GST exemption for Government hospital services denied where security and cleaning work fell outside the relevant constitutional functions and classification.

Exemption under GST for services supplied to Government entities applies only where the service is an activity in relation to a constitutionally entrusted function and also falls within the relevant service classification. In this AAR ruling, security services supplied to a State Government hospital were held not to be covered by the Eleventh or Twelfth Schedule functions, and cleaning and sweeping services under SAC 99945 were treated as limited to roads and streets, not hospital cleaning. The exemption claim under Notification No. 12/2017-Central Tax (Rate) and the corresponding State notification therefore failed.

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Issues: Whether security services and cleaning and sweeping services supplied to a Government hospital are exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and the corresponding State notification.

Analysis: The exemption for services supplied to the Government, a local authority or a governmental authority extends to activities in relation to functions entrusted to Panchayats and Municipalities under Articles 243G and 243W of the Constitution. The phrase "in relation to any function" is wide enough to cover services relatable to the constitutional functions, and the service provider need not itself be a Panchayat or Municipality. However, the scope of the service must still fit within the relevant service classification. The work order showed supply of cleaning, scrubbing, mopping, disinfecting and related services to a State Government hospital, along with security services. Security services are not covered by the Eleventh or Twelfth Schedule entries relied upon. Cleaning and sweeping services, as classified under SAC 99945, cover sweeping and cleaning only in relation to roads and streets, and do not extend to cleaning of hospital premises.

Conclusion: The services are not exempt under Sl. Nos. 3 or 3A of the exemption notification, and the exemption claim fails.

Ratio Decidendi: Exemption for services supplied to Government entities under the GST notification applies only when the service is an activity relatable to a constitutionally entrusted function and also falls within the relevant service classification; hospital cleaning and security services do not qualify merely because they are supplied to a Government hospital.

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