In re M/s Wisdom Security Services (GST AAR Karnataka)
Is GST Applicable on man power services provided to Karnataka Rural Road Development Agency?
The activity of providing manpower services like Data Entry Operators, Field Engineers, Diploma Field Engineers, Senior Software Professionals, Software Engineers for IT Cell, Graduate Assistant, Office Assistant, Peon and Watchman to Karnataka Rural Road Development Agency is not covered under entry no. 3 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and hence is not exempted from GST.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s Wisdom Security Services, (called as the ‘Applicant’ hereinafter)„ having GSTIN number 29ACIPP7156N1ZQ, has filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the KGST Act, 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000-00 each under the CGST Act and the KGST Act.
2. The Applicant is a Proprietary concern and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question:
Is GST Applicable on man power services provided to Karnataka Rural Road Development Agency?
3. The applicant furnishes some facts relevant to the stated activity:
a. The applicant states that he is in the business of providing manpower services. He is providing man power services of Data Entry Operator, Field Engineer, Diploma Field Engineer, Senior Software Professional (Team Leader), Software Engineers for IT Cell, Graduate Assistant, Office Assistant, Peon, Watchmen, etc. to Karnataka Rural Road Development Agency which is under Department of Rural Development and Panchayat Raj Engineering, Government of Karnataka.
b. He states that he is providing manpower services to M/s Karnataka Rural Road Development Agency, (KRRDA) throughout Karnataka State for their various locations as per their work orders against e-Tender. The recipient of service, i.e. KRRDA are informing the applicant that their Audit team is saying that GST is not applicable on manpower services provided to them saying it is: pure services and the notification referred by them is Notification No. 12/2017 – Central Tax (Rate).
c. The applicant states that as per Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017, Serial No. 3, which reads “Pure Services (excluding works contract services or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or local authority or a Government Authority by way of any activin 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, the rate of tax applicable is – NIL. Since the services provided to M/s Karnataka Rural Road Development Agency, to their various officers in Karnataka, from their company is Manpower Services, they feel that the above referred Notification can be applied and GST is not chargeable.
4. FINDINGS 8s DISCUSSION:
4.1 The entry no. 3 of Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 is verified the same reads as under:
‘Pure Services (excluding works contract service or other composite supplies involving supply of goods) provided to the Central Government, State Government or Union Territory or local authority or a Governmental Authority 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.’
4.2 The contract of the applicant is examined and it is seen that the contract is for providing services which does not involve supply of goods and hence is pure services.
4.3 The second issue to be examined is whether the recipient is a Government or local authority or a Governmental Authority. Admittedly the recipient of services i.e. Karnataka Rural Road Development Agency is not Central Government or State Government or a local authority.
4.3.1 The Karnataka Rural Road Development Agency is a Society registered under the Societies Registration Act, 1960 and is a compact, professional and multi-disciplinary body and the personnel will be obtained or engaged on deputation from PRED or hired on contract basis. There will be no permanent appointment to KRRDA. It draws Monitors from different Disciplines, and other Organizations (Public Sector or Private Sector), on part-time basis, to serve as independent Monitors.
4.3.2 The KRRDA will execute all such other acts and things, either alone or in conjunction with other organizations or persons, as the Karnataka Rural Roads Development Agency may consider necessary, incidental or conducive to the attainment of the objectives mentioned above.
4.3.3 The clause 2(zf) of Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 defines the Governmental Authority as under: ‘governmental authority’ has the same meaning as assigned to it in the Explanation to clause (16) of section 2 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017);’
4.3.4 Explanation to Section 2(16) of the Integrated Goods and Services Tax Act, 2017 defines “governmental authority” as under:
“governmental authority’ means an authority or board or any other body, –
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a Panchayat under anicle 243G or to a municipality under article 243W of the Constitution.”
4.3.5 The objectives of the recipient as available in the website of the recipient are as under:
