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TMI Blog2020 (3) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... arai' Chenna,-600029 (hereinafter referred as 'Applicant-) is registered under the GST Act 2017 vide GSTIN No. 33AAIFP7751M1ZR. The applicant is engaged in providing Housekeeping/Cleaning including Pest Control services and Security services as bundled services to Directorate of Medical Education(DME) that includes Government Medical College Hospitals, Government Medical Colleges and Government Nursing Colleges. The applicant has sought Advance Ruling on the following questions:- 1. Whether services provided by Padmavathi Hospitality & Facilities Management Services (PHFMS) to DME are classifiable as a function entrusted to a Panchayat or a Municipality under the constitution? If not then can we conclude that no exemption is available to PHFMS? 2. Whether services provided by PHFMS to DME is exempted under Sl.No.3 of Notification 12/2017 Central Tax dated 28.06.2017 read along with amendment dated 25.01.2018? 3. Whether Services provided by PHFMS to DME including institutions of Government Hospitals and colleges are liable for GST or not? If yes, what is the rate of GST applicable to these services 4. Whether services rendered by PHFMS to DME can be classified as pure servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and so GST exemption is not available in this instance. iii. Sanitation and similar services are classified under SAC 99945. The applicant has referred to the Advance Ruling order of West Bengal, wherein it is ruled that ".......... It includes sweeping and cleaning, but only with reference cleaning of road/street. Cleaning of hospital premises is not therefore classified under sanitation or similar service. The service, the applicant bundled under the description 'Scavenging Services' are therefore not exempt under S.No.3 of exemption notification." 3.1 The applicant was given an opportunity to be personally heard and was heard on 26.09.2019. The applicant appeared and stated that they have filed a W.P. No.24412 of 2019 & WMP No. 24145 of 2019 on the same issue against TamilNadu Medical Services Corporation & Directorate of Medical Education and against the Department. The State Jurisdiction officer also appeared for the hearing and submitted that the WP was filed in Hon'ble High Court and gave a written submission stating that the applicant is not eligible for exemption at Sl.No. 3 of Notification No. 12/2017 as they provide only Manpower services. The applicant was infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kinds of services. Further the exemption is granted only when pure services are related 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. The security services are neither enlisted in Article 243G nor in Article 243W of the Constitution. The hospital services are listed in Article 243G and in Article 243W of the Constitution (Health and sanitation including hospitals Primary health centres and dispensaries). The concerned matter deals with the tender floated by the Directorate of medical education which involves hospital and security services to hospitals, medical colleges, college of nursing and school of nursing. Though DME is falling under State government the hospital and security services in DME are not related to functions entrusted to Panchayat/Municipality under Articles 243G & 243W. iii. Whether services rendered by Padmavathy hospitality & Facility management services to DME are liable for GST? Yes, the services are to be taxed at the rate of 18% for both security and cleaning services. 3.3 In the written submission furnished by the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regime, PHFMS has collected and paid GST from DME from 01.07.2017 to till date. PHFMS used to raise Tax Invoice to DME for the above mentioned services rendered inclusive of GST and even the DME were Clearing the bills including GST, Now that the old tender contract period has expired and they had to apply afresh for the new tender contract to DME, they had made an application for the open Tender floated by DME on 19/02/2019 for providing housekeeping, Security Services, Pest Control & Bio Medical Waste Management Services in 95 government medical institutions under the control of Director of Medical Education Tamilnadu. PHFMS has quoted the bid value of tender including the GST applicable for the services rendered. * However DME is of the opinion that the services provided to them is exempt from GST under exemption notification No 12/2017 - Central Tax (Rate) dt 28/06/2017 read along with amendment dt 25/01/2018 and the tender should be placed excluding GST. DME has based their opinion on note given by an alternative bidder M/s Krystal Integrated services Private Limited and Independent opinion from a Chartered Accounting Firm Sanjiv Shah & Associates. Furthermore, the alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule under article 243G of the constitution are "Health and sanitation, including Hospitals, Primary Health centres and dispensaries" * DME view on the above said points is based on section 39 of the Tamil Nadu District Municipalities Act, 1920 wherein they have relied on the objects of Expenditure connected with public health stating that expenditure towards public health includes "(a) the construction and maintenance of hospitals and dispensaries and temporary places of reception within the municipality or without the municipality for treatment of infectious diseases occurring in the municipality; building hospitals, dispensaries or places of reception for the sick in general" * Hence DME is of the opinion that all the 95 government hospitals coming under the said DME falls under the Municipality and that the functions entrusted to the municipality under article 243W of the constitutions is Public Health Sanitation, conservancy and solid waste management". * The applicant has stated that the original notification 12/2017 read along with amendment 2/2018 issued on 25.012018 refers to "any activity in relation to any function entrusted to Panchayat under article 243G of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument is based on one of the very recent advance ruling passed by west Bengal authority dt 09/09/2019 vide order no 21/WBAAR/2019-20 = 2019 (9) TMI 514 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL in the case of Altabur Rahman Mollah carrying business in the trade name of M/s Reliable Hospitality service. The said Reliable Hospitality services provides services similar to the services provided by PHFMS namely,- 1. Mechanised and automated cleaning of the Hospital premises including the toilets. 2. Mechanised and automated cleaning of the different parts of the academic and hostel area including the toilets 3. Manual cleaning of different parts of the campus of the institute. The applicant also supplies cleaning materials incidental or auxiliary to provisioning the cleaning services. 4. Security services etc All the above said services are provided to state government run hospitals which are located in the municipalities. As per the advance ruling authority order in the above said case the activities, functions and services mentioned as per the applicant does not fall under any of the activities covered either under eleventh schedule or twelfth schedule of the constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicability of GST on the services provided by them to Govt. Hospitals * The writ petition was on the following grounds:- * The procedure which has been adopted by TNMSC is contrary to Rule 29(d) of the Tamilnadu Tender Transparency Rules 2000 read with Section 10 of the Tender Transparency Act. It is a well settled law that all the bidders should be placed in a same position and a level playing field must be provided to all the bidders and any discrimination would fall foul of Article 14 of the Constitution of India. Hence they moved this petition under Article 226 of the Constitution of India 1949 seeking for justice as there is an imminent threat to the fundamental rights which are guaranteed under the Constitution of India * An interim injunction be passed restraining the TNMSC from finalizing the tender in Tender No. 432/outsourcing/DME/TNMSC/ ENGG/ 2019 dated 19/02/2019 pending disposal of the Main writ petition and render justice * The Hon'ble Court may be pleased to issue a writ in the nature of a WRIT of MANDAMUS or any form of writ, order or direction in the nature of WRIT of MANDAMUS to direct the TNMSC to awards the tender contract to PHFMS, who has given the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Senior Counsel appearing for the petitioner submits that the Petitioner had made an application for advance ruling on the applicability of Goods and Service Tax in respect of the tender, which forms the subject of this writ petition, before the sixth respondent, and in view of the first proviso to Section 98(2) of the Central Goods and Services Tax Act, 2017, seeks a clarification from this Court for enabling the Sixth Respondent to pass orders in that application. 4. Having regard to the facts involved in this case, and in particular, the Counter Affidavit dated 12.11.2019 filed by the Third Respondent, the pendency of this Writ Petition shall not preclude the Sixth Respondent from deciding the aforesaid application for advance ruling said to have been made by the petitioner. 5.1 The applicant accordingly was extended another opportunity to be heard in person on 11.12.2019. The authorised representative appeared for the hearing. They submitted copies of order passed by the Hon'ble Judge in WMP No.32267 of 2019 in W.P No.24412 of 2019 where the Advance Ruling Authority and SGST authorities have been made as respondent. In the order, it was directed by the Hon'ble Judge that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting their request ix. Screen shot of Advance Ruling application made by the client in the GST portal, Screen shot of page wherein the attachments made to the application is displayed 5.3 The applicant again vide their letter dated 06th January 2020 has inter-alia stated that the issue before the members is the services offered as per tender by PHFMS to DME is mainly Supply of Man power supply services (such as Managerial , Supervisors, House keeping staff, attenders and security staff ) which comes around 75% for all 3 shifts to 95 Hospitals and medical colleges covered under DME and the material portion comes to 10% and the mechanised cleaning service by using automated machines comes around 5% and the remaining 10% goes for PHFMS service charges. This factual position can be examined from the copies of financial bid as submitted by PHFMS for the TNMSC Tender. They requested the AAR Bench to pass appropriate orders at the earliest in this regard. 6. We have considered the written and oral submissions of the applicant, the Writ Petition No. 24412 dated 19/08/2019 and the related Miscellaneous petitions and the Orders of the Hon Tale High Court of Madras. We find that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be classified as pure services or Composite Supplies? 7.1 The Hon'ble High Court has gave an order dated 14/11/2019 for the WP 24412 of 2019 and WMP No.24145 of 2019 that "the pendency of this Writ Petition shall not preclude the Sixth Respondent from deciding the aforesaid application for advance ruling said to have been made by the petitioner."Accordingly, this application is taken up by this authority. The question before this authority is the applicability of GST on the services for which Tender No. 432/outsourcing/DME/TNMSC/ ENGG/ 2019 dated 19/02/2019 for 'outsourcing of housekeeping and security services in 94 government hospitals, colleges and school & colleges for nursing under the control of Directorate of Medical Education' has been called by Tamil Nadu Medical Services Corporation Limited. It is seen from the tender that the services covered are: Housekeeping/cleaning including Biomedical Waste Management & Pest Control Services and Security Services specifying the requirement of man power at various levels, equipment and machinery and consumables at each of the institutions. It is seen that the institutions are all Hospitals or medical or nursing colleges. 7.2 Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce ruling module is made available on the common portal, the following conditions and procedure are prescribed for the manual filing and processing of the applications. Form and Manner of Application to the Authority for Advance Ruling 3. An application for obtaining an advance ruling under sub-section (1) of section 97 of the CGST Act and the rules made thereunder, shall be made in quadruplicate, in FORM GST ARA-01. The application shall clearly state the question on which the advance ruling is sought. The application shall be accompanied by a fee of five thousand rupees which is to be deposited online by the applicant, in the manner specified under section 49 of the CGST Act. ...................................................... It is reiterated that though the application shall be filed manually till the advance ruling module is made available on the common portal, the fee is required to be deposited online in terms of section 49 of the CGST Act 9. The application for advance ruling or the appeal before the Appellate Authority shall be filed in the jurisdictional office of the respective State Authority for Advance Ruling or the State Appellate Authority for Advance Rulin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Form F of the tender document reveals that when the bid is submitted, the applicable taxes would also have to be included while submitting the bids and in the instant case GST would be applicable on the services in the tender. * Para 7 states that TNMSC responded to their representation with letter dt 14.8.2019 stating that as GST is not applicable in the tender, the bid of KRYSTAL was the lowest. * Para 8 states that the applicant vide their letter 16.8.2019 it was not fair on the part of TNMSC to consider the bid of KRYSTAL without GST and the issue of applicability of GST was to be considered. * Para 10 states that the applicant was asked by TNMSC vide their letter dt 17.8.2019 to negotiate on the applicants lowest bid for Zone 5 considering the applicability of GST * Para 12 states that GST is very much applicable to the case and hence, the bid of KRYSTAL is illegal and should have been disqualified .For efficacious adjudication of the writ they implead Assistant Commissioner GST, Chennai North Commissionerate as a proper and necessary party to clearly decide as regards the applicability of GST. * Para 13 states that even if TNMSC proceed on finalizing the tender on ..... 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