Name of the Applicant:

Sadanand Manpower Service

Appeal No.:

Advance Ruling No. Kar ADRG 46/2021

Ruling pronounced by:

GST AAR Karnataka

Date of Ruling:

30-07-2021

The applicant 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 material contract is mot more than 25% to Government, local authority, government authority or government entity relating to constitutional entities is exempt.

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 28^th June, 2017.

The applicant sought advance ruling on the following issues:

(i) Whether labour supply to Government Departments from a registered dealer under GST Act like providing drivers, peons, housekeeping, data entry operators and other clerical staff attracts exemption from levy of GST?

(ii) Whether above said supply of services covered under “Pure Labour Services” as per Service Accounting Code (SAC) under Chapter No. 99?

(iii) The dealer applies for work as per tender (E-procurement) as a “contractor to supply labour” and TDS as per Income Tax Act deducted u/s 194C (as a contractor or sub-contractor) @ 1%. So, why not dealer to be treated as a “Contractor” under GST Act 2017 also?

In order to claim exemption on supply of man power services, two conditions should be satisfied:

• Pure services (excluding works contract service or other composite supplies involving any goods provided to the Central Government, State Government or Union Territory or local authority or a Government Authority
•  By way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution.

The Authority observed that:

• The applicant is providing manpower services like drivers, peons, housekeeping, data entry operators and other clerical staff to various State Government departments.
•  But these manpower services are not provided by way of any activity in relation to any functions entrusted under Article 243G (Eleventh Schedule) of the Constitution or in relation to any function entrusted under Article 243W (Twelfth Schedule) of the Constitution.

Question

Ruling

Whether labour supply to Government Departments from a registered dealer under GST Act like providing drivers, peons, housekeeping, data entry operators and other clerical staff attracts exemption from levy of GST?

Labour supply/ supply of manpower services like drivers, peons, housekeeping, data entry operators and other clerical staff to Government Departments attract tax @ 18% (CGST 9% + SGST 9%).

Whether above said supply of services covered under “Pure Labour Services” as per Service Accounting Code (SAC) under Chapter No. 99?

The said supply of services provided by the applicant is covered under Service Accounting Code (SAC) under Chapter No. 9985.

The dealer applies for work as per tender (E-procurement) as a “contractor to supply labour” and TDS as per Income Tax Act deducted u/s 194C (as a contractor or sub-contractor) @ 1%. So, why not dealer to be treated as a “Contractor” under GST Act 2017 also?

The said question does not fall under the provisions of Section 97(2) of the CGST/KGST Act, 2017.