TMI Blog2021 (9) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... ish the task. It can be stated that the works involved in the tender is offering 'Comprehensive Facility Management Solutions' to the Hospitals under DM RHS in the area of Housekeeping, Cleaning, Security, maintenance, etc by providing effective manpower including supervisory persons and the required equipment, consumables, etc. The tender considers the entire works as 'Services' which by the clauses of the tender includes goods and services - the person bidding for the tender has to provide the man-hour cost and the cost of resources such as equipment(amortized), consumables, etc to be used by the bidder for effective provision of the comprehensive management solution related to cleaning, housekeeping, security and maintenance of the Hospitals under the DM RHS. Applicability of entry No. 3 of the Notification No. 12/2017-C.T.(Rate) - scope of work to be undertaken in the 86 Government Hospitals under the control of Directorate of Medical Rural Health Services and 7 Hospitals - HELD THAT:- The entry applies to Pure Services provided to the defined class of service recipients and the services are to be of any activity in relation to any function entrusted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - Entry No.3 Chapter 99 of Notification No. 12/2017- C.T.(Rate) dated 28.06.2017 - HELD THAT:- The scope of work in the tender document as furnished to us is 'Comprehensive facility management services' which are 'Pure Services' of Housekeeping, cleaning including pest control services, Security services, assistance in the form of Electrician, Plumber, etc for effective maintenance of the hospital facility; the supply is proposed for the hospitals under DM RHS, which is a Directorate under Ministry of Health Family Welfare, State of Tamil Nadu, i.e., State Government; the activities being in relation to the up-keeping/running of the Hospital facility, is in relation to the activities entrusted to a Panchayat or a Municipality under Article 243G/W of the Constitution and therefore, the exemption at Entry No. 3 of Notification no. 12/2017-C.T.(Rate) dated 28.06.2017 as amended is applicable in respect of the scope of work tendered by TNMSC for the supply to be made to hospitals under DMS. The Tender is for 'Providing Sanitation Services for the Hosp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chayat or a Municipality under the constitution? If not then can we conclude that no exemption is available to PHFMS? 2. Whether services provided by PHFMS to DME is exempted under SI.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 are providing Manual and Mechanised House Keeping services, Man Power Supply and Security Services to Directorate of Medical Education under whom all the Tamil Nadu State Government Medical Colleges and Hospitals are functioning. The contract for the said services was originally sanctioned to them in the year 2013 for a period of three years and was renewed for a further period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d manual Housekeeping/cleaning services including Pest control services Security services are not falling under the above categories of Article 243G and 243W of Indian Constitution and so GST exemption is not available in this instance and also as per the advance ruling Given in case No. 34/2018 vide order number 38/WBAAR/2018-19, dated 28.01.2019 clarifies the same. A study of the two lists, as given above, makes it clear that Security Services provided to Government Hospitals and Medical Colleges as institutions of Central/State/District/ Local Authorities are clearly not covered under the either list. Sanitation and similar services are classified under SAC 99945. As clarified in Advanced Ruling order No. 38/WBAAR/2018-19, dated 28.01.2019 that ...................... It includes sweeping and cleaning, but only with reference cleaning of road/street. Cleaning of hospital premises are not, therefore classified under sanitation or similar service. The services, the Applicant bundled under the description 'Scavenging Services' are therefore, not exempt under SI. No.3 of the Exemption Notification. As per the advanced ruling order No. 38/WBAAR/2018-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Poverty alleviation programme. (xvii) Education, including primary and secondary schools. (xviii) Technical training and vocational education. (xix) Adult and non-formal education. (xx) Libraries. (xxi) Cultural activities. (xxii) Markets and fairs. (xxiii) Health and sanitation, including hospitals, primary health centres and dispensaries. (xxiv) Family welfare. (xxv) Women and child development. (xxvi) Social welfare, including welfare of the handicapped and mentally retarded. (xxvii) Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. (xxviii) Public distribution system. (xxix) Maintenance of community assets. They are of the view that from out of the above list the functions relevant to the applicant are mentioned under clause xxiii which covers health and sanitation including hospitals, primary health centres and dispensaries ; hence the health and sanitation services including hospitals falling under panchayat and primary health centres are exempt and the hospitals which are covered under DME falls under municipality and not panchayat and hence exemption i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of disease, especially through the fecal-oral route. The term public health sanitation services as stated in twelfth schedule means sanitation and similar services which are classified under SAC 99945 which includes sweeping and cleaning but only with reference to cleaning of roads and street and cleaning of hospital premises is not covered under sanitation or similar services. In Circular No.51/25/2018-GST dated 31/07/2018, the Central Government clarifies that the service tax exemption under SI.No. 25(a) of Notification No. 25/2012 dated 20/06/2012 has been substantially, although not in the same form, continued under GST vide SI.No. 3 and 3A of the Exemption Notification. The above circular leaves no doubt that the phrase 'in relation to any function' as applied in SI.No. 3 and 3A, makes no substantial difference between SI.No. 25(a) of the ST Notification and SI.No. 3/3A of the exemption Notification No. 12/2017 2/2018. The phrase 'in relation to any function' refers not to who the service provider is or what activities the recipient of the service is engaged in, but only to what service the supplier is providing. If the service is an activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital mode. The applicant requested for physical hearing and did not agree to participate in the Digital mode. The Authorized Representative of the applicant vide mail date 14.07.2021 requested for an early physical personal hearing and the hearing was held on 28.07.2021 in person. The Authorised representatives S/Shri. P.Ramachandran, Charted Accountant, P. Lokesh Kumar, Certified Practicing Accountant and Ms. G. Anitha, Chartered Accountant appeared for the hearing. The Authorised representative reiterated their written submissions. They stated that the issue before the authority is whether their activity is exempted or taxable, and if taxable, whether the supply is a composite supply. They stated that they are providing similar services to Hospitals in the State of Andhra Pradesh. They stated that they intend to participate in the forth coming tender by DME, Tamil Nadu and requested for clarification. They were asked to furnish the following documents.- 1. Evidence to establish the calling of Tenders for the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning and Carpentry Services in 93 Government Hospitals under the control of Directorate of Medical Rural Health Services -86 Institutions and Directorate of Medical Rural Health Services (ESI) -7 Institution. Whereas, the question raised in the application is on the supply of services to Directorate of Medical Education, for whom no services are rendered by them presently. 3.5 The Registry vide letter No.ARA No. 11/2021 dated 30.07.2021 issued a notice offering an opportunity to explain in writing and in response to that the applicants filed written submissions on 03.08.2021 stating that they need ruling on the applicability of GST on services proposed to be rendered to both DME/DMS so that the applicant can participate in the present and future tenders. 4. The applicant is under the administrative control of the State Jurisdiction. The State jurisdictional authoritiy, Assistant commissioner (ST), Koyembedu Assessment Circle vide his letter Roc.No.534/2019 dated 22.04.2021 has stated that the applicant has already sought clarification before the authority for Advance Ruling for the similar issue for which remarks were already submitted on 20.09.2019 and enclosed a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 Central Tax dated 28.06.2017 read along with amendment dated 25.01.2018 in respect of the activity for which Tenders has been floated by Tamil Nadu Medical Services Commission (TNMSC). 6.2 On perusal of the supporting documents furnished by the applicant, it is seen that TNMSC had floated tender for providing Housekeeping/ cleaning and Security services to be provided to the Government Medical College Hospitals, Government Medical Colleges and Government Nursing Colleges under the Directorate of Medical Education (DME) and this tender has been finalized and the same is not allocated to the applicant as stated by them in their written submissions. However, they have requested to furnish the ruling in respect of the activities covered under the said tender also, stating that it would facilitate to participate in future tenders. Section 95(a) of CGST Act 2017 defines Advance Ruling to mean a decision provided by the authority or the Appellate Authority or the National Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of Section 97 or sub-section(l) of Section 100 or of section 101C of the CGST Act, in relation to the supply of goods or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices and Assistance in Electrical, Plumbing, laundering, Cooking, Catering, Gardening Carpentry Services in 93 Government Hospitals under the Control of Directorate of Medical Rural Health Services (DM RHS), -86 Institutions, Directorate Medical Rural Health Services (ESI) (DM RHS ESI) - 7 institutions. It has been proposed to identify an agency /agencies for one or any or all of the four zones through a transparent bidding process to accomplish the task. From the various clauses of the Bid document, the following are seen: 1.1.1 B. The bidders are expected to offer Comprehensive Facility Management Solutions for all of the following services, individually or as a part of a consortium to be set up for an effective service delivery process for one or any or all of the four zones separately .- 1) Housekeeping / Cleaning including Biomedical Waste Management Pest Control Services 2) Security Services 3) Assistance in Electrical, Plumbing, Laundering, cooking, catering, gardening Carpentry Services 1.1.22 After Notification of award and issue of detailed order by the Directorate of Medical and Rural health services, the successful bidder shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rural health Services on behalf of the Heads of the 93 Hospitals who is placing the contract. 2.1.7 The services mean the services and goods that the contractor is required to provide under the contract 2.2.1 The successful bidders are required to sign the contract agreement with the Directorate of Medical Rural Health Services within 15 days of the date of issuance of Letter of Intent (LOI) ...................... 2.2.4 EXECUTION METHOD: the successful bidders shall get the following documents approved by the DM RHS for Management and effective performance of tasks ................ 2.2.28 PAYMENT: An invoice shall be rendered on the contractors' own invoice form to the authority at monthly intervals 7.2 From the above, the following are deduced:- Tender is called for by Tamil Nadu Medical Services Corporation (TNMSC), which is a body corporate The works involved is Housekeeping/cleaning including Biomedical Waste Management Pest Control Services; Security Services; Assistance in Electrical, Plumbing, Laundering, Cooking, Catering, Gardening Carpentry services The works are to be provided to the 86 Hospitals under the Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental 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 NIL NIL On a cogent reading of the above, it is seen that the entry is applicable to,- All Pure Services; Provided to the Central/State Government or Union territory or Local authority or a Governmental Authority; By way of any activity; In relation to any function entrusted to ;A Panchayat under Article 243G of the Constitution or ;A Municipality under Article 243 W of the Constitution. Thus, the entry applies to Pure Services provided to the defined class of service recipients and the services are to be of any activity in relation to any function entrusted to a Panchayat/Municipality under Article 243 G/243W of the Constitution. Now we examine whether in the case at hand, in respect of the 'Scope of works' covered under said tender, the above stands satisfied in order that the entry will be applicable. The main query of the applicant is whether the 'scope of work' e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... webpage https://health.tn.gov.in/tngovin/dms/dms.php states the evolution of public health systems in Tamil Nadu and function role of institutions involved. For better understanding extracted as below:- The object of hospital services organised in India during the early years of British rule was to cater mainly to the needs of the British army and the British Civilian population. Indian Medical Department was organised on a regular basis in 1786. In 1922 Public Health and Medical Services were separated at all levels. In the year 1875 a Medical Rule was set up and Department of Sanitation and Vaccination was brought under the Control of Medical Department. The Medical Department was then headed by Surgeon General. In 1919 the post of Director of Public Health has been created and the department has been bifurcated. The Public Health Department was formed in the year 1923 for the prevention and control of communicable diseases and for the improvement of General Health Conditions in the State. After the year 1947 the post of Surgeon General who was fully in charge of Indian Medical Department was re-designated as Director of Medical Services for Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Part II - Conditions of Contract role of Tamil Nadu Medical services Corporation is specified as The Tender inviting authority and Tender Accepting Authority and they act as facilitator and the actual contract is between the Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI) and the successful bidder only and the services are to be provided to Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI). In view of the above discussion it is clear that DMS MS(ESI) are State Government Department and the successful bidder makes the supply to the State Government, the identified class under the said entry and second limb of the said Notification is fulfilled. 8.4 The final limb of Entry No.3 Chapter 99 of Notification No. 12/2017- C.T.(Rate) dated 28.06.2017 which is to be examined is whether the activities are 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 scope of work proposed in the tender is 'comprehensive facility management servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titutions in Chittoor, Kadapa, Anantapur, Kurnool Districts in the State of Andhra Pradesh. It is evident that in this case the supply is made not only to the Hospitals but also to the educational institutions and the facts in this count are not similar to that in the case at hand, wherein the supply tendered is towards 'Comprehensive facility management' of the Hospital facility only, which is to be maintained by the State Government as per the dictum of the Constitution under Article 243G/243W. 10. In view of the above, we rule as under: RULING 1. The proposed supply as per the Tender for housekeeping, Security Services and Assistance in Electrical, Plumbing, laundering, Cooking, Catering, Gardening Carpentry Services in 93 Government Hospitals under the Control of Directorate of Medical Rural Health Services, -86 Institutions, Directorate Medical Rural Health Services (ESI)-7 Institutions is exempt under Entry No.3 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 read with Entry No. 3 of Notification No.II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as brought out in para 8 above. 2. The applicant's question on the supply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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