2023 (1) TMI 1162 - AAR - GST

Exemption from GST - works contract service provided to Bio Centers, Department of Horticulture and Center of excellence - other service like data entry operator, security, provided to Horticulture Department - material like fertilisers, soil, sand supplied for use of bio centers - HELD THAT - The applicant is providing manpower supply for tissue culture production and for handling the process of research on flowers, planting and growing for Horticulture department, Government of Karnataka. Whether tissue culture is covered under 1st entry of eleventh schedule which says 'Agriculture, including agricultural extension'? - HELD THAT - The tissue culture is not same as agriculture and there is no direct nexus to the items mentioned in eleventh or twelfth schedule of the constitution. Thus supply of manpower for tissue culture production and for handling the process of research on flowers, planting and growing to Horticulture department, Government of Karnataka are not provided by way of 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. Hence provision of such manpower services are liable to tax at 18%. The Applicant wants to know whether supply of materials like fertilisers, soil and sand for use of bio centers are exempted under GST. However, there is no specific exemption for supply of materials like fertilisers, soil and sand for use of bio centers as per notification No.2/2017-Central Tax (Rate), dated 28.06.2017.

Summary

Issues involved:
1. Admissibility of the application under Section 97(2)(e) of the CGST Act 2017.
2. Exemption of works contract service provided to Bio Centers, Department of Horticulture, and Center of Excellence from GST.
3. Tax liability on providing manpower services like data entry operator, security to Horticulture Department.
4. Exemption of materials like fertilizers, soil, and sand supplied for use of bio centers from GST.

Admissibility of the application:
The issue revolves around the determination of the liability to pay tax on goods or services, making it admissible under Section 97(2)(e) of the CGST Act 2017.

Exemption of works contract service:
The applicant sought clarification on whether works contract services provided to Bio Centers, Department of Horticulture, and Center of Excellence are exempt from GST. The ruling clarified that there is no specific exemption for any works contract service as per Notification No. 12/2017-Central Tax (Rate).

Tax liability on providing manpower services:
The applicant inquired about the GST applicability on providing manpower services for tissue culture production and research on flowers to the Horticulture Department. The ruling referred to the relevant notification and highlighted the conditions for exemption, ultimately concluding that the services are not exempt and are liable to tax at 18% (9% CGST and 9% KGST).

Exemption of materials supplied:
The applicant questioned whether materials like fertilizers, soil, and sand supplied for bio centers are exempt from GST. The ruling pointed out the absence of a specific exemption for such supplies under Notification No. 2/2017-Central Tax (Rate), leading to the conclusion that these materials are not exempt under GST.

The ruling provided a detailed analysis of each issue raised by the applicant, examining relevant provisions, notifications, and constitutional articles to arrive at a comprehensive decision on the tax implications of works contract services, manpower supply, and material provision in the context of the Horticulture Department's tender.