Manpower services for cleaning, sweeping, garden maintenance qualify for GST exemption under Entry 3 of Notification 12/2017

The AAR Karnataka ruled that manpower services for cleaning, sweeping lawns, garden maintenance, and garbage segregation provided to the Department of Horticulture qualify for GST exemption under Entry 3 of Notification No. 12/2017. The services relate to urban amenities like parks and gardens covered under the 12th Schedule of the Constitution, and were provided to state government, satisfying both conditions for exemption eligibility.

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Issues Involved:
1. GST liability on services for cleaning and sweeping of lawns and garden path areas, segregation, and transport of garbage.
2. GST liability on services for the supply of manpower for garden maintenance on an outsourced basis.

Detailed Analysis:

Admissibility of Application:
The application is admissible under Section 97(2)(e) of the CGST Act 2017, which pertains to the determination of the liability to pay tax on any goods or services.

Brief Facts of the Case:
The applicant is a proprietorship concern engaged in providing manpower services and proposes to submit a bid for services to the Department of Horticulture, Government of Karnataka. The services include cleaning and sweeping of lawns and garden path areas, segregation and transport of garbage, and supply of manpower for garden maintenance.

Applicant's Submissions:
1. Nature of Services: The proposed services involve cleaning, sweeping, garbage segregation, and manpower supply for garden maintenance.
2. Pure Services: The applicant contends that these services qualify as "pure services" as they do not involve any transfer of property in goods.
3. Government Definition: The Department of Horticulture is considered a government entity under Section 2(53) of the KGST Act, 2017.
4. Notification 12/2017: The applicant refers to Notification 12/2017 Central Tax (Rate), which exempts pure services provided to the government in relation to functions entrusted to a Panchayat under Article 243G or a Municipality under Article 243W of the Constitution.

Personal Hearing:
The authorized representative reiterated the facts during the personal hearing held on 07-07-2022.

Findings & Discussion:
1. Examination of Services: The services proposed include cleaning and sweeping of lawns, segregation and transport of garbage, and supply of manpower for garden maintenance.
2. Notification 12/2017 Analysis: Entry No. 3 of Notification 12/2017 (Central Tax Rate) exempts pure services provided to the government in relation to functions entrusted to Panchayats or Municipalities under Articles 243G and 243W of the Constitution.
3. Conditions for Exemption:
- The services must be pure services (excluding works contract or composite supplies involving goods).
- The services must be provided to the Central Government, State Government, Union territory, local authority, or a Governmental authority.
- The services must relate to functions entrusted to Panchayats under Article 243G or Municipalities under Article 243W.
4. Constitutional Provisions: Article 243W and the Twelfth Schedule list functions such as urban amenities, including parks and gardens, which are relevant to the services provided by the applicant.

Conclusion:
The applicant's services satisfy the conditions for exemption under Entry No. 3 of Notification 12/2017 (Central Tax Rate).

Ruling:
1. Cleaning and Sweeping Services: The services proposed for cleaning and sweeping of lawns, garden path areas, segregation, and transport of garbage are liable for GST at NIL rate as per Entry No. 3 of Notification 12/2017 (Central Tax Rate).
2. Manpower Supply Services: The services proposed for the supply of manpower for garden maintenance on an outsourced basis are liable for GST at NIL rate as per Entry No. 3 of Notification 12/2017 (Central Tax Rate).

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