Application Rejected under CGST/TNGST Act Due to Pending Writ Petition

The application filed by PHFMS was rejected under Proviso to Section 98(2) of the CGST/TNGST Act as the question raised was already pending in the Hon'ble Madras High Court. The court had allowed the Advance Ruling Authority to decide on the application despite the pending writ petition. However, the authority found that the issue of GST applicability was central to the writ petition, and thus, the application could not be admitted.

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Issues Involved:
1. Classification of services provided by PHFMS to DME.
2. Applicability of exemption under Sl.No.3 of Notification 12/2017.
3. GST liability and applicable rate for services provided by PHFMS to DME.
4. Classification of services as pure services or composite supplies.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by PHFMS to DME:
The applicant, PHFMS, provides housekeeping, pest control, and security services to the Directorate of Medical Education (DME), which oversees Government Medical College Hospitals, Government Medical Colleges, and Government Nursing Colleges. The applicant sought clarification on whether these services are classifiable as functions entrusted to a Panchayat or a Municipality under the Constitution. The applicant argued that their services do not fall under the categories specified in Articles 243G and 243W of the Indian Constitution, which list the functions entrusted to Panchayats and Municipalities, respectively. Consequently, the applicant concluded that no GST exemption is available for these services.

2. Applicability of Exemption Under Sl.No.3 of Notification 12/2017:
The applicant referenced Notification 12/2017 Central Tax (Rate) dated 28.06.2017, which exempts services provided to the government by way of any activity related to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W. The applicant contended that their services do not qualify for this exemption as they do not fall under the specified functions. The jurisdictional authority also supported this view, stating that the services provided by PHFMS involve both manpower and goods, and thus do not qualify as pure services under the exemption.

3. GST Liability and Applicable Rate for Services Provided by PHFMS to DME:
The applicant sought clarification on whether the services provided to DME, including institutions of Government Hospitals and Colleges, are liable for GST and the applicable rate. The jurisdictional authority confirmed that the services are taxable at the rate of 18% for both security and cleaning services. The applicant had been collecting and paying GST at this rate since the inception of GST on 01.07.2017.

4. Classification of Services as Pure Services or Composite Supplies:
The applicant argued that their services should be classified as pure services, which would potentially qualify for exemption under Notification 12/2017. However, the jurisdictional authority clarified that the services provided by PHFMS involve both manpower and goods, and therefore do not qualify as pure services. The authority further stated that the services do not match the description of pure services as defined under the GST Act or the relevant notification.

Ruling:
The application filed by PHFMS was rejected under Proviso to Section 98(2) of the CGST/TNGST Act as the question raised was already pending in the Hon'ble Madras High Court. The court had allowed the Advance Ruling Authority to decide on the application despite the pending writ petition. However, the authority found that the issue of GST applicability was central to the writ petition, and thus, the application could not be admitted.

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