2022 (10) TMI 40 - AAR - GST

Government Educational Manpower Services Denied Tax Exemption Under Notification 12/2017 Based on Specific Service Interpretation

In Re: M/s. Sree Vinayaka Enterprises, (Sri Ganganahalli Channaveeregowda Krishnegowda)

The SC upheld the tax authority's ruling that manpower services provided to government educational institutions do not qualify for tax exemption. The HC ... Maintainability of application - rectification of mistake - error apparent on the face of record or not - Classification of services - manpower supply service - services rendered to government institutions/entities/authorities - Educational Institutions or not - HELD THAT:- The Applicant is engaged in supply of Manpower services to various organisations/institutions like Indian Institute of Astrophysics, Indian Academy of Sciences, National Dairy Research Institute, National Institute of Oceanography, National Institute of Technology Goa, Raman Research Institute, SJB College of nursing, Central University of Karnataka, National Assessment and Accreditation Council, National Institute of Fashion Technology and BGS Global Institute of Medical Science. The manpower supplied by the applicant is in the nature of security guards, housekeeping staff and catering staff. But these manpower services are not provided 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. There is no error/ apparent mistake on the face of the record, in the order and hence the instant application is not valid and is liable for rejection, in terms of section 98(2) of the CGST Act 2017 - the instant application filed by the applicant for rectification of mistake in the Advance Ruling Order is hereby rejected. Issues:1. Classification of services provided to Government entities as exempted services.2. Claiming exemption under Sl.No.3 of Notification 12/2017 dated 28th June 2017 for the services provided.Analysis:1. The applicant initially sought an advance ruling regarding the classification of services provided to Government entities as exempted services. The Advance Ruling Authority ruled that the applicant was incorrect in classifying the manpower services provided to organizations/institutions as exempted services. The ruling stated that the services did not fall under activities related to functions entrusted to a Panchayat or Municipality under the Constitution.2. The applicant also inquired about claiming exemption under Sl.No.3 of Notification 12/2017 dated 28th June 2017 for the said services. The Authority ruled that the applicant was incorrect in claiming exemption under the said entry as the services provided were not covered, and therefore not exempted under the notification.3. The applicant filed for rectification of the ruling, arguing that the institutions to which they supplied services were governmental authorities/entities, primarily Educational Institutions. They claimed that the services provided, such as manpower, sanitation, house-keeping, and security services, fell under Entry 29 of the Eleventh Schedule to the Constitution (Maintenance of community assets). The applicant submitted documentary evidence during a personal hearing to support their claim.4. However, upon review, the Authority found that the new documents submitted with the rectification application were not part of the original Advance Ruling Application. The applicant's representative reiterated their submissions during the personal hearing, emphasizing that the services were indeed provided to governmental authorities/entities.5. The Authority noted that the applicant supplied manpower services to various prestigious institutions but reiterated that these services did not relate to functions entrusted to a Panchayat or Municipality under the Constitution. The Authority concluded that the original ruling was appropriate, considering all submissions, and found no error or apparent mistake on the face of the record.6. Consequently, the Authority rejected the applicant's application for rectification of mistake in the Advance Ruling Order, as there was no valid reason for rectification based on the evidence and arguments presented. The rejection was in line with section 98(2) of the CGST Act 2017.