In re Webel Technology Limited (GST AAR West Bengal)
In the case of Webel Technology Limited, the Authority for Advance Rulings (AAR), West Bengal, examined whether the supply of manpower services, such as data entry operators and junior engineers, to the Public Health Engineering Department (PHE) for the Jal Jeevan Mission (JJM) is exempt from GST under Serial No. 3 of Notification No. 12/2017 – Central Tax (Rate). The applicant, a government PSU, argued that these services qualify as “pure services” provided to a government entity in relation to a function entrusted to a Panchayat or Municipality under Articles 243G and 243W of the Constitution. However, the ruling noted that while the first condition—provision of services to a government entity—was satisfied, the second condition, requiring a direct link to activities listed under these constitutional provisions, was not met. The services provided, including system administration and software support, were considered ancillary rather than primary functions under the Eleventh and Twelfth Schedules of the Constitution.
The ruling also referred to similar decisions from other AARs, including Karnataka, Chhattisgarh, and Maharashtra, where manpower supply services were deemed taxable at 18% GST. Furthermore, the amendment in Notification No. 16/2021 removed exemptions for services provided to “Government Authorities or Government Entities,” reinforcing the taxability of such services. Despite a memo from the PHE Department stating that the services should be exempt, the AAR concluded that Webel Technology Limited’s supply of manpower services does not qualify for exemption under the notification. Therefore, these services are subject to 18% GST (9% CGST + 9% WBGST).
