Manpower supply

[Srinidhi HS]

Taxpayer is firm engaged in the business of Manpower Supply to Hospital, Medical institutes, University and supporting staff to Forest departments. They thought its exempted since providing it to hospital forest department and MGNREGA Scheme. They have not collected tax as well and filed as exempted. Now the order is passed asking to pay tax on that since it does not cover under sl.no 3 notification 12/2017. Any inputs on this. Thank you

[Sadanand Bulbule]

Refer the following in full:

2024 (2) TMI 170 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA - IN RE: M/S. MANISH MANPOWER AGENCY

Exemption under Article 243G of the Constitution or not - pure services provided to Zilla panchayat (social welfare department) and Taluk Panchayat - HELD THAT:- The applicant is providing manpower services like FDA, SDA, Typists, drivers Data Entry Operator, "D" Group etc to Zilla Panchayat/Taluk Panchayat/ Social welfare department/Backward Classes Welfare Department. 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. Hence provision of such manpower services is liable to tax at 18%.

The applicant is also providing manpower services like cleaning staff, cook, assistant cook, teachers, staff nurse and watchman to hostels and residential schools/colleges run by Social welfare department is exempted as it satisfies both the conditions mentioned under entry no. 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. These manpower services are provided to Social welfare department which is a department of State Government. These manpower services are provided to weaker sections including scheduled caste and scheduled tribe which are in relation to the function entrusted to a Panchayat under article 243G of the Constitution which is covered by 27th entry of eleventh schedule which says 'Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes'.

AI Summary

GST on manpower supply: services not tied to constitutionally entrusted local-body functions are taxable, limited exemptions apply.
Provision of manpower such as clerical and support staff to Panchayats or social welfare departments is taxable where not connected with functions entrusted under Article 243G/243W; conversely, supply of cleaning staff, cooks, teachers, nurses and watchmen to hostels and residential schools run by a State Social Welfare Department is exempt under Notification No. 12/2017 where the services relate to welfare of weaker sections as covered in the Eleventh Schedule.