18% GST applicable on Manpower Services given to Government Departments: AAR [Read Order]

The Chhattisgarh Authority for Advance Ruling (AAR) bench of Sonal K. Mishra and Rajesh Kumar Singh determined that the applicant is obligated to pay 18% Goods and Services Tax (GST) on the manpower services provided to various Central and State Government entities.

The applicant M/s Chhattisgarh Anusandhan & Vikas Firm engaged in the business of providing Manpower service which includes providing of Technical personal, Data Operator, Housekeeping service etc to central government and state government.

The appellant alleged that the Notification Number 12/2017 Central Tax (Rate) entry number 3 specifically excludes work contract services and other composite supplies involving the supply of goods, but the service rendered by the applicant does not involve any composite supply of goods or meet the definition of a work contract as set forth in the GST Act 2017.

Further added that they are exempt from the liability of GST in terms of clause 3 of the Notification No 12/2017 supra. being in the nature of pure service covered under the article 243G and 243W of the Constitution of India being functions entrusted to the Municipality and Panchayat.

The authority further highlighted the case of Hari Khemu Gawali v. Deputy Commissioner of Police, Bombay and Another AIR 1956 SC 5591, where the Constitution Bench of the Apex Court observed that “it has been repeatedly said by this Court that it is not safe to pronounce on the provisions of one Act with reference to decisions dealing with other Acts which may not be in pari materia. “

The bench arrived at the conclusion that, despite being a “pure service,” the applicant’s activity of providing manpower services—including technical personnel, data operators, housekeeping services, etc.—to various State Government and Central Government Departments does not constitute any sovereign function as defined by Articles 243G or 243W of the Indian Constitution.

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