2021 (2) TMI 197 - AAR - GST

Classification of services - rate of GST - providing security guards and housekeeping services to Kuvempu University, Shivamogga - GST chargeable @ 18%? - HELD THAT - The recipient of the applicant i.e Kuvempu University does not provide education by way of pre-school and education upto higher secondary school or equivalent, and also due to the fact that the services provided to the University are not security or cleaning or housekeeping services but supply of manpower services as stated above. Hence the applicant is also not eligible to get exemption under entry number 66 of entry (b) of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 - the applicant is of the view that they are providing supply of Security service as well as manpower service used for maintenance and cleaning of University premises and play ground, campus area and building office to Kuvempu University, Shivamogga and hence the impugned transaction attracts reverse charge mechanism as per section 9(3) of the GST Act vide Notification No. 13/2017-Central Tax (Rate) dated 28-06-2017 as amended by the Notification No. 29 / 2018-Central Tax (Rate) dated 31-10-2018. The Kuvempu University is an establishment of the State Government. Therefore, Kuvempu University is not liable to discharge tax under reverse charge basis. Hence the applicant is liable to discharge GST @ 18% on forward charge mechanism on the said supply of manpower services.

Issues Involved:
1. Classification of services provided by the applicant.
2. Applicability of GST rate on the services provided.
3. Eligibility for exemption under Notification No. 12/2017-Central Tax (Rate).
4. Applicability of reverse charge mechanism under GST.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Applicant:
The applicant entered into an agreement with Kuvempu University to provide manpower for security and housekeeping services. The nature of the services was examined, and it was determined that the applicant was providing manpower services rather than security and housekeeping services. The services were classified under SAC 99851, which covers "Employment Services including personnel search, referral service and labour supply service," specifically under SAC 998513 for contract staffing services and SAC 998514 for temporary staffing services.

2. Applicability of GST Rate on the Services Provided:
The services provided by the applicant fall under sub-entry (ii) of entry 23 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, making them liable to tax at the rate of 9% under the CGST Act and 9% under the KGST Act, totaling 18% GST.

3. Eligibility for Exemption under Notification No. 12/2017-Central Tax (Rate):
The applicant claimed exemption under entry no. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which exempts pure services provided to the government or local authority related to functions entrusted to a Panchayat or Municipality under Articles 243G and 243W of the Constitution. However, it was determined that providing manpower for security and housekeeping services does not fall under the functions listed in the Eleventh or Twelfth Schedules of the Constitution. Therefore, the applicant is not eligible for this exemption.

The applicant also claimed exemption under entry no. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which exempts certain services provided to educational institutions. However, Kuvempu University does not provide education up to higher secondary school or equivalent, and the services provided were classified as manpower services, not security or housekeeping services. Thus, the applicant is not eligible for this exemption either.

4. Applicability of Reverse Charge Mechanism under GST:
The applicant contended that their services should attract reverse charge mechanism under section 9(3) of the GST Act, as per Notification No. 13/2017-Central Tax (Rate) dated 28-06-2017, amended by Notification No. 29/2018-Central Tax (Rate) dated 31-10-2018. However, since Kuvempu University is an establishment of the State Government and not liable to discharge tax under reverse charge, the applicant is required to discharge GST at 18% on a forward charge basis.

Ruling:
The applicant is liable to discharge GST at 18% (9% CGST + 9% KGST) on a forward charge basis for providing manpower services to Kuvempu University, Shivamogga.

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