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2021 (8) TMI 357 - AAR - GSTExemption from levy of GST - Labour supply to Government Departments from a registered dealer under GST Act like providing Drivers, peons, housekeeping, data Entry operators and other clerical staff - pure labour services or not - N/N. 11/2017-CT (Rate) and 12/2017 CT (Rate) both dated 28th June 2017 - Pure Labour Services as per Service Accounting Code (SAC) under chapter No. 99 or not - Applicability of dealer for work as per tender (E-procurement) as a Contractor to supply labour - deduction of TDS - Contractor under GST Act, 2017 or not. HELD 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 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. Hence provision of such manpower services is liable to tax at 18% - The said supply of services provided by the applicant is covered under Service Accounting Code (SAC) under chapter No. 9985. Dealer can be Contractor to supply labour or not - HELD THAT - The applicant states that, the dealer applies for work as per tender(E-procurement) as a Contractor to supply labour and TDS as per Income Tax Act is deducted u/s 194C (As a Contractor or Sub-Contractor) @ 1% and wants to know why not dealer be treated as a Contractor under GST Act, 2017. The said question does not fall under the provisions of Section 97(2) of the CGST/KGST Act, 2017.
Issues involved:
1. Applicability of exemption from GST on labor supply to Government Departments. 2. Classification of services under "Pure Labour Services" as per SAC. 3. Treatment of dealer as a Contractor under GST Act. Analysis: Issue 1: Applicability of exemption from GST on labor supply to Government Departments The applicant sought an advance ruling to determine if supplying labor to Government Departments, such as providing drivers, peons, housekeeping staff, and clerical personnel, is exempt from GST under specific notifications. The applicant contended that pure labor services to government entities are exempt under Notification No. 12/2017-Central Tax (Rate). The Assistant Commissioner's comments referenced a similar ruling from Gujarat, supporting the exemption for services provided to government entities. However, the Authority found that the applicant's services did not meet the conditions for exemption under the said notification as they were not related to functions entrusted to Panchayats or Municipalities under the Constitution. Issue 2: Classification of services under "Pure Labour Services" as per SAC The Authority examined whether the services provided by the applicant could be classified as "Pure Labour Services" under SAC Chapter No. 99. While the applicant argued for such classification, the Authority noted that there was no specific definition of "Pure Labour Services" under the GST Tariff. Consequently, the Authority determined that the services provided fell under SAC 9985, indicating that they were not eligible for the exemption claimed. Issue 3: Treatment of dealer as a Contractor under GST Act The applicant inquired about being treated as a Contractor under the GST Act, citing deductions made under the Income Tax Act for TDS. However, the Authority clarified that the question did not fall within the purview of Section 97(2) of the CGST/KGST Act, 2017, as it pertained to the classification of the dealer under the GST Act. The ruling did not address this aspect as it was outside the scope of the advance ruling sought. In conclusion, the Authority ruled that labor supply services to Government Departments by the applicant attract tax at 18% (CGST @ 9% and KGST @ 9%) and are classified under SAC 9985. The exemption claimed by the applicant was not applicable due to the services not being related to functions entrusted to Panchayats or Municipalities as specified in the relevant notification. The question regarding the treatment of the dealer as a Contractor under the GST Act was deemed beyond the scope of the advance ruling sought.
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