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TMI Blog2021 (9) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred as 'Applicant' or 'PHFMS') is registered under the GST Act 2017 vide GSTIN No. 33AAIFP7751M1ZR. The applicant is engaged in providing Mechanized and Manual Housekeeping services/Cleaning services including Pest Control services; Security services, non-medical Man Power supply to support Medical and paramedical services in hospital projects; Bio Waste Management for all Hospitals under DME as bundled services to Directorate of Medical Education (DME) that includes Government Medical College Hospitals, Government Medical Colleges and Government Nursing Colleges. The applicant has sought Advance Ruling on the following questions:- 1. Whether services provided by Padmavathi Hospitality & Facilities Management Services (PHFMS) to DME are classifiable as a function entrusted to a Panchayat 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpretation of law, they have stated that GST@18% will be applicable to Mechanised and Manual housekeeping services and cleaning services, Pest control and security services provided as bundled services to Government hospitals and colleges due to below reasons.- * As per Exemption Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 under Chapter 99 read along with amendment issued on 25.01.2018 BOTH refers to services provided "to the Central Government, State Government or Union territory or local Authority or Governmental Authority by way of 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. * Their services i.e Mechanised and 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulture, including agricultural extension. (ii) Land improvement, implementation of land reforms, land consolidation and soil conservation. (iii) Minor irrigation, water management and watershed development. (iv) Animal husbandry, dairying and poultry. (v) Fisheries. (vi) Social forestry and farm forestry. (vii) Minor forest produce. (viii) Small scale industries, including food processing industries. (ix) Khadi, village and cottage industries. (x) Rural housing. (xi) Drinking water. (xii) Fuel and fodder. (xiii) Roads, culverts, bridges, ferries, waterways and other means of communication. (xiv) Rural electrification, including distribution of electricity. (xv) Non-conventional energy sources. (xvi) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy and Solid Waste Management ................... ". However they are providing Manual and Mechanised housekeeping services and Man power and security services to Hospitals covered under DME tender falling under municipalities and are not falling under clause f of article 243W of the constitution. * The dictionary meaning of the term public health sanitation is "Sanitation refers to public health conditions related to clean drinking water and adequate treatment and disposal of human excreta and sewage. ... Sanitation systems aim to protect human health by providing a clean environment that will stop the transmission 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule is considered with respect to applicability of the Exemption Notification under the GST, the scope of any service should be determined in terms of the Scheme of classification of the Services referred to in Explanation 3(i) of the Exemption Notification. * 'Sanitation and similar services', classified under SAC 99945, includes sweeping and cleaning, but only with reference to cleaning of a road or street. Cleaning of hospital premises is not, therefore classified under 'Sanitation or similar service' 3.1 Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, 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. Anith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /ENGG/2021 dt 05.07.2021 in which the applicant propose to participate 3.3 They furnished a Write up on the activities covered under the proposed tender- with its similarities/variance with the activity undertaken in hospitals in Andhra Pradesh. 3.4 On perusal of the documents, it is noticed that at present they are not providing any service to DME and the proposed Tender is called for by Tamil Nadu Medical Services Corporation Limited(TMSCL) for Outsourcing of Housekeeping, Security Services and Assistance in Electrical, Plumbing, Laundering, Cooking, Catering, Gardening 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by PHFMS to DME/DMS 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/DMS 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/DMS can be classified as pure services or Composite Supplies? The questions raised as above requires ruling on the applicability of SI.No.3 of Notification 12/2017 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling, which is admissible and within the ambit of this authority as per Section 95(a)/97(2) of GST Act and therefore the question raised in respect of the activities tendered and to be provided to DMS, if awarded to the applicant, is taken up for consideration on merits. 7.1 On perusal of the documents produced by the applicant, it is seen that Tamil Nadu Medical Service Corporation Ltd., (TNMSC) has called for a tender vide Bid Reference 697/Outsourcing/DMS/TNMSC/ENGG/2021 dt 05.07.2021, Tender for outsourcing of 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 (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturer specifications for all the equipment and consumables to be provided for performing the Overall Management/Operational Services at the Hospitals under the control of DM&RHS / DM &RHS(ESI) and the cost of equipment should be amortized for 3 years and annual costs to be specified in summary sheets * 2.1.2 The Tender inviting authority and Tender Accepting Authority means The Tamil Nadu Medical services Corporation (TNMSC). * 2.1.3 Implementing authority/ Department means The Director of Medical 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 inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 3 Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, this limb is fulfilled. 8.3 The webpage https://tnhealth.tn.gov.in/tngovin/orgnstructure.nhp. gives the Organisational structure of Ministry of Health and Family Welfare, Tamil Nadu and DM&RHS is listed as a Directorate under the said Ministry. Further, the 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the State by adopting a streamlined procedure for their procurement, storage and distribution was incorporated under the Companies Act, 1956. A discussed above, upon perusing the tender document Clause 2.1.2 of the Interpretation of Terminologies in 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 ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Andhra Pradesh and has furnished the Tender document, agreement and sample invoices. On perusal, it is seen that in the said case, the Tender is for 'Providing Sanitation Services for the Hospitals and Medical/nursing colleges in DME Institutions 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 Not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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