Manpower services for tissue culture production and research activities taxable at 18% GST under ruling

The AAR Karnataka ruled that manpower services for tissue culture production and research activities provided to the Horticulture Department are taxable at 18% GST. The authority determined that tissue culture does not qualify as agriculture under the eleventh schedule and lacks direct nexus to constitutional functions of Panchayats or Municipalities under articles 243G and 243W. Additionally, supply of materials like fertilizers, soil, and sand to bio centers attracts GST as no specific exemption exists under the relevant notification.

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Issues involved:
1. Admissibility of the application under Section 97(2)(e) of the CGST Act 2017.
2. Exemption of works contract service provided to Bio Centers, Department of Horticulture, and Center of Excellence from GST.
3. Tax liability on providing manpower services like data entry operator, security to Horticulture Department.
4. Exemption of materials like fertilizers, soil, and sand supplied for use of bio centers from GST.

Admissibility of the application:
The issue revolves around the determination of the liability to pay tax on goods or services, making it admissible under Section 97(2)(e) of the CGST Act 2017.

Exemption of works contract service:
The applicant sought clarification on whether works contract services provided to Bio Centers, Department of Horticulture, and Center of Excellence are exempt from GST. The ruling clarified that there is no specific exemption for any works contract service as per Notification No. 12/2017-Central Tax (Rate).

Tax liability on providing manpower services:
The applicant inquired about the GST applicability on providing manpower services for tissue culture production and research on flowers to the Horticulture Department. The ruling referred to the relevant notification and highlighted the conditions for exemption, ultimately concluding that the services are not exempt and are liable to tax at 18% (9% CGST and 9% KGST).

Exemption of materials supplied:
The applicant questioned whether materials like fertilizers, soil, and sand supplied for bio centers are exempt from GST. The ruling pointed out the absence of a specific exemption for such supplies under Notification No. 2/2017-Central Tax (Rate), leading to the conclusion that these materials are not exempt under GST.

The ruling provided a detailed analysis of each issue raised by the applicant, examining relevant provisions, notifications, and constitutional articles to arrive at a comprehensive decision on the tax implications of works contract services, manpower supply, and material provision in the context of the Horticulture Department's tender.

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