2018 (5) TMI 904 - AUTHORITY FOR ADVANCE RULING - DELHI - GST

Head Note / Extract:
Levy of GST on Service contract with railways - cleaning, sanitation, manpower supply, washing, housekeeping, etc. in Delhi and outside Delhi - pure service contract or works contract - N/N. 9/2017-Integrated Tax (Rate) dated 28.06.2017 - Whether the contract for Railway station sanitation and / or cleaning, Train cleaning & Railway Premises cleaning would be exempt from GST vide S. No. 3 of N/N. 9/2017 - Integrated Tax (Rate) dated 28.06.2017 (as intimated by Northern Railway vide its letter dated 20.11.2017), what would be the impact of GST exemption, if the above contract is pure service contract or work contract (involving sanitation labour and material)? Whether 'pure services' or the same also involve supply of any goods? - Held that: - the cleaning contracts of the applicant with the Northern Railways, which may involve use of consumables such as soap/ detergent/ chemicals of a minimal quantity and of a very nominal value are "pure service" contracts, in terms of S. No. 3 of Notification No. 9/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended by Notification No. 2/2018 - Integrated Tax (Rate) dated 25.01.2018 and parallel CGST and SGST notifications. Whether the service receiver i.e. Northern Railways is covered in 'Central Government' or 'State Government' or 'Union Territory' or 'Local Authority' or a 'Governmental Authority' or a 'Government Entity' or not? - Held that: - as per Section 3(8) of the General Clauses Act, 1897, the 'Central Government' means the President. Therefore, the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of President are also covered in 'Central Government'. It is observed that contracts by Northern Railway to the applicant have been awarded in the name of the President of India - Hence, it is held that Northern Railway is covered in the said Notification as 'Central Government'. Whether the cleaning services rendered by the applicant are in relation to any function entrusted to a Municipality under Article 243W of the Constitution? - Held that: - The Railways cannot be called a Municipality under Articles 243P and 243Q of the Constitution of India. Further, the functions of Railways i.e. transport of goods or passengers are not covered in Schedule XII of the Constitution which covers the constitutional functions of Municipalities. The cleaning services supplied to Railways i.e. cleaning of locomotives, railway stations, railway lines provided by the applicant cannot be said to be covered in Clause (6) of Schedule XII of the Constitution which covers 'public health, sanitation conservancy and solid waste management' functions of the Municipalities. The Municipalities are constitutionally entrusted with such functions in relation to urban areas but they are not entrusted with such functions in relation to Railway properties. It is observed that, Northern Railway has informed their sanitation contractors vide No. C-12/San/Misc/2017 dated 20.11.2017 that contracts for station sanitation would be exempt from GST, provided it is a pure service contract and no supply of goods are involved - Since, under Section 103 of the CGST Act, 2017, this ruling is binding only on the applicant and the jurisdictional officers, the Northern Railways is free to contest the same. However, the applicant is required to deposit GST as per this Ruling. Ruling: - The cleaning services supplied by the applicant to the Northern Railways are not exempted under S. No. 3 of the Notification No. 09/2017 - Integrated Tax (Rate) dated 28.06.2017, as amended by Notification No. 2/2018 - Integrated Tax (Rate) dated 25.01.2018 and parallel Notifications of CGST and SGST.