Navya Nuchu ., In re

FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, TELANGANA

1. In terms of Section 102 of the Telangana Goods and Services Tax Act, 2017 (TGST Act, 2017 or the Act), this Order may be amended by the Appellate authority so as to rectify any error apparent on the face of the record, if such error is noticed by the Appellate authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer or the appellant within a period of six months from the date of the order. Provided that, no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard.

2. Under Section 103 (1) of the Act, this advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only

(a) On the applicant who had sought it in respect of any matter referred to in sub-Section (2) of Section 97 for advance ruling;

(b) On the concerned officer or the jurisdictional officer in respect of the applicant.

3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed.

4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-Section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made.

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5. The subject appeal was originally filed under Section 100 (1) of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as “TGST Act, 2017” or “the Act”, in short) by M/s. NavyaNuchu, Hyderabad (GSTIN: 36ACPPN2902H1ZJ) (hereinafter referred in short as “the appellant”) against the the Order No.05/2024 dated 09.02.2024 (“impugned order”) passed by the Telangana State Authority for Advance Ruling (Goods and Services Tax) (“Advance Ruling Authority” / “AAR” / “lower Authority”).

6. The Appellate Authority for Advance Ruling (AAAR) in its order 1s^t cited above rejected the appeal as barred by limitation.

7. Aggrieved by the order of the AAAR, the appellant approached the Hon’ble High Court which has been pleased to pass orders in the ref 2n^d cited above directing the AAAR to pass orders based on merits of the appeal.

8. Therefore, the appeal is taken up by the AAAR and opportunity provided again to present their case.

9. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the corresponding provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression `GST Act’ would be a common reference to both CGST Act and TGST Act.

Brief facts of the case:

10. The appellant have entered into an agreement with the Scheduled Castes Development Department, Hyderabad District, and Government Welfare Departmental Hostels, Government Social Welfare College Boys Hostel (Govt SWCBH) to rent out the property to run Social Welfare College (Boys Hostel).

11. Schedule Caste Development Department is providing hostel facility to students of Scheduled Caste, weaker sections and backward classes.

12. It has been contended that they are providing to the State Government pure services by way of any activity in relation to any function entrusted to a Municipality / Panchayat under the article 243W/243G of the constitution of India. The same is covered under the entry number 3 of Notification No.12/ 2017, dt.28-06-2017and, hence, exempted under the GST Act, 2017.

Findings of AAR:

13. The appellant is providing building property on rent to schedule caste development department, Hyderabad district, Government welfare departmental hostels, Government social welfare college boys hostels (Govt. SWCBH). The appellant is of 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.

14. 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. Clearly the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed underl2th 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 appellant is not eligible for this exemption.

15. The appellant is providing renting of buildings to GHMC and in municipalities and there is no direct relation between the services provided by the appellant 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.

16. Vide the impugned order, the Advance Ruling Authority has given the following advance ruling on the questions raised by the appellant:

17. Aggrieved by the said AAR, the appellant filed an appeal before this appellate authority on the ground that the Ruling of AAR is not justified in classifying their supply as “taxable”.

Personal Hearing:

18. Personal Hearing was held on 22.8.2025. The authorised representative Smt. Sumalatha Pola, CA, attended the personal hearing and reiterated the written submissions made in their appeal and requested to consider the same.

19. It has been contended that the appellant is letting out their property to Scheduled Castes Development Authority who in turn are using it for welfare of weaker sections. Therefore the service falls under the exempted supply covered under pure services by way of any activity in relation to any function entrusted to a Municipality / Panchayat under the article 243W/243G of the constitution of India. The same is covered under the entry number 3 of Notification No.12/ 2017, dt.28-06-2017 and, hence, exempted under the GST Act, 2017.

20. They have handed over hardcopies of the following documents:

i. Information handbook of SC Development Dept. 2023.

ii. AAAR order of Maharastra dt. 1.4.2022.

iii. AAR Karnataka order dt. 6.4.2021.

iv. AAR Karnataka order dt. 2.7.2024.

v. AAAR Maharastra order dt. 27.3.2025.

21. The AR submitted that the present issue under appeal is similar to the issue dealt in the above orders. The AR requested to consider the appeal since the supply is directly linked to welfare measures.

Discussions and Findings:

22. The exemption entry at serial no. 3 of notification 12/2017 reads as follows:

“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”.

243W. Powers, authority and responsibilities of Municipalities, etc.

Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow–(a)the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to—(i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule;

23. According to the schedule 12 to Constitution of India, the functions and schemes are as follows:

1. Urban planning including town planning.

2. Regulation of land-use and construction of buildings.

3. Planning for economic and social development.

4. Roads and bridges.

5. Water supply for domestic, industrial and commercial purposes.

6. Public health, sanitation conservancy and solid waste management.

7. Fire services.

8. Urban forestry, protection of the environment and promotion of ecological aspects.

9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.

10. Slum improvement and up gradation.

11. Urban poverty alleviation.

12. Provision of urban amenities and facilities such as parks gardens, playgrounds.

13. Promotion of cultural, educational and aesthetic aspects.

14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums.

15. Cattle ponds; prevention of cruelty to animals.

16. Vital statistics including registration of births and deaths.

17. Public amenities including street lighting, parking lots, bus stops and public conveniences.

18. Regulation of slaughter houses and tanneries.

24. The Hon’ble Supreme Court of India in the case of Doypack Systems Pvt. Ltd. vs. Union of India and Ors. (12.02.1988 – SC) AIR 1988 SC 782 clarified the meaning of the expression “in relation to” as follows: “In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term ‘relate” is also defined as meaning to ring into association or connection with. It has been clearly mentioned that “relating to” has been held to be equivalent to or synonymous with as to “concerning with” and “pertaining to”.

25. From the above observation of the Hon’ble Supreme Court, and the definition of “in relation to” explained in the Corpus Juris Secundum, it is clear that the phrase ” in relation to” when used in legal context, should be used as it is meant to be and not as in the general context.

26. The Rulings in the AARs / AAARs of other States submitted by the appellant have been examined. It is noticed that the learned Authorities have proceeded to pass the orders without considering the guidance given by the Hon’ble apex court in the case of M/s. Doypack Systems Pvt. Ltd. Therefore, these orders are not considered.

27. The appellant also admittedly submits that they have let out their buildings to SC Development Department etc. which in turn used it for running social welfare college hostels. Therefore, the supply made by the appellant is not directly “in relation to” i.e. “concerning with”, “pertaining to” the statutory functions assigned to panchayats etc as enumerated above.

28. In view of the above, the following order is passed.

ORDER

The appeal is dismissed and the impugned ruling of Advance Ruling Authority is upheld.