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2020 (12) TMI 835 - AAR - GSTManpower Supply services - providing of staff to Government, to carry out work entrusted to it as per the 12th Schedule to Article 243W of the Indian Constitution - Services covered under Clause 1 2 of Twelfth Schedule of Article 243W? or not - benefit of Exemption Notification No. 12/2017 dated 28th June, 2017 (Entry No. 3 of Exemption Notification) - pure labour services or not - Government Works Contract Services or not - rate of GST. HELD THAT - Applicant has received work orders for supply of goods or services or both, from the Municipal Corporation of Amravati, Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) and Maharashtra Jeevan Pradhikaran (Water Supply) for the period 2019-20 - On perusal of the work orders, it is seen that applicant is only supplying manpower to Municipal Corporation and Maharashtra Jeevan Pradhikaran (water supply) whereas in respect of MSEDCL, in some cases they are supplying only manpower whereas in other cases, in addition to supply of manpower, they are supplying materials as well. Thus, in most cases pure services, in the form of manpower supply, are rendered by the applicant and only in a couple of cases, there is an element of composite supply of goods and services being provided. Whether their subject activities are covered under Clause 1 2 of 12th Schedule of Article 243W of the Indian Constitution? - HELD THAT - In the subject case, as per the work orders submitted by the applicant we find that, for the services to fall under Article 243W of the Constitution, the said services should be supplied to Municipalities as and when outsourced to the applicant. Out of the three recipients mentioned by the applicant we find that only the Amravati Municipal Corporation, Amravati (AMC), is a municipality, established and set up as per the provisions of Article 243 P of Constitution of India and they are also performing the functions entrusted under Article 243W in public interest. Applicant is specially supplying services like providing manpower for cleaning, providing manpower for collecting of rent from hawkers and providing manpower for collecting of parking fees to Amravati Municipal Corporation, which satisfies the definition of a local authority as provided under Section 2 (69) (b) of the CGST Act. MSEDCL is not a municipality. It is an electricity distributing company and therefore supply of goods and services to MSEDCL cannot be considered as related falling under Clause 1 2 of Article 243W of the Constitution. Similarly, since Maharashtra Jeevan Pradhikaran (water supply) is not a municipality, supply of services to it, by the applicant, are also not related to Urban planning including town planning or Planning of land- use and construction of buildings. Therefore the said supply does not fall under Clause 1 2 of Article 243W of the Constitution - subject activities undertaken by the applicant will not fall under Clause 1 2 of the 12th Schedule to Article 243 W of the Constitution. Whether the services provided by it falls under Entry No. 3 of Exemption Notification No. 12/2017 dated 28th June, 2017 as amended from time to time as the services are in the nature of pure labour services? - HELD THAT - Maharashtra State Electricity Board (or MSEB), a state-owned electricity regulation board operating within the State of Maharashtra, was formed on 20 June 1960 under Section 5 of the Electricity (Supply) Act, 1948. In accordance with Electricity Act 2003 of the Government of India, the Maharashtra State Electricity Board was restructured into 4 companies in 2005, one of which was MSEDCL, a public sector undertaking (PSU) controlled by the Government of Maharashtra. MSEDCL distributes electricity to the entire Maharashtra state except some parts of Mumbai city - MSEDCL is constituted and established by the State Government of Maharashtra to carry out the function of distribution of electricity and is therefore clearly covered under the definition of 'Government Entity'. Whether Maharashtra Jeevan Pradhikaran falls under the definition of Government Entity? - HELD THAT - The Principal responsibilities of Maharashtra Jeevan Pradhikaran according to MWSSB Act 1976 are Planning, designing and implementation of water supply and sewerage schemes including facilitation for necessary financial provisions, As directed by the Government of Maharashtra (Government of Maharashtra), taking over any water supply as well as sewerage scheme for operation and maintenance, To establish service level bench marks for water supply and sewerage sector, To extend relevant support, regarding water sector, to Government of Maharashtra as well as Local Self Governments, To support Government of Maharashtra to prepare Annual Plan and to establish / modify tariff / tax / cess structure in water sector. Therefore, the Maharashtra Jeevan Pradhikaran is also under the control of the Government of Maharashtra and can be considered as a Government Entity'. Whether the supply of Pure services by the applicant can be considered as 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? - HELD THAT - Providing manpower for cleaning of public washrooms and restrooms, if provided Municipal Corporations, will be covered under Public health, sanitation conservancy and solid waste management /Public amenities including street lighting, parking lots, bus stops and public conveniences since these functions are entrusted to the Municipalities under Article 243 W of the Constitution. Since it is not forthcoming from the applicant's submissions that, they are providing such services of providing staff for cleaning of public washrooms/restrooms to the Amravati Municipal Corporation, the applicant will not be eligible for exemption under Entry No. 3 of Exemption Notification No. 12/2017 dated 28.06.2017. Whether the services provided by it fall within the Government Works Contract Services on which GST rate was amended to 12% in the Notification No. 20/2017? - HELD THAT - In only two situations, the applicant is supplying goods as well as services to MSEDCL. Firstly, it provides labour and material for the supply, test, transport, construction, erection, testing and commissioning of HVDS (high voltage distribution systems) Distribution Transformer Centres of varying capacities, release of Agricultural Pumps, Residential and Street light connections Manpower for Setting up new connections. Secondly the applicant provides labour and material for electrical installation in government staff quarters - the composite supply undertaken by the applicant as mentioned in para 5.7.3 above does not fall in any of the categories of (iii) (iv) and (v) of Notification no. 20/2017 - C.T. (Rate), as mentioned by them because there is no Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017. In the subject case as seen from their submissions in respect of the supply carried out by the applicant, there is no works contract since there is no contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Therefore the question of availing the reduced rate of 12% GST does not arise at all.
Issues Involved:
1. Whether the services provided by the Applicant are covered under Clause 1 & 2 of Twelfth Schedule of Article 243W. 2. Whether the services provided by the applicant fall under the Exemption Notification No. 12/2017 dated 28th June, 2017 (Entry No. 3 of Exemption Notification) as amended from time to time as the services are in the nature of pure labour services. 3. Whether the services provided by the applicant fall within the Government Works Contract Services on which GST rate was amended to 12% in the notification No. 20/2017. Detailed Analysis: Issue 1: Coverage under Clause 1 & 2 of Twelfth Schedule of Article 243W - The applicant's activities, such as providing manpower for cleaning, collecting rent from hawkers, and collecting parking fees, do not fall under "Urban planning including town planning" or "Planning of land-use and construction of buildings" as per Clauses 1 & 2 of the 12th Schedule to Article 243W of the Constitution. - MSEDCL and Maharashtra Jeevan Pradhikaran are not municipalities; hence, services provided to them do not fall under Clause 1 & 2 of Article 243W. - Conclusion: The services provided by the applicant are not covered under Clause 1 & 2 of the Twelfth Schedule of Article 243W. Issue 2: Exemption under Notification No. 12/2017 - For services to be exempt under Entry No. 3 of Notification No. 12/2017, they must be pure services provided to the government or a local authority in relation to functions entrusted to a Panchayat or Municipality under Articles 243G or 243W. - The applicant provides pure services to entities like the Amravati Municipal Corporation, MSEDCL, and Maharashtra Jeevan Pradhikaran, which qualify as government entities. - Services like providing manpower for collecting parking fees for the Amravati Municipal Corporation fall under public amenities and are eligible for exemption. - Services like collecting rent from hawkers and other services provided to MSEDCL and Maharashtra Jeevan Pradhikaran do not qualify for exemption as they are not related to functions under Articles 243G or 243W. - Conclusion: Except for the service of providing manpower to the Amravati Municipal Corporation for collecting vehicle parking fees, other services do not fall under Entry No. 3 of Exemption Notification No. 12/2017. Issue 3: Applicability of GST rate as per Notification No. 20/2017 - The applicant provides composite supplies of works contract to MSEDCL, which do not fall under the specified categories in Notification No. 20/2017. - There is no "works contract" as defined in clause (119) of section 2 of the CGST Act, 2017, since there is no contract for building, construction, or other activities involving immovable property. - Conclusion: The services provided by the applicant do not fall within the Government Works Contract Services on which GST rate was amended to 12% in Notification No. 20/2017. Order: 1. The services provided by the Applicant are not covered under Clause 1 & 2 of Twelfth Schedule of Article 243W. 2. Except for the service of providing manpower to the Amravati Municipal Corporation for collecting vehicle parking fees, other services provided by the applicant do not fall under Entry No. 3 of Exemption Notification No. 12/2017. 3. The services provided by the applicant do not fall within the Government Works Contract Services on which GST rate was amended to 12% in Notification No. 20/2017.
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