Fire services are a Matter Listed in the Twelfth Schedule of the Constitution and a Function of the Municipal Corporation

The applicant M/s. Tirupati Construction has been awarded a works contract for the construction of the Fire Station and Staff Quarters in SWZ(A) the Surat Municipal Corporation. The construction contract is a labour plus material basis contract and is an ongoing activity as of the date of filing the advance ruling application. It was asked whether the activity of composite supply of works contract service entered into by the applicant supplier and the said local authority recipient merits classification at Serial Number 3(vi)(a) of Notification Number 11/2017 – Central Tax (Rate).

The authority found that the subject contract is for the construction of immovable property wherein the transfer of property in goods is involved in the execution of the subject contract. It was held that subject supply is works contract service. The service recipient is Surat Municipal Corporation, which the authority held as a local authority. It was noted that vide Explanation to Serial No 3(vi) of said NT, ‘business’ shall not include any activity or transaction undertaken by a local authority in which they are engaged as public authorities. It was noted that fire services are a matter listed in the twelfth schedule of the Constitution of India and thereby a function of the Municipal Corporation. Therefore, the activity undertaken by Surat Municipal Corporation and the supply of Staff Quarters was out of the purview of business, as described under Sr. no. 3(vi)(a) of Said NT. It was held that a fire station will be used for fire services function as envisaged in schedule twelfth of our Constitution and cannot be considered a commercial building. Therefore, the subject supply merits entry under Sr. No. 3(vi)(a) of said NT.