The Gujarat Appellate Authority for Advance Ruling (GAAAR) in the case of M/s Sankalp Facilities and Management Services Pvt. Ltd. vide order No. GUJ/GAAAR/APPEAL/2023/03 dated 29.03.2023, ruled that no GST exemption under Entry No. 3 to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended, is eligible for supply of manpower services for housekeeping, cleaning. security, data entry operators etc. to various Government departments.

In this case, the appellant is engaged in the business of providing manpower supply for housekeeping. cleaning. security. data entry operator etc. They also provides such services to several Government authorities/ entities. The appellant submitted that they are eligible to claim exemption benefit under Serial No. 3 of Notification No. 12/2017-Central Tax(Rate)  dated 28.06.2017, for pure services (supply of manpower, security service) provided to Central Government, State Government, Local authorities, Government entities.

The GAAAR observed that the words “or a Governmental authority or a Government Entity” in the heading Description of services against the referred Entry No.3 to Notification No.12/2017-Central Tax (Rate) has been omitted vide Notification No. l6/2021-Central Tax (Rate) dated 18.11.2021.

Further, the GAAAR rejected the submission of the appellant that, “for claiming benefit of exemption, is that the term ‘in relation to' used in the exemption provided at Entry No.3 of Notification No. l2l2017-CT (Rate) dated 28.06.2017, as amended, is very much wide enough to cover every kind of services that results in performance of the functions as mentioned in Article 243W and 243G of the Constitution of India either directly or indirectly. Therefore their supply of manpower services for housekeeping. cleaning. security, data entry operator etc. to the referred service recipients are eligible for exemption under the above said entry”.

For this the GAAAR, provides that if the intention of the legislature was to exempt all the services provided to Central Government, State Government or Union Territory or Local authority then there was no need to specify 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. Therefore, the appellant made a mistake of assuming that entry No. 3 specifically exempts all services provided to government offices performing the duties listed in either article 243G or article 243W of the Indian Constitution.

The GAAAR held that the manpower services provided by the appellant are consumed within the premises of concerned government offices. These services were not related to any activity in relation to any function carried out by these service recipients as entrusted under articles 243G or 243W of the Constitution of India.