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2025 (4) TMI 417 - AAR - GSTExempt supplies under N/N. 12/2017 (as amended) or not - services to 54 hospitals under the control of DM RHS - HELD THAT - Public Health is covered as one of the functions of both the Articles 243G (clause 23) and 243W. (clause 6) of the Constitution. While clause 6 of Article 243W refers to Public Health clause 23 of Article 243G on the other hand cites Health and sanitation including hospitals primary health centres and dispensaries as its function. Accordingly it is clear that Public Health and Hospitals being State subject the respective Governments of State have the responsibility to carry out these functions either through a Panchayat under Article 243G or through a Municipality under Article 243W depending upon the location of the health facility. In the case of the state of Tamilnadu the said responsibility is entrusted to the Directorate of Medical and Rural Health Services which has been established for this purpose. As much as carrying out the said function of running the hospitals primary health centres dispensaries etc. it also becomes essential to carry out activities for the up-keep and maintenance of the said health facilities. The clause any activity in relation to the functions entrusted to in Entry No.3 of the impugned notification clearly establishes the fact that activities of any nature if they are in relation to the functions entrusted to a Panchayat or a Municipality gets covered under the said entry. As could be seen from the scope of work entrusted to the applicant by the Directorate of Medical and Rural Health Services Tamil Nadu i.e. Services in relation to housekeeping security providing assistance in Electrical/Plumbing works etc. are meant for the effective maintenance of the hospital facility - these services are nothing but activities in relation to the function i.e. operation and maintenance of hospitals primary health centres dispensaries etc. for Public Health which is entrusted to a Panchayat or a Municipality and therefore the exemption provided under Entry No.3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 as amended is applicable in respect of the scope of work to be carried out by the applicant to the 54 Government hospitals under the charge of the Directorate of Health and Rural Health Services Tamil Nadu. Conclusion - The proposed supply of services for housekeeping Security assistance in electrical plumbing etc. to the 54 Government hospitals under the charge of the Directorate of Medical and Rural Health Services Tamilnadu is exempt under Entry No.3 of N/N. 12/2017-CT (Rate) dated 28.06.2017 read with Entry No.3 of N/N. II(2)/CTR/532(d-14)/2017 vide G.O.(Ms) No.73 dated 29.06.2017.
ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment is whether the services provided by the applicant to 54 government hospitals under the Directorate of Medical and Rural Health Services (DM&RHS), Tamil Nadu, qualify as exempt supplies under Entry No.3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017, as amended. This involves determining if the services are "pure services" provided to a governmental authority in relation to functions entrusted to a Panchayat or Municipality under Articles 243G and 243W of the Constitution. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The relevant legal framework includes Notification No. 12/2017-CT (Rate), which exempts "pure services" provided to government entities in relation to functions entrusted under Articles 243G and 243W of the Constitution. The exemption is applicable if the services are provided to a governmental authority and relate to functions such as public health and sanitation, which are listed under the Eleventh and Twelfth Schedules of the Constitution. Court's interpretation and reasoning: The Tribunal examined whether the services provided by the applicant fall under the scope of "pure services" as defined in the notification. The Tribunal considered the nature of the services, the recipient of the services, and the relationship of the services to the functions listed in the Constitution. The Tribunal noted that the services provided are comprehensive facility management services, including housekeeping, security, and assistance in various maintenance tasks, which are essential for the upkeep of public health facilities. Key evidence and findings: The Tribunal reviewed the contract agreements, letters of intent, and invoices provided by the applicant, which detailed the nature of the services and the percentage of consumables involved. The applicant's services were found to be primarily manpower-based, with consumables constituting only 5-6% of the total billing, which supports the classification of the services as "pure services." Application of law to facts: The Tribunal applied the criteria from the notification to the facts of the case, determining that the services qualify as "pure services" because they primarily involve manpower and not goods. The services are provided to a governmental authority, the DM&RHS, which is responsible for public health functions. The Tribunal concluded that the services are in relation to functions entrusted to a Panchayat or Municipality, as they involve the operation and maintenance of public health facilities. Treatment of competing arguments: The Tribunal considered the applicant's argument that even if the services were considered composite supplies, they would still qualify for exemption under Entry No.3A of the notification, as the value of goods supplied is less than 25% of the total value. However, the Tribunal found that the services are "pure services" and not composite supplies, making Entry No.3A inapplicable. Conclusions: The Tribunal concluded that the services provided by the applicant to the government hospitals are exempt under Entry No.3 of Notification No. 12/2017-CT (Rate), as they are "pure services" provided to a governmental authority in relation to public health functions. SIGNIFICANT HOLDINGS The Tribunal held that the proposed supply of services for housekeeping, security, and assistance in maintenance tasks to the 54 government hospitals under the DM&RHS is exempt under Entry No.3 of Notification No. 12/2017-CT (Rate). This decision reinforces the principle that services related to public health functions provided to governmental authorities are exempt from GST. Core principles established: The judgment establishes that services primarily involving manpower, with minimal goods involved, can qualify as "pure services" for the purpose of GST exemptions. It also clarifies that services related to the maintenance and operation of public health facilities are considered activities in relation to functions entrusted to Panchayats or Municipalities under the Constitution. Final determinations on each issue: The Tribunal determined that the applicant's services are exempt from GST under the specified notification, as they meet all the criteria for "pure services" provided to a governmental authority in relation to constitutional functions. This ruling provides clarity on the application of GST exemptions for similar services provided to governmental entities.
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