2018 (12) TMI 228 - AAR - GST

AAR rules applicant exempt from GST for pure services to municipality under Exemption Notification

In Re: M/s. National Security Services

The Authority for Advance Ruling (AAR) ruled in favor of the applicant, stating that the Exemption Notification No. 12/2017-Central Tax (Rate) dated ... Exemption from GST - Security Services rendered to Pimpri Chinch wad Municipal Corporation in relation to functions entrusted to Municipality under Article 243W of the Constitution - Pure services - N/N. 12/2017- Central Tax (Rate) dated 28/06/2017 (Entry No. 3 of the Notfn.). Whether the activities of the applicant’s personnel who are there to assist/help the security guards of PCMC can be equated with as being in relation to any function entrusted to a Municipality under article 243W of the Constitution? Held that:- There is no doubt in anyone’s mind that the personnel provided by the applicant to the PCMC are actually aiding and helping the security guards of PCMC. In the subject case the applicant is providing pure services (without the supply of goods) to PCMC. The said services are in relation to any functions entrusted to a Municipality under article 243W of the Constitution. The agreement between the applicant and PCMC very clearly states that the applicant shall provide assistants to the Security Guards of PCMC. The invoice raised by the applicant mentions services rendered as, “Being round the clock helper to security service Providing assistance to the Security Guards of PCMC is an activity in relation to various functions as enumerated above which have been entrusted to a Municipality under article 243W of the Constitution. The applicant is entitled to the benefit of Notification No, 12/2007-CT(Rate) dated 28.06.2017. Ruling:- The Exemption N/N. 12/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 3 of the Notfn.) is applicable to the applicant for the Pure services i.e. Security Services rendered to Pimpri Chinch wad Municipal Corporation in relation to functions entrusted to Municipality under Article 243W of the Constitution thereby exempting the applicant service provider from the whole of GST. Issues Involved:1. Applicability of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 3) to the applicant for Pure Services.2. Whether the Security Services rendered to Pimpri Chinchwad Municipal Corporation (PCMC) are in relation to functions entrusted to a Municipality under Article 243W of the Constitution and thereby exempt from GST.Issue-wise Detailed Analysis:1. Applicability of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 3):The applicant, National Security Services, provides Security Services to PCMC, including services to Water Pump Houses, Purification Plants, Hospitals, Dispensaries, Solid Waste Management, and Slum Improvement. The applicant contends that these services are Pure Services provided to Municipalities in relation to functions entrusted under Article 243W of the Constitution, thus qualifying for exemption under Notification No. 12/2017.The Department, however, argues that the applicant is providing 'Assistants' to Security Guards, which should be classified as manpower services rather than services related to functions under Article 243W, thus not qualifying for the exemption.2. Whether Security Services Rendered to PCMC are in Relation to Functions Entrusted to a Municipality under Article 243W of the Constitution:The applicant asserts that their services are Pure Services provided without any material and are in relation to functions entrusted to Municipalities under Article 243W, such as urban planning and public safety. They argue that the term 'Assistants' used in the contract is merely a convenience term, and the personnel provided are performing full security duties under the supervision of PCMC's security guards.The Department maintains that the services provided are manpower services for security arrangements and not directly related to functions under Article 243W.Observations and Judgment:The Authority for Advance Ruling (AAR) examined the facts and submissions from both the applicant and the Department. The AAR noted that the applicant's personnel are indeed aiding and helping the security guards of PCMC, performing duties that include preventing untoward incidents, protecting premises, and coordinating with emergency services, albeit under PCMC's supervision.The AAR concluded that the services provided by the applicant are Pure Services in relation to functions entrusted to a Municipality under Article 243W of the Constitution. Therefore, these services qualify for exemption under Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017.Order:The AAR ruled in favor of the applicant, stating that the Exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 3) is applicable to the applicant for the Pure Services rendered to PCMC in relation to functions entrusted to a Municipality under Article 243W of the Constitution, thereby exempting the applicant service provider from GST.