In re Webel Support Multipurpose Service Cooperate Society Limited (GST AAR West Bengal)
West Bengal Authority for Advance Ruling (AAR) examined whether the supply of manpower services by Webel Support Multipurpose Service Cooperative Society Limited to Webel Technology Limited (WTL) qualifies for GST exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The applicant, a cooperative society, was contracted by WTL to provide engineers and data entry operators for the Public Health Engineering Directorate’s Jal Jeevan Mission (JJM) project in West Bengal. Initially, GST at 18% was applied to the contract. However, the Public Health Engineering Department later directed WTL to refund the GST amount, asserting that the services should be exempt under the notification. The applicant sought clarification through an advance ruling, arguing that their services qualify as “pure services” and should be exempt.
The AAR ruled that while the manpower supply qualifies as “pure services,” it does not meet the exemption criteria because the services are provided to WTL, a government-owned entity, rather than directly to a government department or local authority. Under GST law, the recipient of services is the entity liable for payment. Since WTL is the direct recipient, the exemption under Notification No. 12/2017 does not apply. Therefore, the manpower supply remains taxable at 18%. This ruling clarifies that indirect contracts with government agencies through intermediaries like WTL do not qualify for GST exemptions.
