GST Not Applicable On Centage Charges Collected For Pure PMC Or Consultancy Services Provided To Govt.: AAR

The Kerala Authority of Advance Ruling (AAR) has held that (GST) is not applicable on the centage charges collected for pure PMC / consultancy services provided to Government/local authorities in relation to functions under Article 243G / 243W as these are exempt under Entry 3 of Notification No. 12/2017-CTR, subject to conditions. The bench of Jomy Jacob IRS and Mansur M.I. has observed that services rendered by the applicants to the Government Departments and local authorities pertain to activities such as supervision, coordination and administrative management of civil, electrical and infrastructure projects, including projects like the development of RRT & VET facilities for environmental protection. The AAR opined that the services involved are pure services and such activities are directly connected with the functions enumerated in the Twelfth Schedule (relating to Article 243W) and the Eleventh Schedule (relating to Article 243G) of the Constitution of India, and therefore qualify as services provided in relation to functions entrusted to Municipalities under Article 243W or to Panchayats under Article 243G. The applicant, STEEL INDUSTRIALS KERALA LIMITED (SILK) is a Public Sector Undertaking registered under the GST regime. It was established in 1974 by the Government of Kerala with a mission to develop steel based industries and services in Kerala. The company is head quartered at Thrissur and operates multiple manufacturing units and service divisions across the State, and maintains a liaison office at Trivandrum. SILK operates as a government accredited agency for the execution of civil, structural and electro mechanical projects in the capacity of a Project Management Consultant (PMC). In addition to its consultancy role, SILK also provides a wide range of services and products, including fabrication, casting, ship building, ship breaking and the manufacture of hospital and home furniture. SILK undertook various PMC assignments for client agencies including the Local Self Government Department (LSD), Scheduled Tribes Development Department (STDD), Kannur District Panchayath, Forest Department and multiple Grama Panchayaths. Some of the projects involved were PMC for installation and repair of Mini and High Mast Lamps for Grama Panchayaths; and development of a Rapid Response Team (RRT) and a Veterinary Emergency Team (VET) at Olavakkode in the Palakkad Forest Division, executed pursuant to a tripartite agreement between the Divisional Forest Officer (DFO), Palakkad, SILK and the project contractor. As part of the consideration for the PMC services, SILK collected "centage charges" from the client departments. These centage charges were billed/ collected by SILK in respect of the consultancy/PMC activities performed for the Government entities and local bodies. Centage charges represent a percentage-based consultancy/administrative fee collected by the applicant for project management and supervisory services rendered by Government departments/local authorities. The applicant sought the advance ruling on the issue whether GST is applicable on the centage charges collected being the centage charges levied for consulting services provided to a Government entity which is covered under Article 243G/243W of the Indian constitution (12th schedule). Yet another issue raised was whether the company can claim refund of GST already paid for the year 2017-18 onwards? The AAR held that the organisations to whom the applicant has rendered services are either State Government Departments (LSGD, STDD, Forest Department).or Local Authorities (District Panchayaths, Grama Panchayaths), and therefore fall squarely within the categories specified in Entry No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The authority further held that the applicant can claim refund of GST already paid for the past period, subject to the limitation of two years prescribed under the GST law. However, this authority cannot rule on the eligibility for refund against the claim since all facts related to the eligibility for refund are not available before this authority. Ruling Details Applicant’s Name: Steel Industrials Kerala Limited Ruling Date: 08.12.2025 Click Here To Read Ruling Read More: Used Vehicle Dealers Can Claim GST ITC on Business Expenses: AAR

GST Not Applicable On Centage Charges Collected For Pure PMC Or Consultancy Services Provided To Govt.: AAR

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