The Maharashtra Authority of Advance Ruling ( AAR ) has held that supply of Security Services to Municipal Corporations under Article 243 W is exempted from GST.
The applicant M/s. Maharashtra Ex-Servicemen Corporation Ltd is an organization fully owned and controlled by the Government of Maharashtra, formed for the resettlement of Ex-Servicemen of Indian Defense Forces (i.e. Army, Navy, and Air Force) and opening employment opportunities after their retirement from the Defense forces. The applicant is providing security services to various Government, Semi-Govt., Central PSUs, state PSUs offices including various Municipal Corporations.
The applicant filed an application to know whether the Exemption Notification No. 12/2017 Central Tax (Rate) is applicable to the applicant for providing “Pure Services” i.e. Security Services rendered to secure & safeguard the assets of various sites of Municipal Corporations in relation to functions entrusted to Municipality under Article 243 W of the Constitution, thereby exempting the applicant as a service provider from the whole of GST.
It was submitted by the applicant that the condition of the notification that services should be provided to the Municipality is satisfied by the applicant. The next condition of the notification i.e. services should be in relation to functions entrusted to the municipalities under Article 243W of the constitution is also satisfied by the applicant. The applicant given the reliance on the case of M/s National Security Services Ltd.
The division bench presided by Sri Rajiv Magoo, Member Central Tax and Sri T. R. Ramnani, Member State Tax held that “we are of the opinion that, that the applicant will be entitled to the benefit of Notification No 12/2007-CT(Rate) in respect of the impugned activity only if the same is provided in relation to functions which have been entrusted to a Municipality under Article 243W of the Constitution. If the impugned activity/services are not provided in relation to functions that have been entrusted to a Municipality under Article 243 W of the Constitution, then in such a case the applicant will not be entitled to exemption under Sr. No 3 of Exemption Notification No. 12/2017 — Central Tax (Rate)”
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