The Authority for Advance Rulings, Tamil Nadu in the case of M/S. QUALITY PROPERTY MANAGEMENT SERVICES PRIVATE LIMITED vide Case No. TN/09/ARA/2025 dated 20.03.2025, has ruled that even if consumables are used, unless there’s a separate supply of goods to the recipient, it remains a “pure service”. The AAR examined whether these services qualified for exemption under Entry No. 3 of Notification No. 12/2017-CT (Rate), which exempts pure services provided to governmental authorities related to functions under Articles 243G and 243W of the Constitution. The authority determined that the services provided were indeed “pure services,” as the consumables and equipment used were incidental to the service delivery and not separate supplies. Consequently, the AAR ruled that the applicant’s services were exempt from GST under Entry No. 3 of the relevant notification. 

Facts of the Case: In this case, the applicant provides comprehensive facility management services to 54 Government Hospitals under DM&RHS, Tamil Nadu, including manpower for housekeeping, security, plumbing, electrical, cooking, and gardening, along with minimal supply of consumables and equipment. Equipment and consumables used are not supplied to the hospitals but merely used by the applicant for service delivery. The services are rendered to State Government hospitals under Directorate of Medical & Rural Health Services, a Government department, satisfying the condition of services being provided to the State Government.

Issue: Whether services provided to 54 hospitals under the Directorate of Medical & Rural Health Services (DM&RHS), Tamil Nadu, are exempt under Notification No. 12/2017-CT (Rate), as amended.

AAR’s Rulings: 

The AAR observed that the applicant provides Comprehensive Facility Management Services to 54 Government hospitals under the Directorate of Medical and Rural Health Services which include Housekeeping, Security and Support in electrical, plumbing, laundry, cooking, gardening, and carpentry. Further, as per LOI and Contract Agreement, the applicant must deploy manpower and provide equipment and consumables (not as a sale but for use during services. The AAR stated that the services constitute “pure services” and not “composite supplies”, since there is no independent or separate supply of goods to the recipient.

Also, the Authority examined Entry No. 3 and Entry No. 3A of Notification 12/2017, and stated that although minor consumables and equipment are used, they are for the execution of the services and not independently supplied. Sample invoices did not reflect separate charges for goods. Hence, Entry 3A is not applicable as the transaction is not a composite supply.

The Authority relied on AAR Order No. 31/ARA/2021 dated 10.08.2021 in the case of Padmavathi Hospitality, where similar services provided to Government hospitals under DM&RHS were also held to be exempt under Entry 3.

The AAR ruled that that the services rendered by M/s. Quality Property Management Services Pvt. Ltd. to the 54 Government hospitals under DM&RHS are exempt from GST under Entry No. 3 of Notification No. 12/2017-CT (Rate), as amended.