The Karnataka Authority of Advance Ruling (AAR) ruled that labour supply like Drivers, peons, housekeeping, data entry operators to Government Departments attracts 18% GST.
The Applicant, M/s Sadanand Manpower Service is providing manpower services like Drivers, peons, Housekeeping, Data entry operators and other clerical staff to various State Government departments.
The Applicant contended that as per service code 99 and central notification (Tax Rate) No. 11 and 12 of 2017 dated 28.06.2017 pure Labour service” (or where the material contract is not more than 25%) to government, local authority, government authority or government entity relating to constitutional entities is exempted. The Applicant states that government departments are registered as TDS authorities instead of having normal GSTIN. It means there is no furtherance of business. The Applicant is of the view that Pure labour supply to Government or Government offices is exempted as per Sl.No.3 of Notification No.12/2017-Central Tax (Rate), dated 28th June 2017.
The applicant has sought advance ruling on the issue of whether Labour supply to Government Departments from a registered dealer under the GST Act like providing Drivers, peons, housekeeping, data Entry operators and other clerical staff attracts exemption from levy of GST as per Notification Nos. 11/2017-CT (Rate) and 12/2017 CT (Rate) both dated 28th June 2017, and whether the above-said supply of services is covered under “Pure Labour Services as per Service Accounting Code (SAC) under chapter No. 99.
The two-member bench of Dr. M.P.Ravi Prasad and Mashood Ur Rehman Farooqui ruled that Labour supply/supply of manpower services like Drivers, peons, housekeeping, data entry operators and other clerical staff to Government Departments attracts tax at the rate of 18% GST. The said supply of service is covered under Service Accounting Code (SAC) 9985.
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