2019 (1) TMI 1491 - AAR - GST

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

In Re: M/s. EX-SERVICEMEN RESETTLEMENT SOCIETY

The applicant was found ineligible for GST exemption under Notification No 12/2017-CT(Rate) and WB Govt Gazette Notification-1136-FT for providing ... Exemption from GST - classification of services - Security Services and Scavenging Services to various hospitals under the State Government as well as the Central Government - N/N. 12/2017-CT(Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136-FT dated 28.06.2017, as amended - Bundling of services - Held that:- The services provided under the head “Scavenging Services”, according to the Applicant’s submission, includes manual cleaning, duties of attendant or operator of trolleys - Article 243G under Serial No 26 covers “Health and sanitation, including hospitals, primary health centres and dispensaries” - Article 243W under Serial No 7 covers “Public health sanitation, conservancy and solid waste management”. No other entries in the Eleventh or the Twelfth Schedules of the Constitution appear relevant while examining applicability of the Applicant’s services bundled as ‘Scavenging Services’. ‘Health Care Service’ is defined under clause 2(zg) of the Exemption Notification. It means inter alia any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicine in India and includes services by way of transportation of patient to and from a clinical establishment. It is classified under SAC 99931. It does not include any of the services the Applicant bundled under the description ‘Scavenging Services’ - Again, ‘Sanitation and similar services’ are classified under SAC 99945. It includes sweeping and cleaning, but only with reference cleaning of a road or street. Cleaning of hospital premises is not, therefore, classified under ‘Sanitation or similar service’. The services the Applicant bundled under the description ‘Scavenging Services’ are, therefore, not exempt under Sl No. 3 of the Exemption Notification. Ruling:- Benefit of exemption from the payment of GST is not available to the Applicant under Notification No 12/2017-CT(Rate) dated 28.06.2017 and WB Govt Gazette Notification-1136FT dated 28.06.2017, as amended, for the supply of Security Services and the bundle of service that he describes as ‘Scavenging Services’. 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.