Applicant denied GST exemption for Security & Scavenging Services to govt hospitals.

The applicant was found ineligible for GST exemption under Notification No 12/2017-CT(Rate) and WB Govt Gazette Notification-1136-FT for providing Security Services and Scavenging Services to government hospitals. The ruling stated that the services did not qualify as pure services under the exemption criteria, as they did not fall under the functions entrusted to Panchayats or Municipalities. Consequently, the applicant was deemed not exempt from GST for the mentioned services.

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Issues Involved:
1. Eligibility for GST exemption under Notification No 12/2017-CT(Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017 for Security Services and Scavenging Services provided to government hospitals.

Detailed Analysis:

1. Admissibility of Advance Ruling:
The application for advance ruling is admissible under Section 97(2)(b) of the CGST/WBGST Acts, 2017. The applicant confirmed that the question raised is neither decided by nor pending before any authority under the GST Act. The concerned officer raised no objections to the admission of the application, and hence it was admitted.

2. Nature of Services Provided:
The applicant, a registered society, supplies Security Guards and Scavenging Services to medical colleges and hospitals under the State and Central Government. The applicant claims that these services are exempt under the Exemption Notification, as they are in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W of the Constitution.

3. Examination of Exemption Notification:
The exemption under Serial No 3 of the Exemption Notification applies to pure services provided to the government, local authority, governmental authority, or government entity in relation to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution. The applicant’s eligibility for exemption needs to be examined based on whether the services are pure services, the recipient is a government entity, and the services are classifiable under functions entrusted to Panchayats or Municipalities.

4. Definition and Scope of Pure Services:
Pure services, although not explicitly defined in the GST Act, are understood to be services involving no supply of goods. The applicant claims that no goods are supplied while providing the services, classifying them as pure services. The services are provided to government-owned or managed hospitals, fulfilling the criterion of the recipient being a government entity.

5. Functions of Panchayats and Municipalities:
Article 243G and the Eleventh Schedule list functions of Panchayats, including health and sanitation, while Article 243W and the Twelfth Schedule list functions of Municipalities, including public health sanitation and conservancy. The applicant’s services under ‘Scavenging Services’ include manual cleaning and duties of attendants, which could fall under these functions.

6. Classification and Eligibility:
The services under ‘Scavenging Services’ do not fit the definition of ‘Health Care Service’ under clause 2(zg) of the Exemption Notification, which includes diagnosis, treatment, and patient transportation. Additionally, ‘Sanitation and similar services’ under SAC 99945 includes sweeping and cleaning of roads or streets, not hospital premises. Therefore, the services described as ‘Scavenging Services’ are not exempt under Serial No 3 of the Exemption Notification.

Ruling:
The applicant is not eligible for GST exemption under Notification No 12/2017-CT(Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017 for the supply of Security Services and the bundle of services described as ‘Scavenging Services’. This ruling is valid subject to the provisions under Section 103 until declared void under Section 104(1) of the GST Act.

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