No GST Exemption for Sub-Contracted Pure Labour Services, Says AAR:

No GST Exemption for Sub-Contracted Pure Labour Services, Says AAR The applicant is M/S Build Layer Constructions, with address 1b58, Vinayak Sadan, Ground Floor, Housing Board, Pali - 306401, Rajasthan. The applicant is registered for GST, having GST registration No. 08AATFB8617M1ZO in the State of Rajasthan. The applicant has applied for an Advance Ruling.

• Note 1: If anyone disagrees with the legal decision of the Advance Ruling, they are allowed to appeal to the Appellate Authority for Advance Ruling under Section 100 of the CGST/RGST Act, 2017. This must be done within the period of 30 days from the day they received the order.
• Note 2: Both the CGST Act (Central GST) and RGST Act (Rajasthan GST) have almost the same meaning. Hence, unless there is a clear difference mentioned among these, whenever we say CGST Act, it also refers to the RGST Act. Therefore, from this point, both the acts combined will be called as "GST Act".

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What is Case?

M/s Build Layer Constructions (the applicant) is a GST-registered company based in Pali, Rajasthan. Their work is to offer labour services to construction projects, and not materials. BCM Builders LLP has signed a contract with the Rajasthan government under the "Affordable Housing Scheme (Pradhan Mantri Awas Yojna)" to build 380 flats, both material and labour included. For this project, BCM Builders LLP signed another contract with M/s Build Layer Constructions (applicant), for the supply of labour force (only), no material. Meaning, all construction materials for the project will be supplied by BCM Builders LLP. Now, the applicant is asking for clarity on the GST treatment of this arrangement. Specifically, they are asking: • Does the service they are providing (pure labour for a government housing project) qualify for any GST exemption? • What is the correct classification of their service under GST law? For these answers, the applicant has filed an Advance Ruling under GST law (Section 97).

Questions Raised by Applicant:

The applicant has raised the following questions seeking the advance ruling: "Question 1: Whether the entry number 10 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is applicable on the services of "Pure Labour" provided by the applicant? Question 2: If the entry number 10 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable, then what will be the classification and IISN for these services of "Pure Labour" provided by the applicant?"

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What Did Ruling Say?

In accordance with the Rajasthan Authority for Advance Ruling (RAAR):

• Answer 1: No, the entry number 10 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the services of "Pure Labour" provided by the applicant.
• Answer 2: As entry number 10 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable, the labour service provided by the taxpayer falls under HSN code 9954, attracting a GST rate of 18%.