projects to the water supply utility, pertaining to functions entrusted to a municipality qualify for exemption under serial number four of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018 – HELD - The services relate to water supply for domestic and industrial purposes, which is enumerated as Entry 5 of the Twelfth Schedule of the Constitution as a function entrusted to Municipalities. The project also advances Municipal functions relating to environmental protection and ecological aspects under Entry 8 of the Twelfth Schedule. The expression "in relation to" used in the exemption provision has wide amplitude covering both direct and indirect nexus with municipal functions. The services rendered by the applicant are integrally connected with the functioning, efficiency and sustainability of municipal water supply functions under Article 243W of the Constitution and therefore qualify for exemption under Serial No. 4 of Notification No. 12/2017-CT (Rate), as amended by Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018 - Pure Agent Status - Integrated Project Implementation and Supervisory Role - Whether the applicant, in respect of amounts received from the water supply utility for remittance to the private contractor without any markup, deduction or value addition, acts as a pure agent of the recipient of supply under Rule 33 of the CGST Rules, 2017 – HELD - The applicant does not qualify as a pure agent within the meaning of Rule 33 of the CGST Rules. Although the amounts are transmitted without markup or deduction, the essential conditions for pure agency status are not satisfied because the applicant is not merely as a channel for payment but as an active and integral participant in the overall execution, supervision, financial management and implementation of the project - The services of the contractor are procured as an integral part of the applicant own contractual obligations under the overall project arrangement rather than as independent supplies obtained merely on behalf of the water supply utility. The amounts received and disbursed are intrinsically linked to the execution of the overall supply undertaken by the applicant, and therefore cannot be treated as reimbursements eligible for exclusion from the value of taxable supply. Such amounts are liable to be considered as part of the consideration for the supply made by the governmental authority.
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