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2021 (9) TMI 481 - AAR - GSTClassification of services - services provided by Padmavathi Hospitality Facilities Management Services (PHFMS) to DME - function entrusted to a Panchayat or a Municipality under the constitution - exemption under SI.No.3 of Notification 12/2017 Central Tax dated 28.06.2017 read along with amendment dated 25.01.2018 or not - levy of GST - pure services or Composite Supplies? - HELD THAT - t is seen that Tamil Nadu Medical Service Corporation Ltd., (TNMSC) has called for a tender vide Bid Reference 697/Outsourcing/DMS/TNMSC/ENGG/2021 dt 05.07.2021, Tender for outsourcing of housekeeping, Security Services and Assistance in Electrical, Plumbing, laundering, Cooking, Catering, Gardening Carpentry Services in 93 Government Hospitals under the Control of Directorate of Medical Rural Health Services (DM RHS), -86 Institutions, Directorate Medical Rural Health Services (ESI) (DM RHS ESI) - 7 institutions. It has been proposed to identify an agency /agencies for one or any or all of the four zones through a transparent bidding process to accomplish the task. It can be stated that the works involved in the tender is offering 'Comprehensive Facility Management Solutions' to the Hospitals under DM RHS in the area of Housekeeping, Cleaning, Security, maintenance, etc by providing effective manpower including supervisory persons and the required equipment, consumables, etc. The tender considers the entire works as 'Services' which by the clauses of the tender includes goods and services - the person bidding for the tender has to provide the man-hour cost and the cost of resources such as equipment(amortized), consumables, etc to be used by the bidder for effective provision of the comprehensive management solution related to cleaning, housekeeping, security and maintenance of the Hospitals under the DM RHS. Applicability of entry No. 3 of the Notification No. 12/2017-C.T.(Rate) - scope of work to be undertaken in the 86 Government Hospitals under the control of Directorate of Medical Rural Health Services and 7 Hospitals - HELD THAT - The entry applies to Pure Services provided to the defined class of service recipients and the services are to be of any activity in relation to any function entrusted to a Panchayat/Municipality under Article 243 G/243W of the Constitution - in the case at hand, the scope of work is the supply of Comprehensive facility management service for the upkeep/running of the hospitals, i.e., the successful bidder uses the materials required for provision of such services and the various services are supplied to the recipient by such successful bidder. Hence, the recipient is supplied with 'Pure services' of Housekeeping/cleaning including Pest Control services; Security services; manpower for various maintenance services. The first limb of the said notification specifies 'Pure Services (excluding works contract service or other composite supplies involving supply of any goods)', in the instant case, the services provided are 'Pure Services' and the said entry covers all the 'Pure services', therefore, this limb is fulfilled. It is clearly evident that Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI) are Directorates under Health Family welfare Department, Government of Tamil Nadu. In the case at hand, the tender issuing and accepting authority, alone is the TNMSC. The role of the Tamil Nadu Medical Service Corporation Ltd., (TNMSC), a Government of Tamil Nadu Undertaking is to be understood in the backdrop of the tender offer document of Tamil Nadu Medical Services Corporation Bid Reference 697/Outsourcing/DMS/TNMSC/ENGG/2021 dt 05.07.2021 - upon perusing the tender document Clause 2.1.2 of the Interpretation of Terminologies in Part II - Conditions of Contract role of Tamil Nadu Medical services Corporation is specified as The Tender inviting authority and Tender Accepting Authority and they act as facilitator and the actual contract is between the Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI) and the successful bidder only and the services are to be provided to Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI) - thus, DMS MS(ESI) are State Government Department and the successful bidder makes the supply to the State Government, the identified class under the said entry and second limb of the said Notification is fulfilled. Whether the activities are 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? - Entry No.3 Chapter 99 of Notification No. 12/2017- C.T.(Rate) dated 28.06.2017 - HELD THAT - The scope of work in the tender document as furnished to us is 'Comprehensive facility management services' which are 'Pure Services' of Housekeeping, cleaning including pest control services, Security services, assistance in the form of Electrician, Plumber, etc for effective maintenance of the hospital facility; the supply is proposed for the hospitals under DM RHS, which is a Directorate under Ministry of Health Family Welfare, State of Tamil Nadu, i.e., State Government; the activities being in relation to the up-keeping/running of the Hospital facility, is in relation to the activities entrusted to a Panchayat or a Municipality under Article 243G/W of the Constitution and therefore, the exemption at Entry No. 3 of Notification no. 12/2017-C.T.(Rate) dated 28.06.2017 as amended is applicable in respect of the scope of work tendered by TNMSC for the supply to be made to hospitals under DMS. The Tender is for 'Providing Sanitation Services for the Hospitals and Medical/nursing colleges in DME Institutions in Chittoor, Kadapa, Anantapur, Kurnool Districts in the State of Andhra Pradesh. It is evident that in this case the supply is made not only to the Hospitals but also to the educational institutions and the facts in this count are not similar to that in the case at hand, wherein the supply tendered is towards 'Comprehensive facility management' of the Hospital facility only, which is to be maintained by the State Government as per the dictum of the Constitution under Article 243G/243W.
Issues Involved:
1. Classification of services provided by PHFMS to DME/DMS under functions entrusted to Panchayat or Municipality. 2. Exemption applicability under SI.No.3 of Notification 12/2017 Central Tax. 3. GST liability and applicable rate for services provided by PHFMS to DME/DMS. 4. Classification of services as pure services or composite supplies. Issue-wise Detailed Analysis: 1. Classification of Services Provided by PHFMS to DME/DMS: The applicant sought clarification on whether the services provided by PHFMS to the Directorate of Medical Education (DME) and Directorate of Medical & Rural Health Services (DMS) are classifiable as functions entrusted to a Panchayat or Municipality under the Constitution. The ruling clarified that the services provided, which include housekeeping, security, and assistance in various maintenance tasks, are not directly classified under the functions entrusted to Panchayats or Municipalities as per Articles 243G and 243W of the Constitution. The services are considered as comprehensive facility management solutions. 2. Exemption Applicability under SI.No.3 of Notification 12/2017 Central Tax: The applicant queried whether the services provided to DME/DMS are exempt under SI.No.3 of Notification 12/2017 Central Tax dated 28.06.2017. The ruling examined the scope of work under the tender, which includes pure services like housekeeping, security, and maintenance services provided to state government hospitals. It was determined that these services are indeed pure services provided to a state government entity, fulfilling the conditions of the exemption notification. Therefore, the services are exempt under Entry No.3 of Notification 12/2017-C.T.(Rate) dated 28.06.2017. 3. GST Liability and Applicable Rate for Services Provided by PHFMS to DME/DMS: The ruling addressed whether the services provided by PHFMS to DME/DMS are liable for GST and, if so, the applicable rate. It was concluded that since the services are exempt under the specified notification, they are not liable for GST. The services provided are considered pure services related to functions entrusted to a Panchayat or Municipality, thereby qualifying for the exemption. 4. Classification of Services as Pure Services or Composite Supplies: The applicant sought clarification on whether the services rendered by PHFMS to DME/DMS can be classified as pure services or composite supplies. The ruling clarified that the services provided, which include housekeeping, security, and various maintenance services, are pure services. The services do not involve significant supply of goods and thus do not constitute composite supplies. The exemption applies as these are pure services in relation to functions entrusted to Panchayats or Municipalities. Additional Notes: - The ruling did not address the applicability of GST on services provided to Medical Colleges and Nursing Colleges under the Directorate of Medical Education (DME) as the applicant did not provide sufficient evidence of current or proposed services to these institutions. - The ruling emphasized that the exemption under SI.No.3 of Notification 12/2017-C.T.(Rate) applies to services provided to state government hospitals for functions related to public health and sanitation. Ruling Summary: 1. The proposed supply of housekeeping, security, and various maintenance services to 93 government hospitals under DMS is exempt under Entry No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017. 2. The question regarding the supply to Medical Colleges and Nursing Colleges under DME was not admitted due to lack of sufficient evidence.
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