2020 (12) TMI 797 - AAR - GST

Cooperative Society Services Exemption Dispute: No Relief for Vegetable Supply to Government Ashrams

The Authority determined that the services provided by the cooperative society were not covered under Clause 1 & 2 of the Twelfth Schedule of Article ... Twelfth Schedule of Article 243W - functions entrusted to a Municipality - pure services - Exemption Notification No. 12/2017 (Entry No. 3) - supply of manpower to Government authorities - governmental authority / Government EntityTwelfth Schedule of Article 243W - functions entrusted to a Municipality - supply of manpower to Government authorities - Whether the services provided by the applicant are covered under Clause 1 & 2 of the Twelfth Schedule of Article 243W. - HELD THAT: - Clause 1 and Clause 2 of the Twelfth Schedule relate to 'Urban planning including town planning' and 'Planning of land-use and construction of buildings' respectively. The applicant supplies manpower (cleaning staff, security, data-entry operators, skilled/unskilled staff, therapists) to various Government offices and institutions. The Authority found no nexus on record between the applicant's manpower-supply activities and functions of urban planning or land-use/construction entrusted to municipalities under Clauses 1 and 2. The applicant did not demonstrate that the supplied services were in furtherance of the municipal functions specified in those Clauses. Consequently, the supply of such manpower/services falls outside the scope of Clauses 1 and 2 of the Twelfth Schedule. [Paras 5]Answered in the negative; the applicant's services are not covered under Clause 1 & 2 of the Twelfth Schedule of Article 243W.Twelfth Schedule of Article 243W - functions entrusted to a Municipality - Whether the meals (vegetables and mutton) supplied to Government Ashrams for economically weaker students fall within Clause 1 & 2 of the Twelfth Schedule of Article 243W. - HELD THAT: - Clauses 1 and 2 concern urban planning and land-use/construction. The applicant in fact supplies vegetables and mutton (goods) to Government Ashrams rather than prepared meals. There is no basis to correlate such supply of goods with the municipal functions listed in Clauses 1 and 2. The Authority therefore held that supply of vegetables and mutton cannot be regarded as falling within those Clauses of the Twelfth Schedule. [Paras 5]Answered in the negative; the supply of vegetables and mutton to Government Ashrams does not fall within Clause 1 & 2 of the Twelfth Schedule of Article 243W.Pure services - Exemption Notification No. 12/2017 (Entry No. 3) - functions entrusted to a Municipality - governmental authority / Government Entity - Whether the services provided by the applicant qualify as exempt under Entry No. 3 of Notification No. 12/2017 as 'pure services' provided to Government/local authority in relation to functions entrusted to a Municipality under Article 243W. - HELD THAT: - Entry No. 3 requires (i) supply to be of pure services (excluding composite supplies involving goods), (ii) supply to Central/State/Union territory/local authority or governmental authority/entity, and (iii) the services must be by way of any activity in relation to a function entrusted to a Panchayat or Municipality under the respective Constitutional Schedule. While many of the applicant's supplies are pure services to Government offices, the applicant failed to establish that those services are activities in relation to any municipal functions under Article 243W. The lone supplies of vegetables and mutton are supplies of goods and not pure services. The applicant is not shown to be a Government Entity nor to have contracts demonstrating that its services further functions entrusted to municipalities. In absence of such nexus and supporting contract details, the applicant is not eligible for exemption under Entry No. 3 of Notification No. 12/2017. [Paras 5]Answered in the negative; the applicant's services do not qualify for exemption under Entry No. 3 of Notification No. 12/2017.Final Conclusion: The Authority answered all three questions in the negative: the applicant's supplied services do not fall within Clauses 1 or 2 of the Twelfth Schedule of Article 243W, the supply of vegetables and mutton to Government Ashrams is not covered by those Clauses, and the services do not qualify for exemption under Entry No. 3 of Notification No. 12/2017. Issues Involved:1. Coverage of services under Clause 1 & 2 of Twelfth Schedule of Article 243W.2. Classification of meals provided to Government Ashrams under Clause 1 & 2 of Twelfth Schedule of Article 243W.3. Applicability of Exemption Notification No. 12/2017 (Entry No. 3) for pure labour services.Issue-Wise Detailed Analysis:1. Coverage of Services under Clause 1 & 2 of Twelfth Schedule of Article 243W:The applicant, a cooperative society, provides various services including labour to municipal corporations and government institutions. The primary question was whether these services, such as supplying cleaning staff, data entry operators, and security guards, fall under Clause 1 & 2 of the Twelfth Schedule of Article 243W. Clause 1 pertains to urban planning including town planning, and Clause 2 pertains to planning of land-use and construction of buildings. The Authority found that the services provided by the applicant, such as manpower for cleaning, security, and computer work, do not relate to urban planning or land-use planning. Therefore, these services are not covered under Clause 1 & 2 of the Twelfth Schedule of Article 243W.2. Classification of Meals Provided to Government Ashrams:The second issue was whether the meals provided to Government Ashrams for economically weaker students fall within Clause 1 & 2 of the Twelfth Schedule of Article 243W. The Authority noted that the applicant was not providing meals but rather supplying vegetables and mutton. These supplies cannot be correlated with urban planning or land-use planning functions under Clause 1 & 2. Therefore, the supply of vegetables and mutton does not fall within these clauses.3. Applicability of Exemption Notification No. 12/2017 (Entry No. 3) for Pure Labour Services:The third issue was whether the services provided by the applicant qualify for exemption under Notification No. 12/2017 (Entry No. 3), which exempts pure services provided to government entities in relation to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W. The Authority examined various work orders and found that:- The supply of labour for cleaning and security to the Collector's office and other state government offices does not show a direct relation to functions under Article 243G or 243W.- The supply of staff to Government Medical Colleges and Hospitals is not covered under the 11th or 12th Schedule.- The supply of manpower for computer work to the Amravati Municipal Corporation (AMC) was not clearly shown to be related to functions under Article 243W.Therefore, the services provided by the applicant do not qualify for the exemption under Entry No. 3 of Notification No. 12/2017.Conclusion:The Authority concluded that:- The services provided by the applicant are not covered under Clause 1 & 2 of the Twelfth Schedule of Article 243W.- The supply of vegetables and mutton to Government Ashrams does not fall within Clause 1 & 2 of the Twelfth Schedule of Article 243W.- The services provided by the applicant do not fall under the Exemption Notification No. 12/2017 (Entry No. 3) as they are not in the nature of pure labour services related to functions entrusted under Article 243G or 243W.Order:The questions raised by the applicant were all answered in the negative.