Services provided by the applicant to the Government are not exempt

Services provided by the applicant to the Government are not exempt M/s Telangana State Technology Services Limited (TSTSL)(AAR Telangana); TSAAR Order No.12/2021; 04.10.2021; Applicant has filed the present application in 104 of CGST/TGST Rules, seeking Advance Ruling seeking clarification.

Facts:

• Applicant is a Service Agency to the Telangana Government and its Departments relating to Information Technology and its related services. One of Such services provided by TSTSL is, acting as a fund manager on behalf of IT E&C Department, Telangana State in executing e procurement process as per GOVERNMENT the OF G.O.Ms.No.7 TELANGANA, Dated 17-11-2016 INFORMATION issued by TECHNOLOGY, ELECTRONICS & COMMUNICATIONS DEPARTMENT (e[1]Procurement.
• As per the guidelines issued through above stated GO, TSTSL as fund manager receives entire amounts lie e-Procurement Transaction charges) into a designated Bank Accounts On receipt of the e[1]Procurement Transaction Fees (inch of GST), TSTS is paying GST 18% on the entire e Procurement Transaction Fees on monthly basis And TSTS recognizes its share of Service Charges 45 and again pays GST @ 18% on monthly basis. The balance amounts are utilizing for IT expenditure towards the specific requirements of the Concerned Departments of Telangana State.
• The applicant is of the opinion that he is acting as a pure agent on behalf of the State government which is floating tenders amounting to supply of services and such supply may not attract tax under CGST Act, 2017, hence this application.

Questions Raised:

i. Whether the e-Procurement transaction fee collected on behalf of ITE&C Department of Telangana State Government towards online tenders’ results in supply of goods or services or both, within the meaning of supply as defined? ii. Whether the Tax liability arises on e-procurement transaction fee collected on behalf of State Government Department i.e., IT E&C department? iii. Whether this services made by State Government Department falls under Entry No.6 of exemption of Notification No. 12/2017- Central Tax (Rate) Dated 28th June, 2017?

Discussion and findings:

• The applicant is providing service to various departments of Telangana Government in the field of Information technology and related services. These services include e-procurement of various goods & services for these Government departments. It is the opinion of the applicant that such services provided by him fall under Entry 6 of Notification No. 12/2017 dated: 28.06.2017 and therefore are exempt from any tax under GST.
• A careful reading of the said Entry in the Notification reveals that this entry pertains to services provided by the Government and not services provided to the Government. The applicant is providing services to the Government. Therefore the services provided by the applicant to the Government are not exempt under this Notification. Further the services provided by the applicant on behalf of the Government to business entities is covered by the exception to the above entry, therefore such services also are not exempt.

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