TMI Blog2022 (4) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... pay the consideration to the applicant. So, there can be no dispute that the applicant is supplying the services to State Government. In fact, the applicant himself has admitted the same - since Medicare raises invoices on the applicant for the work done by it as a sub- contractor and the applicant is liable to pay the consideration to Medicare, admittedly it is a supply by the sub-contractor to main contractor i.e., supply of services by Medicare to the applicant. The functions entrusted to a Panchayat as listed in the Eleventh Schedule include the functions like Health and sanitation, including hospitals, primary health centres and dispensaries . Further, the functions entrusted to a municipality as listed in the Twelfth Schedule includes Public health, sanitation conservancy and solid waste management . According to Cambridge Dictionary, sanitation means the systems for taking dirty water and other waste products away from buildings in order to protect people s health . Further, sanitation and similar services (Group: 99945) falls under Heading 9994: Sewage and waste collection, treatment and disposal and other environmental protection services. Furthermore, Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression GST Act would mean the CGST Act and the WBGST Act both. 1.2 The applicant submits that he has entered into an agreement dated 29.11.2019 with Department of Health Services, Department of Health Family Welfare, Government of West Bengal for collection and disposal of bio-medical waste from various clinical establishments. In order to fulfil its obligations under the aforesaid agreement, the applicant entered into an agreement with Medicare Environmental Management Private Limited ( Medicare ) on 20.11.2019 where under Medicare was appointed as a sub-contractor for collection and disposal of bio-medical waste from 05(five) zones. 1.3 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made there und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est Bengal and the applicant (representing the aforesaid consortium) for collection and disposal of bio-medical waste from various clinical establishments. It is pertinent to state that all such clinical establishments are under the administration of the State Government of West Bengal. 2.4 The applicant submits that pursuant to its selection as an operator of CBMWTF, the applicant entered into various agreements with hospitals for providing facilities in relation to collection and disposal of biomedical waste. One such agreement was entered into with Bauria (Fort Gloster) State General Hospital dated 16.12.2019 wherein it was stated that the agreement concerned was for availing services in accordance with the Master Service Agreement. Thus, on a conjoint reading of both the agreements, it is clear that the applicant is serving the State Government of West Bengal. 2.5 In order to fulfil its obligations under the Master Service Agreement, the applicant entered into sub-contract agreements with Medicare from time to time on 20.11.2019, 01.06.2020 and 01.06.2021 ( Sub-Contract Agreement ) where under Medicare was appointed as sub-contractor for collection and disposal of bio- me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality under article 243W of the Constitution. Nil Nil 75 Heading 9994 Services provided by operators of the common bio-medical waste treatment facility to a clinical establishment by way of treatment or disposal of biomedical waste or the processes incidental thereto. Nil Nil 2.9 It is submitted that the following elements needs to be satisfied in order to be eligible for an exemption under entry 3 of the aforesaid notification namely:- (i) The service provider must provide pure services (i.e. excluding works contract service or other composite supplies involving supply of any goods). (ii) The services in question must be provided to the Central Governments, State Government or Union Territory or Local authority or a Government Authority or a Governmental Entity. (iii) As far as Governmental Authorities or Government Entities are concerned, the service in question must be in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear from the language of the entry concerned, the same provides for an activity-based exemption. The capacity or status of the service provider (in terms of whether the service provider is a main contractor or a subcontractor ) is immaterial. In the present case, Medicare meets all the three requirements posted by the said entry for the reasons elaborated in the paragraphs that follow. 2.14 Medicare is an operator of a Common Bio-Medical Waste Treatment Facility and satisfies the first requirement of the aforesaid entry. The expression operator of a common bio-medical waste treatment facility is not defined either in the aforesaid notification or in the CGST Act. It is thus apposite to refer to the definition of the said expression in the Environment (Protection) Act and the Rules issue where the said expression has been specifically defined. 2.15 In exercise of the powers conferred by Sections 6, 8 and 25 of the Environment (Protection) Act, 1986 the Central Government has notified the Rules for the management and handling of bio-medical waste, namely Bio-Medical Waste ( Management And Handling) Rules, 1998. These rules have been amended from time to time and on 28.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its facilities located at Howrah (Belgachia), Nadia (Kalyani) and Burdwan (Raniganj). 2.20 In view of the above submissions, it is seen that all requirements of S. No 75 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 stand satisfied and consequently, Medicare s activities are exempt therein. 2.21 In the case of Saritha Infra Geo Structures vs Pr. Commr. Of C.T, Visakhapatnam, 2019 (27) G.S.T.L 211(Tri- Hyd.), the Hon ble Tribunal held that the exemption available does not depend on whether such services are provided directly by the main contractor or by the main contractor using the services of a sub-contractor. Relevant excerpts from the aforesaid decision are as under: ..... The exemption available to the services provided to IIT, Kharagpur does not depend on whether such services are provided directly by the main contractor or by the main contractor using the services of a sub contractor. In view of the above, I find that on merits, the services rendered by the appellant through the main contractor to IIT, Kharagpur are exempted under Section 102 of the Finance Act, 1994. The application for refund has been filed within the time stipulated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate work contract (including material and labour). Party B further entered in a sub contract with the applicant for Pure Labour Service in said project. ...... In view of the above, we find that scope of above said entry is not person-centric but projectcentric. The entry does not speak of contractor or sub contractor but sharply of pure services by way of construction under certain projects. It clearly stipulates that whosoever is supplying the pure labour contract services for the construction of a civil structure or any other original works under PMAY is exempted from GST. 2.24 In re: ST Engineering Electronics Ltd. 2020 (42) G.S.T.L. 575 (A.A.R.-GST-TN), the Authority for Advance Ruling Tamil Nadu while deciding whether the benefit is restricted merely to the contractor or to the subcontractor as well noted as under: .... To summarize, we find that the entry at 3(v) do not specify the class of service provider to whom it applies. The entry is specific to the composite supply of works contract pertaining to railways including monorail and metro. This view is fortified by the justification of the recommendation of the Fitment Committee to the 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The applicant submits that the aforementioned decisions of the Advance Ruling Authorities have a persuasive value. In this regard, the applicant places reliance on the decision of the Hon ble Supreme Court in the case of Columbia Sportswear Company vs Director of Income Tax, Bangalore, AIR 2012 SC 3038 wherein it was held that the determination of the Authority for Advance Ruling is not just advisory but binding in respect of the transaction in relation to which the ruling had been sought and on the Commissioner and the income tax authorities subordinate to him and has persuasive value in respect of other parties. However, it has also been rightly held by the Authority itself that this does not mean that a principle of law laid down in a case will not be followed in future. Submission by the applicant in the matter of scope of issuing a ruling in respect of issues that arise on the transaction between the applicant and its sub-contractor During the course of the hearing, the AAR observed that no ruling can be pronounced in respect of question number (ii) and (iii) made by the applicant under serial number 14 of the application in FORM GST ARA-01 since an application fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the word applicant had to be read into every situation in respect of which an advance ruling can be delivered then nothing stopped the Legislature from using the word applicant in all the situations covered by Section 97(2), which it has not done. A situation that has been missed out or consciously excluded by the Legislation, ie a causes omissus , cannot be supplied or read into a provision of law by any quasi-judicial authority by applying principles of construction, unless it leads to an absurdity. The Applicant relies on this cardinal principle of law as held by the Supreme Court in the case of Padma Sundara Rao v State of Tamil Nadu 2002) 3 SCC 533 (Constitution Bench) (d) Accordingly, it is the humble submission of the applicant that so long as question of law regarding applicability of a notification has been made out, this AAR has appropriate jurisdiction to pronounce a ruling on the same regardless of whether the impact of the notification falls directly on the applicant or whether the impact of the notification is on the sub-contractor of the applicant. As long as there is necessary nexus between the subcontractor impact and that of the applicant, this AAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill have a direct bearing on the quality as also, ability to claim credit, ultimate pricing etc of the applicant. This aspect is further accentuated by the fact that the present sub-contractor M/s. Medicare is a sole sub-contractor of the applicant and as can be discerned from Clause (c) of the sub-contract agreement dated 1st June, 2020 (referred at Page 68 of the Application), Medicare s scope of work was to provide complete services. (e) Further, the choice of usage of the phrase in relation to supply of goods . being undertaken by the applicant contained in the definition of the term Advance Ruling, is also instructive and relevant to the present issue. (f) The term in relation to is a critical and vital pointer which according to the applicant throws appropriate light on how the entire scheme of Advance Ruling must be interpreted. The Applicant relies on the decision of the Hon ble Supreme Court in the case of Doypack Systems Pvt. Ltd. Versus- Union of India (1988) 2 SCC 299 where at Para 50 the Hon ble Supreme Court had interpreted the meaning of the expression in relation to and observed as follows: The expression in relation to (so also per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Rate) dated 28/06/2017 and Entry No 3 of Notification No. 12/2017 State Tax (Rate) dated 28/06/2017 are applicable to the applicant or not. As per Entry Number 3 of Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017, the applicant must provide pure services (excluding work contract services or other composite supplies involving supply of any goods) and the service recipient must be Central Government or State Government or Union Territory or a Governmental Authority or Govt Entity. As per the registration details the applicant provides pure services and doesn t supply any goods and in the instant case service recipient is the department of Health Family Welfare, Govt of West Bengal. So, in this case, service provided appears to be exempted. 3.2 Whether the provisions of Entry Number 3 of Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017 and Entry No 3 of Notification No. 12/2017 State Tax (Rate) dated 28/06/2017 are applicable to the sub-contractor of the applicant or not. As per Entry Number 3 of Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017, the applicant must provide pure services (excluding work contract services or other com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant during the course of hearing. The applicant has furnished a written submission in this regard. We, therefore, for the sake of convenience, take the issue involved in question number (i) first and on the later part, we will express our view related to question number (ii) and (iii) respectively. Observation in respect of supply involved in question number (i): 4.2 The applicant has entered into an agreement, termed as Master Service Agreement, with Department of Health Services, Department of Health Family Welfare, Government of West Bengal for the collection and disposal of bio medical waste from various clinical establishments located at different zones in the state of West Bengal. In order to carry out the said work, the applicant has appointed Medicare as a sub-contractor and tasked Medicare with the work of collection and disposal of bio-medical waste for the zones concerned. The applicant raises invoices on the clinical establishments which are effectively cleared by the State Government (in terms of Master Service Agreement). On the other hand, Medicare raises invoices on the applicant for the work done by it as a sub- contractor. 4.3 The applicant contends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. 4.5 We are also of the same view that in order to get covered under entry serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, following conditions have to be fulfilled: (i) It shall be pure service ((excluding works contract service or other composite supplies involving supply of any goods) only; (ii) Services recipient shall be the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity; [ Governmental authority or a Government Entity has been omitted w.e.f. 01.01.2022 vide Notification No. 16/2021-Central Tax (Rate) dated 18.11.2021] (iii) Services have to be 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. 4.6 We, therefore, cannot accept the interpretation of the applicant that condition as referred to in point number (iii) in the preceding para 4.5 is applicable in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. In fact, the applicant himself has admitted the same. [refer to Para 2.4] Following the same principle, since Medicare raises invoices on the applicant for the work done by it as a sub- contractor and the applicant is liable to pay the consideration to Medicare, admittedly it is a supply by the sub-contractor to main contractor i.e., supply of services by Medicare to the applicant. 4.8 It is submitted by the applicant that he provides pure services and does not supply any goods. The applicant also claims that such supply is provided to State Government. We accept both the aforesaid submissions and now proceed to decide whether the supply is 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. 4.9 The functions entrusted to a Panchayat and to a municipality under article 243G and 243W of the Constitution along with eleventh and twelfth schedule are reproduced herein under: 243G: Powers, authority and responsibilities of Panchayats. - Subject to the provisions of this Constitution the Legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as maybe specified therein, with respect to (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as maybe entrusted to them including those in relation to the matters listed in the Twelfth Schedule; (b) the Committees with such powers and authority as maybe necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. Twelfth Schedule [Article 243W of the Constitution (Seventy-Fourth Amendment) Act, 1992]: 1. Urban planning including town planning. 2. Planning of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. 5. Water supply for domestic, industrial and commercial purposes. 6. Public health, sanitation conservancy and solid waste management. 7. Fire services. 8. Urban forestry, protection of the environment and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) made by the applicant under serial number 14 of the application in FORM GST ARA-01 since an application for advance ruling can be filed by the supplier in relation to supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. But, in respect of supply in involved in the aforesaid questions, the applicant is the recipient of services. 4.13 The applicant has furnished a written submission to counter the aforesaid observation and the authorised advocate of the applicant has also put forth argument in the same line in course of personal hearing. The applicant contends that he has sought a ruling under Section 97(2) (b) of the GST Act which deals with applicability of a notification issued under the provision of the Act and the said sub-section nowhere provides that the question on which a ruling can be sought is restricted to applicability of a notification on the applicant. Therefore, an application under Section 97(2) (b) of the GST Act can be sought on the applicability of a notification regardless of whether the sweep of such notification operates on the applicant or any other person. 4.14 The applicant further contends that where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght for vide question number (ii) and (iii), has not been undertaken or proposed to be undertaken by the applicant. 4.17 In the matter of M/s USV Private Limited, the Advance Ruling Authority, Maharashtra has not admitted the application on the following grounds: (i) the AAR found the applicant as a recipient of services; (ii) the questions are in respect of past and completed supply. 4.18 In re Godavari Marathwada Irrigation Development Corporation, the Advance Ruling Authority, Maharashtra has observed as follows: Section 95 of the CGST Act, 2017 allows this authority to decide the matter in respect of supply of goods or services or both, undertaken or proposed to be undertaken by the applicant. We find that the applicant has not undertaken the supply in the subject case. Rather, the applicant is a recipient of impugned services in the subject case. The impugned transactions are not in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant and therefore, the subject application cannot be admitted as per provision of Section 95 of the GST Act. Hence without discussing the merit of the case, we reject th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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