Case Law Details
In re Webel Support Multipurpose Service Cooperate Society Limited (GST AAR West Bengal)
West Bengal Authority for Advance Ruling (AAR) has ruled that Webel Support Multipurpose Service Co-operative Society Limited (the applicant) is not entitled to tax exemption on the supply of manpower services under the Goods and Services Tax (GST) framework. The applicant, a registered cooperative society, provides manpower services under a contract with Webel Technology Limited (WTL), a government undertaking. These services are used by the Public Health Engineering Directorate for the “Jal Jeevan Mission” project in West Bengal. The applicant sought clarification on whether their services qualified as exempt under Notification No. 12/2017-Central Tax (Rate), which exempts certain supplies to the government.
In its order dated December 20, 2024, the AAR held that the applicant was providing services to WTL and not directly to the Public Health Engineering Department, Government of West Bengal. As a result, the exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) did not apply. The ruling clarified that the exemption is applicable only when the supply is made directly to government bodies, whereas in this case, WTL was an intermediary entity. Consequently, the manpower supply was deemed taxable.
Following this ruling, the applicant sought rectification of the order, arguing that WTL itself had obtained an exemption for providing similar services to the Public Health Engineering Department. The applicant contended that since their supply was ultimately for the same government project, they should also qualify for the exemption. However, the AAR rejected this request, citing Section 102 of the GST Act, which allows rectification only for errors apparent on the face of the record. The AAR noted that the applicant’s claim involved a legal interpretation rather than a clear mistake, making rectification inappropriate. The ruling referenced the Supreme Court’s decision in T.S. Balaram, ITO v. Volkart Bros (1971) 82 ITR 40 (SC), which established that rectifiable mistakes must be “obvious and patent,” not issues requiring extensive legal reasoning.
The Assistant Commissioner of CGST & CX, Bidhannagar Division, supported this view, stating that the applicant’s request pertained to the merits of legal interpretation rather than an apparent error. The AAR agreed, emphasizing that the appropriate recourse for the applicant was to file an appeal under Section 100 of the GST Act rather than seeking rectification under Section 102. The ruling underscores that tax exemptions under GST laws apply strictly based on direct contractual relationships with government bodies and cannot be extended to intermediaries through rectification proceedings.
This decision reinforces the principle that tax exemptions under GST are strictly interpreted and depend on the direct nature of supplies to government bodies. The applicant, if dissatisfied, must seek relief through the appellate process rather than through rectification under Section 102.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING WEST BENGAL
1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression “GST Act” would mean the CGST Act and the WBGST Act both.
1.2 The applicant is a Co-operative Society registered under the West Bengal Co-operative Societies Registration Act. The applicant provides multipurpose services including supply of manpower support services to various Government Departments under M/s Webel Technology Limited (WTL, for short). The applicant has received a work order from WTL for providing manpower services to the Public Health Engineering Directorate of the Government of West Bengal for executing their „JAL JEEVAN MISSION’ Project in the state of West Bengal.
1.3 The applicant filed an application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:
Question 1: Whether Jal Jeevan Mission is correct in classifying the services provided to Government entities as exempted services?
Question 2: Whether the services are exempted under notification no. 12/2017 Central Tax (Rate) dated 28.06.2017?
1.4 This authority vide order dated 20.12.2024 held that the applicant provides services to Webel Technology Limited and not to the Public Health Engineering Department, Government of West Bengal. The instant supply of services therefore would not qualify to be an exempted supply under serial number 3 of the Notification 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.
1.5 The applicant has filed an application for rectification of the said order passed by this authority under following grounds:
- The applicant is supplying pure labour services to Webel Technology Ltd., which is a Government Undertaking concern. The said supply is exempted under Notification no. 12/2017 Central Tax (Rate) dt 28.06.2017 as Webel Technology Ltd is supplying the same services to Public Health Engineering Department, Government of West Bengal relating to “Jal Jeevan Mission” Project.
- The applicant as well as the service recipient (Webel Technology Ltd) filed application before the Hon’ble West Bengal Authority for Advance Ruling as to whether the supply of pure labour to the Government is exempted or not.
- The Advance Ruling authority has passed an order in favour of Webel Technology Limited that their supply to Public Health Engineering Department, Government of West Bengal is exempted from payment of tax.
- On the contrary, in the case of applicant, the exemption is not allowed by the Advance Ruling authority.
- Thus, the applicant has sought rectification and requested to allow the exemption to the applicant also as provided to Webel Technology Ltd.
1.6 In connection to the application for rectification, the applicant has been allowed an opportunity of being heard. Mr Goutam Chakrabarty, authorised advocate of the applicant has appeared on 18.02.2025 and has reiterated the submission as noted in the preceding para.
1.7 In terms of section 102 of the GST Act, the Authority or the Appellate Authority or the National Appellate Authority may amend any order passed by it under section 98 or section 101 or section 101C respectively, so as to rectify any error apparent on the face of the record, if such error is noticed by the Authority or the Appellate Authority or the National Appellate Authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer, the applicant appellant, the Authority or the Appellate Authority within a period of six months from the date of the order.
1.8 Any mistake which is manifest, plain, or obvious may be regarded as a mistake apparent on the face of the record and thereby may be rectified invoking the provision of section 102. A rectification is done when there is an error which is apparent on the face of record in such decision or order or notice or certificate or any other document. Thus, errors which involves question of law cannot be rectified. The Supreme Court in the case of T. S. Balaram, ITO v Volkart Bros (1971) 82 ITR 40 (SC), held that; “a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions.
1.9 The Assistant Commissioner, CGST & CX, Bidhannagar Division, Kolkata North Commissionerate has submitted that the relief sought by the applicant is of the nature of merit which is a subject of interpretation of law and therefore the applicant is not entitled to seek rectification under section 102 of the GST Act.
1.10 We are also of the same view as expressed by the officer concerned from the revenue that the issue raised by the applicant is a matter of legal interpretation and this authority, after a detailed discussion, has pronounced the ruling. The applicant, being aggrieved by the ruling, may approach before the Appellate Authority under section 100 of the GST Act. There is no scope to invoke the provision of section 102 in the instant case.
1.11 In light of above, we are unable to accept the application for rectification of the order filed by the applicant. The same is therefore rejected.
