Services rendered by Government & not services rendered on behalf of Government are exempt: AAR

TELANGANA STATE AUTHORITY FOR ADVANCE RULING in matter of TELANGANA STATE TECHNOLOGY SERVICES LIMITED has ruled out that Entry 6 of Notification No. 12/2017 dated: 28.06.2017 reveals that this entry pertains to services provided by the Government and not services provided to the Government. 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.

Questions raised:

1. 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?

2. Whether the Tax liability arises on e-procurement transaction fee collected on behalf of State Government Department i.e., IT E&C department?

3. 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?

Discussions & 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.

The said entry reads as follows:

“Services by the Central Government, State Government, Union territory or local authority excluding the following services:

(a) Services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;

(b) Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(c) Transport of goods or passengers; or

(d) Any service, other than services covered under entries (a) to (c) above, provided to business entities.”

Ruling

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.