2021 (1) TMI 436 - AAR - GST

Outsourced hospital staff services not GST exempt

In Re: M/s. Vishv Enterprise,

The ruling determined that the services of providing Para-medical Administrative, Technical, and other Staff on an outsource basis to Seth L.G. General ... Benefit of exemption from GST - Pure service - services of providing Para-medical Administrative, Technical and other Staff on Outsource basis to Seth L.G. General Municipal Hospital - ‘Central Government’ or ‘State Government’ or ‘Local authority’ or ‘Governmental authority’ or ‘Government entity. - HELD THAT:- The applicant has provided Man Power Supply Agency Services to Seth L.G. General Municipal Hospital. The applicant regularly places their contract service bill with 9% CGST & 9% SGST. However, Seth L.G. General Municipal Hospital are not ready to pay GST and responded that they are not in category to pay GST. There is exemption to service to Municipality under Article 243W & Panchayat under Article 243G - as per Serial No 3 of the Notification No. 12/2017- Central Tax (Rate) dated 28/06/2017, GST is exempted for Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to central Government, state Government or Union Territory or Local Authority or a Governmental Authority or a Government entity by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. The conditions to be fulfilled to be eligible for taking the benefit of the exemption from GST for pure services are also fulfilled. Thus, no evidence has been provided by applicant to establish that Seth L.G. General Hospital falls under definition of ‘Central Government’ or ‘State Government’ or ‘Local authority’ or ‘Governmental authority’ or ‘Government entity. Entry 3 of the Notification No. 12/2017- Central Tax (Rate) dated 28/06/2017 exempts the Pure services provided to Central Government, State Government or Union Territory or Local Authority. In absence of any evidence in support of above, the exemption provided under the Entry 3 of the said Notification cannot be extended to them - the exemption is not available to the applicant in respect of supply of manpower services viz. Para-medical Administrative, Technical and other Staff on Outsource basis made to Seth L.G. General Municipal Hospital in terms of Serial No 3 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. Issues Involved:1. Applicability of GST on the supply of contract work service of Man Power and House Keeping in Government Municipal Corporation, Government Hospital, and other Government Departments.2. Exemption of GST on services provided to Municipality under Article 243W and Panchayat under Article 243G.3. Eligibility for GST exemption under Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017.Comprehensive Issue-wise Detailed Analysis:Issue 1: Applicability of GST on the supply of contract work service of Man Power and House Keeping in Government Municipal Corporation, Government Hospital, and other Government Departments.The applicant is engaged in providing contract work services of Man Power Recruitment & Supply by outsourcing in Government Departments, including Government Municipal Corporations and Hospitals. The issue raised is whether such services are subject to GST. The applicant has been billing these services with 9% CGST and 9% SGST, but the service recipients, such as Seth L.G. Hospital, refuse to pay GST, claiming they are exempt.Issue 2: Exemption of GST on services provided to Municipality under Article 243W and Panchayat under Article 243G.The applicant contends that services provided to municipalities and panchayats are exempt from GST under Article 243W and Article 243G of the Constitution. They seek clarification on whether their services fall under this exemption, as they have been unable to secure payment for GST from Seth L.G. Hospital since April 2019.Issue 3: Eligibility for GST exemption under Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017.The ruling examines whether the services provided by the applicant qualify for GST exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate). This notification exempts 'Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to central Government, state Government or Union Territory or Local Authority or a Governmental Authority or a Government entity by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.'Discussion and Findings:The ruling identifies three conditions for exemption under the notification:1. The services must be 'pure services' without any supply of goods.2. The services must relate to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W.3. The recipient must be a Central Government, State Government, Union Territory, Local Authority, Governmental Authority, or Government Entity.Analysis of Conditions:1. Pure Services:- The services provided by the applicant are purely manpower supply services without any involvement of goods, thus meeting the first condition.2. Relation to Functions Entrusted to Panchayats/Municipalities:- The services provided are related to hospital services, which are listed under Article 243G (Health and sanitation, including hospitals) and Article 243W (Public health, sanitation conservancy). Therefore, the second condition is satisfied.3. Recipient Qualification:- The ruling scrutinizes whether Seth L.G. Hospital qualifies as a Local Authority or Governmental Authority. The definitions provided under the CGST Act and related notifications are considered. However, the applicant fails to provide evidence that Seth L.G. Hospital meets these definitions.Conclusion:In the absence of evidence proving that Seth L.G. Hospital qualifies as a Local Authority or Governmental Authority, the exemption under Notification No. 12/2017-Central Tax (Rate) cannot be extended. Consequently, the services of providing Para-medical Administrative, Technical, and other Staff on an outsource basis to Seth L.G. General Municipal Hospital are not exempt from GST.Ruling:Question 1: Whether services of providing Para-medical Administrative, Technical, and other Staff on an outsource basis to Seth L.G. General Municipal Hospital are exempted or notRs.Answer: Answered in Negative.