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2021 (11) TMI 1133 - AAR - GSTClassification of services - rate of GST - Pure Services - composite supply - works contract service - providing Man Power Service which includes providing of Technical personal Data Operator House Keeping Service etc. to different State Government and Central Government Department - applicability of Sr. No. 3 of Notification No. 12/2017-CT dated 28.06.2017 - HELD THAT - To avail the benefit of clause 3 of the Notification No 12/2017 three conditions should be satisfied. Firstly pure services (excluding works contract service or other composite supplies involving any goods) should be provided secondly it should be provided to the Central Government State Government or Union territory or local authority or a Governmental authority and thirdly it should be 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. Supply of man power as discussed above provided by business entities like the applicant not involving any supply of goods would be treated as supply of pure services also the applicant has submitted that they are providing the same to Central / State Government. The interpretation by the applicant that their activity/services of providing Man Power Service involving providing of Technical personal Data Operator House Keeping Service etc. to different State Government and Central Government Department in the nature of pure service are functions entrusted to the Municipality and Panchayat covered under article 243G and 243W of the Constitution is misplaced and devoid of merit. The act of providing man power to Central / State Government by the applicant can by no stretch of imagination be linked to an act of discharging any sovereign functions as envisaged and covered under the functions entrusted and as specified to municipalities / panchayats under 243G/243W of the Constitution of India. Nothing is in record to establish that the activity / provision of service of manpower which includes providing of technical personal data operator housekeeping service etc. by the applicant to different State Government and Central Government Department have any direct and proximate relationship with any of the activities listed in Article 243G or Article 243W read with Eleventh Schedule and Twelfth Schedule of the Constitution of India. No evidence to relate the aforesaid activities or relate the same to functions as envisaged under covered under the functions entrusted and as specified to municipalities /panchayats under 243G/243W of Constitution of India is forthcoming. In the present case the applicant a business entity performing the business activity of provision of service of manpower viz. providing of technical personal data operator housekeeping service etc. to different State Government and Central Government Department can in no way be termed or equated to performing a sovereign function as envisaged under Article 243G or Article 243W of the Constitution. The activity of provision of service of manpower viz. providing of technical personal data operator housekeeping service etc. to different State Government and Central Government Department by the applicant though being a pure service is not any sovereign function as envisaged under Article 243G or Article 243W of the Constitution - the activity of provision of service of manpower is not eligible for NIL rate of GST provided under Sr. no. 3 of Notification No 12/2017-Central Tax (Rate) dated 28-6-2017. The aforesaid activity of manpower supply attracts CGST@ 9% and CGGST@ 9% classifiable under SAC 998513.
Issues Involved:
1. Determination of GST liability and tax rate on the services of providing technical personnel, data operators, housekeeping, etc., to different State and Central Government Departments. 2. Applicability of Entry Number 3 of Notification Number 12/2017-Central Tax (Rate) dated 28/06/2017 to the services provided by the applicant. Issue-wise Detailed Analysis: 1. GST Liability and Tax Rate on Services Provided: The applicant, engaged in providing manpower services such as technical personnel, data operators, and housekeeping to various State and Central Government Departments, sought an advance ruling on the GST liability and applicable tax rate for these services. The applicant contended that these services should be exempt from GST under Entry Number 3 of Notification Number 12/2017-Central Tax (Rate) dated 28/06/2017, which provides a nil rate of tax for "pure services" provided to government entities in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W of the Constitution. 2. Applicability of Entry Number 3 of Notification Number 12/2017-Central Tax (Rate): The applicant argued that their services fall under the definition of "pure services" as they do not involve any composite supply of goods or works contract services. They believed that these services should be exempt from GST as per the aforementioned notification. Analysis and Discussion: The Authority for Advance Ruling (AAR) examined the provisions of the CGST Act and the CGGST Act, 2017, noting that they are similar unless specified otherwise. The AAR analyzed the relevant clauses of Notification No. 12/2017-CT(R) dated 28-06-2017, which exempts certain "pure services" provided to government entities from GST, provided they are related to functions entrusted to Panchayats or Municipalities under Articles 243G and 243W of the Constitution, respectively. The AAR referred to the definitions of "Government," "local authority," "governmental authority," and "government entity" as provided under the CGST Act, 2017, and the relevant notifications. The functions entrusted to Panchayats and Municipalities under Articles 243G and 243W were also examined to determine if the applicant's services fall within these categories. The AAR concluded that the applicant's services of providing manpower, including technical personnel, data operators, and housekeeping, do not have a direct and proximate relationship with any of the activities listed under Articles 243G or 243W. Therefore, these services cannot be considered as performing sovereign functions as envisaged under these articles. The AAR cited the Supreme Court's rulings on the interpretation of exemption notifications, emphasizing that such notifications should be interpreted strictly, and the burden of proving applicability lies with the assessee. In cases of ambiguity, the benefit cannot be claimed by the assessee and must be interpreted in favor of the Revenue. Conclusion: The AAR ruled that the applicant's services of providing manpower to various State and Central Government Departments, although being "pure services," do not qualify for the nil rate of GST under Entry Number 3 of Notification No. 12/2017-Central Tax (Rate). These services are not related to functions entrusted to Panchayats or Municipalities under Articles 243G and 243W of the Constitution. Consequently, the services are subject to GST at the rate of 18% (9% CGST and 9% CGGST), classified under SAC 998513. Order: The ruling concluded that the manpower services provided by the applicant to various Central and State Government departments are liable for GST at the applicable rate of 18% and are not eligible for the nil rate of tax under Entry Number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017.
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