2024 (7) TMI 522 - AAR - GST

Exemption from GST - Bruhat Bengaluru Mahanagra Palike, Banglore - obtaining security services on outsource basis from security agency as per the pure services under 12th schedule to Article 243-W of the Constitution and under 11th schedule to Article 243-G - HELD THAT - Supply of Security services to Bruhat Bengaluru Mahanagara Palike (BBMP) are not 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 and hence not exempted from GST.

Summary

Issues:
1. Whether security services provided to a local authority are exempt from GST under specific provisions.
2. Admissibility of the application under Section 97(2)(e) of the CGST Act 2017.
3. Taxability of providing security services to a specific entity.
4. Interpretation of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
5. Determination of whether the entity in question qualifies as a local authority.

Analysis:
1. The applicant, a Private Limited Company, sought an advance ruling on the taxability of providing security services to a local authority, specifically Bruhat Bengaluru Mahanagara Palike (BBMP). The key question was whether such services are exempt from GST under certain provisions.
2. The application was deemed admissible under Section 97(2)(e) of the CGST Act 2017, which pertains to the determination of the liability to pay tax on goods or services.
3. The applicant had entered into a work order with BBMP to provide security services to their head office premises for three years, prompting the query on the taxability of these services.
4. The applicant claimed that BBMP considered the supply of security services as exempt under SI. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, leading to the need for interpretation of this notification.
5. The ruling authority analyzed the definition of "Local Authority" under the KGST Act 2017 to determine whether BBMP falls under this category. BBMP's establishment under the Karnataka Municipal Corporations Act confirmed its status as a corporation and a local authority.
6. Further examination involved assessing whether the security services provided to BBMP were related to functions entrusted to a Panchayat under article 243G of the Constitution or a Municipality under article 243W of the Constitution. It was concluded that the services did not meet these criteria, rendering them not exempt from GST.
7. The final ruling stated that the supply of security services to BBMP was not considered as part of any function entrusted to a Panchayat or Municipality under the Constitution, hence not exempt from GST.

This detailed analysis of the judgment provides insights into the interpretation of relevant legal provisions and the specific circumstances surrounding the taxability of security services provided to a local authority.