2018 (12) TMI 228 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (20) G. S. T. L. 457 (A. A. R. – GST) – Exemption from GST – Security Services rendered to Pimpri Chinch wad Municipal Corporation in relation to functions entrusted to Municipality under Article 243W of the Constitution – Pure services – N/N. 12/2017- Central Tax (Rate) dated 28/06/2017 (Entry No. 3 of the Notfn.).
–
Whether the activities of the applicant’s personnel who are there to assist/help the security guards of PCMC can be equated with as being in relation to any function entrusted to a Municipality under article 243W of the Constitution?
–
Held that:- There is no doubt in anyone’s mind that the personnel provided by the applicant to the PCMC are actually aiding and helping the security guards of PCMC.
–
In the subject case the applicant is providing pure services (without the supply of goods) to PCMC. The said services are in relation to any functions entrusted to a Municipality under article 24
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
8-19/B-132 Dated:- 24-10-2018 – SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by NATIONAL SECURITY SERVICES, the applicant, seeking an advance ruling in respect of the following issue. Whether the Exemption Notification No.12/2017- Central Tax (Rate) dated 28/06/2017 (Entry No. 3 of the Notfn.) is applicable to the applicant for the Pure services i.e. Security Services rendered to Pimpri Chinch wad Municipal Corporation in relation to functions entrusted to Municipality under Article 243W of the Constitution thereby exempting the applicant service provider from the whole of GST. At the outset, we would like to make it clear that the provisions
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y PCMC from where water supply is made to the city. Moreover, the Security Services are provided to Hospitals and Dispensaries run by PCMC. Also the Security Services are provided for Solid Waste Management, Slum Improvement undertaken by PCMC. Moreover the Security Services are also provided to PCMC in relation to Urban Planning including Town Planning, which is for Public Safety at large. All these Services are covered in article 243W of the Constitution as functions entrusted to Municipality. Consequently Sl. No. 3 of the Notification No. 12/2017 – Central Tax (Rate) dated 28/06/2017 as amended squarely applies in the case of applicant and the Security Services provided to PCMC in relation to afore said functions entrusted to PCMC are exempt from GST. Moreover it is to mention that PCMC have also advised not to charge GST on Security Services provided to them in relation to aforesaid functions as being Security Services are exempt under Notification No. 12/2017 dated 28/06/2017 sinc
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
aforesaid exemption notification. The condition of the notification that Services should be provided to the Municipality is also satisfied by the applicant. The next condition i.e. the Services should be in relation to the functions entrusted to the Municipalities under Article 243 W of the Constitution is also satisfied by the applicant. In view of the aforesaid, the applicant is of the view that Security Services provided by them to PCMC are exempt from GST. Additional submissions by applicant. In this context our written submissions given during preliminary hearing held on 23/08/2018 may please be referred. The written submissions dated 21/08/2018 filed by the Deputy Commissioner, Div. III (Deccan) CGST Pune-II Commissionerate filed under F.No. VGN (30)87/ Dn.III/GSTII/ N-Security/ Adv. Ruling/ 2018-19, copy of which was also served on us, may also be referred to. In this connection, our submissions for final hearing are as under: The Department in their aforesaid submissions dated
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ontext we would like to clarify that, even though the concerned documents refer to the word Assistant, in fact what we are providing are the Security Guards. The reason behind using the word assistant (Madatnis) in the contract and other relevant documents is that the security guards provided by us are working under the overall supervision of the Security Guards, who are on the establishment of the PCMC. However the persons provided by us are performing the duties of Security Guards only and carry out the entire function of the security and also responsible for the same . These facts are also evident from the duty list and functions which have been mentioned in 1 Annexure- A to the agreement between us and PCMC. The said 6:4 annexure-A specifies and elaborates the duties to be discharged by the persons provided by us as security guards(ln the contract termed as Assistant/ Madatnis ). The said duties as specified in Annexure-A are as mentioned below: 1) That the guards provided by us sh
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
any untoward incident like theft etc. they are supposed to coordinate with the security department and also coordinate with police under the guidance of security department 6) They are supposed to work in three shifts or as and when required. All these duties and responsibilities cast by PCMC by way of agreement on the guards provided by us indicate that the security guards provided by us are not mere assistants / helpers (Madatnis) because they are fully responsible for the security of the entire premises and also supposed to handle the emergency situation like fire, theft etc. and are to coordinate with important organization like police, fire brigade, hospitals etc. Only the thing is that they are supposed to work under the supervision of security guards of the PCMC does not make them helpers but they themselves discharge the duties of security guard. The term Madatnis used in the relevant documents is only a convenience term used by PCMC only to indicate that the Security Guards pr
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
mmissioner (Security) PCMC, Pune-411018 has clarified that, as per Annexure -A of the agreement (Duty list Sl.No.02 to 12) even though the persons provided by us are working under the supervision and directions of the security guards who are on the establishment of PCMC, the persons provided by us are doing the security work in relation to urban planning and public safety at large. Moreover in support of our contention that the persons provided by us are discharging the duties of security guards only, we hereby submit the photo copy of ID cards of 5.3/6.6 security guards issued by us being used by the persons provided by us for security work. These ID cards are displayed on the uniforms of the persons working as security guards provided by us. The Honorable Member may kindly go through the same. (8.348:47) In view of the above, it is evident that the persons being provided by us to PCMC are performing the duties of security guards only and also responsible for the entire security arran
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
team and that the role of the persons provided by us is inseparable from entire security team as also can be seen from duty list and responsibilities cast on the persons provided by us by way of agreement (Annexure-A) to the agreement). Therefore persons provided by us clearly provide the services in relation to activities in relation the functions entrusted to Municipality under Article 243W of the Constitution and thereby entitled for the benefit of Exemption Notification No.12/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 03 of the Notfn.). We are thus providing security services which are pure services in relation to the functions entrusted to Municipality (PCMC in this case) under article 243 W of the Constitution and thereby entitled for the benefit of Nil rate of GST under the exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (Entry no. 3 of the Notfn.), w.e.f. 01/07/2017. Further, without prejudice to the aforesaid contention on our part we further s
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ccordingly. We also request your honor that, in case any additional point is raised by the department to oppose the Said application, we may be given opportunity to present our say on the points raised by the department. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- Question on which advance ruling is required: Whether Exemption Notification 12/2017-Central Tax (Rate) dt.28.06.2017 (Entry No. 3 of the Notification) is applicable to the applicant for the pure services i.e. Security Services rendered to Pimpri Chinchwad Municipal Corporation in relation to functions entrusted to Municipality under Article 243W of the constitution thereby exempting the applicant service provider from the whole of GST? Ans- The applicant has submitted that In the present case the applicant is providing Security Services to the said municipality (Pimpri Chinchwad Municipal Corporation) in relation to water supply for domestic industrial and commerc
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rovided 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 Article 243W of the Constitution reads as under: 243W. Powers, authority and responsibilities of Municipalities, etc Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow (a) the Municipalities with such powers and authority as may be necessary to enable them 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 may be 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
verty alleviation. 12. Provision of urban amenities and facilities such as parks, gardens, playgrounds. 13. Promotion of cultural, educational and aesthetic aspects. 14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums. 15. Cattie pounds; prevention of cruelty to animals. 16. Vital statistics including registration of births and deaths. 17. Public amenities including street lighting, parking lots, bus stops and public conveniences. 18. Regulation of slaughter houses and tanneries. In the opinion of this office, the services provided by M/s. National Security Services pertains to providing assistant to Security Guards of PCMC cannot be termed as Services in relation to Urban Planning including Town Planning or any activity in relation to any function entrusted to a Municipality under article 243W of the Constitution but can be termed as providing manpower services for the work of Security arrangements to various properties of PCMC. Therefore, the Exemp
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e submissions made by the applicant The applicant has submitted that they have entered into an agreement with Pimpri Chinchwad Municipal Corporation (PCMC) to provide Security services to them. The Security Services are provided in form of providing Security guards; to Water Pump Houses, Purification Plants run by PCMC from where water supply is made to the city; to Hospitals and Dispensaries run by PCMC; for Solid Waste Management, Slum Improvement undertaken by PCMC; in relation to Urban Planning including Town Planning, which is for Public Safety at large. According to their submissions all these Services are covered in article 243W of the Constitution, as functions entrusted to Municipality. Hence the provisions as per Sl.No. 3 of the Notification No. 12/2017 – Central Tax (Rate) dated 28/06/2017 as amended applies in their case and therefore, the Security Services being Pure Services, provided by the applicant to PCMC in relation to afore said functions entrusted to PCMC are exemp
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t can be termed as providing manpower services for the work of Security arrangements to various properties of PCMC. Therefore, the Exemption Notification 12/2017-Central Tax (Rate) dt.28.06.2017 (Entry No. 3 of the Notification) is not applicable to the Security Services rendered to Pimpri Chinchwad Municipal Corporation. Vide further detailed submissions the applicant has stated that the security guards provided by them are working under the overall supervision of the Security Guards, who are on the establishment of the PCMC and they are carrying carry out the entire function of the security. They have also cited the duties which are performed by their personnel when on duty under the PCMC. They have submitted that the security guards provided by them are not mere assistants/helpers) because they are fully responsible for the security of the entire premises and are also supposed to handle the emergency situation like fire, theft etc. and are to coordinate with important organization l
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d by them fell under the ambit of the Exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 03 of the Notfn.). We find that there is no doubt in anyone s mind that the personnel provided by the applicant to the PCMC are actually aiding and helping the security guards of PCMC The only question that needs to be looked into is Whether the activities of the applicant s personnel who are there to assist/help the security guards of PCMC can be equated with as being in relation to any function entrusted to a Municipality under article 243W of the Constitution?. If the answer is yes then it is Clear that they would be eligible for exemption since in that case it would be seen that the personnel provided by the applicant are performing duties in relation to functions entrusted to Municipality (PCMC) under article 243W of the Constitution. We now reproduce Sl No. 3 of Notification No. 12/2017- Central Tax (Rate) dated 28/06/2017, under which the applicant is claiming
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e the applicant is providing pure services (without the supply of goods), as submitted by them, to PCMC. We find that the said services are in relation to any functions entrusted to a Municipality under article 243W of the Constitution. The agreement between the applicant and PCMC very clearly states that the applicant shall provide assistants to the Security Guards of PCMC. The invoice raised by the applicant mentions services rendered as, Being round the clock helper to security service Providing assistance to the Security Guards of PCMC is an activity in relation to various functions as enumerated above which have been entrusted to a Municipality under article 243W of the Constitution. Hence we find that the applicant is entitled to the benefit of Notification No, 12/2007-CT(Rate) dated 28.06.2017. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra G
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =