Security Services provided to Municipal Corporations not under GST: AAR Maharashtra

The Maharashtra Authority of Advance Ruling (AAR), comprising of the bench of Rajiv Magoo and T.R. Ramnani, decided that security services provided to municipal corporations are exempted from taxation under GST.

Maharashtra Ex-Servicemen Corporation Ltd., is a government-owned and operated organisation established by the Maharashtra government for the purpose of resettling ex-servicemen from the Indian armed forces and providing work opportunities after their retirement. The applicant provides security services to various government, semi-government, central PSU, state PSU, and municipal corporation officers, including Nagpur Municipal Corporation, Latur Municipal Corporation, Parbhani Municipal Corporation, and Solapur Municipal Corporation, among others.

The current application is filed on the question of whether the GST exemption is applicable to the applicant for providing pure services, such as security services rendered to secure and safeguard the assets of various municipal corporations’ sites in relation to the functions entrusted to municipalities under Article 243 of the constitution, thereby exempting the applicant as a service provider from the whole of.

The court noted that Exemption is extended to “pure services” as defined under Chapter 99, and based on the applicant’s submission, particularly with regard to the fact that no material is provided during the provision of impugned security services, we conclude that the applicant’s impugned security services are pure services.

The authority further noted that the petitioner has also failed to mention or enumerate the functions of municipal corporations in connection to which the contested services are delivered, The court argued that municipal corporations may be involved in a variety of performing responsibilities, such as leasing grounds/ facilities for exhibitions, marriages, and other activities that are not entrusted to municipalities under Article 243W of the Constitution. As a result, in such situations, the impugned security without the supply of material, i.e. pure services, supplied by the applicant to the Municipal Corporation will not be exempted under the exemption rules.

The AAR ultimately decided that the applicant is eligible for GST exemption for “pure services”, such as security services provided to various municipal corporation sites, only if such pure services are provided to the Municipal Corporation in relation to the functions entrusted to Municipal Corporations under Article 243 of the Indian Constitution.

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