TMI Blog2020 (3) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout GST. The applicant had also made a representation to TNMSCL dt 11.7.2019 stating that price quoted by KRYSTAL without GST is to be disqualified as GST is applicable to the services involved in the tender. To this, TNMSCL vide letter dt 14.8.2019 had replied that GST is not applicable as per Notification No 12/2017 dt 28.6.2017 and hence, KRYSTAL is the LI for Zone 1 to 4 as they had the lowest bid with zero GST. In the writ petition, the applicant has repeatedly stressed that KRYSTAL has made the successful bid only because they quoted zero GST whereas in reality GST is chargeable for the services covered in the tender. With GST added, the applicant would have been the lowest bidder for zone 1 to 4 and they would not have been asked to lower their bid for zone 5 without including GST. The applicant himself has stated in the writ petition and in the communication with TNMSCL that the applicability of GST is essential to be decided before the tender is finalized. The stand of the applicant that the issue of applicability of GST is not the issue in the writ petition is not correct. The decision of the Hon ble High Court on the writ will be applicable on the GST authorities w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to DME is exempted under Sl.No.3 of Notification 12/2017 Central Tax dated 28.06.2017 read along with amendment dated 25.01.2018? 3. Whether Services provided by PHFMS to DME including institutions of Government Hospitals and colleges are liable for GST or not? If yes, what is the rate of GST applicable to these services 4. Whether services rendered by PHFMS to DME can be classified as pure services or Composite Supplies? The applicant submitted a copy of challan evidencing payment of application fees of ₹ 5, 000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they provide Housekeeping/cleaning including pest control services, security services to Directorate of Medical Education (DME) that includes Government Medical College Hospitals, Government Medical Colleges and Government Nursing Colleges. The applicant provides the above services to 95 Government Hospitals and colleges within Tamil Nadu. They have been providing these services since 2013 by way of 3 year contract that was renewed in 2016 which expires in 2019. The applicant has stated that they now intend to renew the contract by particip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same issue against TamilNadu Medical Services Corporation Directorate of Medical Education and against the Department. The State Jurisdiction officer also appeared for the hearing and submitted that the WP was filed in Hon ble High Court and gave a written submission stating that the applicant is not eligible for exemption at Sl.No. 3 of Notification No. 12/2017 as they provide only Manpower services. The applicant was informed that as per Section 98(2) of CGST Act 2017, as the question raised is already pending in Hon ble High Court, this authority cannot rule on the issues raised. They informed that they will file copy of Writ Petition. The applicant furnished written submissions during the hearing 3.2 The State Jurisdictional Authority in the written submission has stated that the applicant has filed writ in the High Court of judicature at Madras for the same subject sought m the advance ruling and has furnished the comments raised on the question as given below:- i. Whether services rendered by Padmavathi hospitality Facility Management services is falling under Pure services? The Goods and service tax act 2017 defines services in Section 2(102). it means any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh DME is falling under State government the hospital and security services in DME are not related to functions entrusted to Panchayat/Municipality under Articles 243G 243W. iii. Whether services rendered by Padmavathy hospitality Facility management services to DME are liable for GST? Yes, the services are to be taxed at the rate of 18% for both security and cleaning services. 3.3 In the written submission furnished by the applicant during the PH held on 26.09.2019, they inter-alia stated that,- PHFMS is a partnership firm formed in the year 2012. They are primarily into the business of providing Housekeeping services, Pest Control Services, Supply of Manpower services, Security services and Services under works Contract basis to their clients in three states namely Tamil Nadu. Andhra Pradesh and Telangana . Some of their major customers are Directorate of Medical Education, TCS, Venkateshwara University, works contract services to Railways (Tirupati Renigunta) ETC. One of the Major Customer to whom they provide Housekeeping, Pest Control, Security Services Biomedical Waste Management is The Directorate of Medical Education, Tamil Nadu (DME) under whom a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DME is of the opinion that the services provided to them is exempt from GST under exemption notification No 12/2017 - Central Tax (Rate) dt 28/06/2017 read along with amendment dt 25/01/2018 and the tender should be placed excluding GST. DME has based their opinion on note given by an alternative bidder M/s Krystal Integrated services Private Limited and Independent opinion from a Chartered Accounting Firm Sanjiv Shah Associates. Furthermore, the alternative bidder namely M/s Krystal Integrated services Private limited had given their quote for contract price exclusive of GST based on the above Government notification stating that the services rendered are fully exempt under Notification No 12/2017 read along with amendment dated 25/01/2018 that the services provided to Central Government, State Government or Local Authority or a Governmental Authority by way of activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to Municipality under Article 243W. M/s Krystal Integrated services Private limited in their bid had quoted that as per serial no 3 Of the notification No 12/2017-CT (Rate) da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all the 95 government hospitals coming under the said DME falls under the Municipality and that the functions entrusted to the municipality under article 243W of the constitutions is Public Health Sanitation, conservancy and solid waste management . The applicant has stated that the original notification 12/2017 read along with amendment 2/2018 issued on 25.012018 refers to any activity in relation to any function entrusted to Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution . They are of the opinion that all the 95 government hospitals falling under the DME comes under Municipality and not Panchayat and the notification specifically states activities entrusted to a municipality or panchayat. Hence it is very clear that this exemption notification applies to panchayat and municipalities only and does not attract to services provided by a private party to any state government hospitals. Under article 243G of the Constitution, activities in relation to any function entrusted to Panchayat is clearly listed out in the eleventh schedule. From the list of function specified, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt also supplies cleaning materials incidental or auxiliary to provisioning the cleaning services. 4. Security services etc All the above said services are provided to state government run hospitals which are located in the municipalities. As per the advance ruling authority order in the above said case the activities, functions and services mentioned as per the applicant does not fall under any of the activities covered either under eleventh schedule or twelfth schedule of the constitution As per the order of advance ruling the applicant is not providing health services to any hospitals and that the scope of sanitation and similar services as classified under SAC 99945 includes the words cleaning and sweeping but these services are limited to cleaning and sweeping of roads and streets and not hospitals. Hence the services provided by the said applicant are not to be treated as sanitation services under the GST Act. Hence the supplies by the applicant is not qualified for exemption under SL no 3/3A Of the exemption notification 12/2017 read along with amendment made in 2/2018. Further the Advance ruling authority has stated that the exemption is extended to panchayat and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the fundamental rights which are guaranteed under the Constitution of India An interim injunction be passed restraining the TNMSC from finalizing the tender in Tender No. 432/outsourcing/DME/TNMSC/ ENGG/ 2019 dated 19/02/2019 pending disposal of the Main writ petition and render justice The Hon ble Court may be pleased to issue a writ in the nature of a WRIT of MANDAMUS or any form of writ, order or direction in the nature of WRIT of MANDAMUS to direct the TNMSC to awards the tender contract to PHFMS, who has given the lowest price bid The issue pending before the Hon Tale High Court is the incorrect tender process and procedure adopted by TNMSC. The said Writ Petition filed by them has never asked for clarification of the applicability of GST on the services provided by them, but has only asked the Hon ble High Court for interim injunction to stop the Entire tender process since the TNMSC has violated the procedure which has to be adopted by TNMSC in contrary to Rule 29(d) of the Tamilnadu Tender Transparency Rules 2000 read with Section 10 of the Tender Transparency Act. As per Section 98 of the GST Act, PHFMS has not raised this subject matter eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Writ Petition shall not preclude the Sixth Respondent from deciding the aforesaid application for advance ruling said to have been made by the petitioner. 5.1 The applicant accordingly was extended another opportunity to be heard in person on 11.12.2019. The authorised representative appeared for the hearing. They submitted copies of order passed by the Hon ble Judge in WMP No.32267 of 2019 in W.P No.24412 of 2019 where the Advance Ruling Authority and SGST authorities have been made as respondent. In the order, it was directed by the Hon ble Judge that the views of advance ruling authority in the GST issue of the applicability has a bearing in the W.P. In the W.P. filed, the applicant has stated in para 12 that they are making GST authorities as 3rd respondent as the issue of applicability is to be decided. The representative has stated that they did not file for any withdrawal of the 3rd respondent, GST authorities before Hon ble High Court. The applicant stated that they will submit the tender, bid documents, quotations, advertisement for contract within 2 days. They stated that they have submitted the application online on 15/08/2019 and WP on 19.08.2019 but had subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material portion comes to 10% and the mechanised cleaning service by using automated machines comes around 5% and the remaining 10% goes for PHFMS service charges. This factual position can be examined from the copies of financial bid as submitted by PHFMS for the TNMSC Tender. They requested the AAR Bench to pass appropriate orders at the earliest in this regard. 6. We have considered the written and oral submissions of the applicant, the Writ Petition No. 24412 dated 19/08/2019 and the related Miscellaneous petitions and the Orders of the Hon Tale High Court of Madras. We find that the applicant is a partnership firm primarily into the business of providing Housekeeping services, Pest Control Services, Supply of Manpower services, Security services and Services under works Contract basis to their clients in three states namely Tamil Nadu. Andhra Pradesh and Telangana. One of the Major Customer to whom they provide Housekeeping, Pest Control, Security Services Biomedical Waste Management is The Directorate of Medical Education, Tamil Nadu (DME) under whom all the State Government Medical Colleges are functioning. The applicant provide Housekeeping, Pest Control Security, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcing of housekeeping and security services in 94 government hospitals, colleges and school colleges for nursing under the control of Directorate of Medical Education has been called by Tamil Nadu Medical Services Corporation Limited. It is seen from the tender that the services covered are: Housekeeping/cleaning including Biomedical Waste Management Pest Control Services and Security Services specifying the requirement of man power at various levels, equipment and machinery and consumables at each of the institutions. It is seen that the institutions are all Hospitals or medical or nursing colleges. 7.2 Section 98(2) of the GST ACT 2017, states as follows:- (2) The Authority may, after examining the application and the records called for and after hearing the applicant or his authorised representative and the concerned officer or his authorised representative, by order, either admit or reject the application: Prodded that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act: Provided further that no applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a fee of five thousand rupees which is to be deposited online by the applicant, in the manner specified under section 49 of the CGST Act. ...................................................... It is reiterated that though the application shall be filed manually till the advance ruling module is made available on the common portal, the fee is required to be deposited online in terms of section 49 of the CGST Act 9. The application for advance ruling or the appeal before the Appellate Authority shall be filed in the jurisdictional office of the respective State Authority for Advance Ruling or the State Appellate Authority for Advance Ruling respectively. It is seen that an applicant shall file the Advance Ruling Application online along with payment of the fees on the GSTN portal. Further, the applicant is also required to file the with the office of the State Authority for Advance Ruling as the back-end interface for the officers of the Advance Ruling Authority is not operational yet. In this case, the applicant filed the application on 18.09.2019 with the office of the respective State Authority for Advance Ruling. 7.3 The jurisdictional state officer has infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of KRYSTAL without GST and the issue of applicability of GST was to be considered. Para 10 states that the applicant was asked by TNMSC vide their letter dt 17.8.2019 to negotiate on the applicants lowest bid for Zone 5 considering the applicability of GST Para 12 states that GST is very much applicable to the case and hence, the bid of KRYSTAL is illegal and should have been disqualified .For efficacious adjudication of the writ they implead Assistant Commissioner GST, Chennai North Commissionerate as a proper and necessary party to clearly decide as regards the applicability of GST. Para 13 states that even if TNMSC proceed on finalizing the tender on the basis that no GST is applicable, the Assistant Commissioner GST may proceed to levy GST The applicant has prayed for interim injunction of the tender process and also issue a writ of mandamus to direct TNMSC to reject the bid of KRYSTAL and award the tender to the applicant in all Zones. 7.5 It is seen from the writ petition filed by the applicant that the applicant has submitted before the Hon ble High Court that KRYSTAL, a bidder to the said tender has submitted their bid by stating GST as Zero and em ..... X X X X Extracts X X X X X X X X Extracts X X X X
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