2019 (9) TMI 513 - AAR - GST

Governmental authority or not - managing the procurement of drugs and equipment for the medical colleges and hospitals and construction and maintenance of health facilities - exemption on the consideration received for the management services provided - exemption in terms of Sl.No. 3/3A/4/5 of N/N. 12/2017-CT(Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017, as amended from time to time. HELD THAT - The Applicant has been set up under Notification No. HF/SPSRC/WBMSC/40/2008/162 dated 17/1 1/2008 of the Department of Health Family Welfare, Government of West Bengal, as a fully owned body for managing the procurement of drugs and equipment for the medical colleges and hospitals and construction and maintenance of health facilities - Section 153(1)(a) of the 1973 Act empowers the Zilla Parishad Art 243(d) of the Constitution defines a Panchayat as an institution of self-government constituted under Art 243B. Such a Panchayat, according to section 2(15b) of the 1973 Act, includes a Zilla Parishad to undertake schemes and adopt measures for public health and sanitation, including establishment and maintenance of dispensaries and hospitals. Managing procurement of drugs and equipment for the medical colleges and hospitals and construction and maintenance of health facilities is an activity in relation to establishment and maintenance of hospitals and dispensaries. The Applicant, therefore, is a body established by a State Government Notification, with 100 per cent participation by way of equity and control, to carry out a function entrusted to a Panchayat under Sl No. 23 of the Eleventh Schedule under Article 243 G of the Constitution. It is, therefore, a Governmental Authority as defined under para 2(zf) of the Exemption Notification. The Applicant has not provided any invoice or work order. The description of the activity for which the Applicant raises tax invoice is, therefore, not ascertained. However, the Applicant is eligible for exemption under Sl No. 5 of the Exemption Notification on supply of any service, including composite supplies like works contract service whatever be the proportion of goods, in relation to establishment and maintenance of hospitals and similar health facilities.

Summary

Issues involved:
Admissibility of the Application, Submissions of the Applicant, Submissions of the Revenue, Observations & Findings of the Authority.

Admissibility of the Application:
The Applicant sought a ruling on the exemption availability on administrative cost under specific notifications. The Revenue objected based on the exclusion of tax rate questions under section 97(2)(a) to (f). However, the Authority found the question admissible under section 97(2)(b) as it pertained to the applicability of an exemption notification and was not pending elsewhere.

Submissions of the Applicant:
The Applicant, a governmental authority, argued for exemption eligibility based on its role in managing medical procurement projects. It contended that its revenue source was solely administrative costs, making it a pure management service eligible for exemption under specific provisions.

Submissions of the Revenue:
The Revenue disputed the Applicant's status as a governmental authority and the nature of its services. It referenced legal precedents to challenge the Applicant's eligibility for exemption, emphasizing the lack of evidence supporting the claims made.

Observations & Findings of the Authority:
The Authority analyzed relevant circulars and legal interpretations to determine the Applicant's eligibility for exemption. It highlighted the broadened scope under GST compared to the previous service tax regime. The Authority concluded that the Applicant, meeting the criteria of a governmental authority, was eligible for exemption under specific notifications for services related to health facility maintenance.

In conclusion, the Authority ruled that the Applicant qualified as a governmental authority and was eligible for exemption under the relevant notifications for services linked to hospital and health facility maintenance.