In a recent case, the West Bengal Authority for Advance Ruling Goods and Services Tax (AAR) has held that Goods and Service Tax (GST) exemption is not applicable to supply of man power services to Webel Technology Limited
Webel Support Multipurpose Service Cooperate Society Limited, 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.
The applicant has questioned whether Jal Jeevan Mission is correct in classifying the services provided to Government entities as exempted services. And whether the services are exempted under notification no. 12/2017 Central Tax (Rate) dated 28.06.2017?
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The applicant desirous of obtaining an advance ruling is required to file an application on the common portal in FORM GST ARA-01 in respect of subject matter as specified in sub-section (2) of section 97 of the GST Act. The questions on which the advance ruling is sought for are found to be covered under clause (b) of sub-section (2) of section 97 of the GST Act.
The applicant stated that the questions raised in the application have neither been decided by nor is pending before any authority under any provision of the GST Act. The officer concerned from the revenue has raised no objection to the admission of the application.
The applicant submitted that he has been informed on 15.07.2024 by WTL that Public Health Engineering Directorate of the Government of West Bengal has issued a letter to WTL and asserted that as per Government Notification No.56/2017/25 dated 29th June 2017 and Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (1136 F.T. dated 28.06.2017), rate of GST for the services rendered in respect of the above referred work is NIL. By the said memo, Public Health Engineering Directorate of the Government of West Bengal has directed the Chief Executive Officer, WTL to return the amount paid on account of GST, being excess payment and therefore refundable.
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The authorized advocate of the dealer, in course of personal hearing and later through email, has submitted that according to the applicant, the instant supply is taxable @ 18%. 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. The issue before us is to decide whether such supply would qualify for exemption vide entry number 3 of the Notification No. 12/2017Central Tax (Rate) dated 28.06.2017, as amended.
The aforesaid document clearly shows that the work has been awarded by the PHED to Webel Technology Limited for rendering manpower services to them for JJM project. It is thus evident that WTL has received the work order from the Public Health Engineering Department, Government of West Bengal. WTL subsequently has engaged the applicant to provide the aforesaid manpower services.
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The term ‘pure services’ has not been defined under the GST Act. However, a bare reading of the description of services as specified in entry serial number 3 of the Notification No. 12/2017Central Tax (Rate) dated 28.06.2017, as amended, denotes supply of services which does not involve any supply of goods can be regarded as pure services. The applicant has submitted that as per the work order issued to him by WTL, he provides manpower services of 513 Junior Engineers (Civil), 45 Junior Engineers (Mechanical) and 25 Junior Engineers (Electrical) and 99 Data Entry Operators for executing ‘JAL JEEVAN MISSION’ Project. It prima facie appears that the aforesaid supply doesn’t involve any transfer of materials in goods. We therefore hold that the supply of services as provided by the applicant is pure services.
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The applicant has been awarded the contract by WTL for which WTL is liable to pay the consideration to the applicant. So, there can be no dispute that the applicant is supplying the services to WTL. The bench held that the second condition i.e., the applicant provides services to the Central Government, State Government or Union Territory or local authority does not get satisfied in the instant case.
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A two-member bench of Dr Tanisha Dutta, Joint Commissioner and Joyjit Banik, Additional Commissioner as it is mandatory to satisfy all the three conditions as mentioned earlier in para 2.5 so as to qualify a services for exemption under serial number 3 of the Notification No. 12/2017-Cenral Tax (Rate) dated 28.06.2017, as amended.
The bench found 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 would not qualify to be an exempted supply under serial number 3 of the otification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.
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