WB AAR Declares Security & Scavenging Services for Govt Hospitals as Pure Services, Fully GST-Exempt

Ex-Servicemen Resettlement Society, a GST-registered organisation based in Kolkata, deploys security guards and scavenging staff on contract to a number of government-run medical colleges, district hospitals, and sub-divisional hospitals across West Bengal. Its monthly invoices cover only the actual wage outgo, the employer’s EPF and ESIC contributions, and the annual bonus payable to workers. The Society had consistently levied 18% GST on these bills and paid the tax in the ordinary manner. Trouble began when several of the hospitals informed the Society that these services were actually covered by the “pure services” exemption under Notification 12/2017, which led the Society to seek an authoritative ruling.

In support of its stand, the applicant relied on a communication issued by the State’s Department of Health & Family Welfare on 22 August 2025, which indicated that such contracts were exempt. The Society also pointed out that the jurisdictional GST authorities had not taken any opposing view.

Question to be Decided: Whether the Society’s security and scavenging manpower supplied to government hospitals qualifies as exempt “pure services” under Entry 3 of Notification No. 12/2017-Central Tax (Rate).

The AAR found that the Society was providing nothing beyond manpower, i.e., security guards and cleaning staff, whose remuneration was reimbursed through wages, EPF/ESIC dues, and bonus. There was no transfer of goods or any works-contract element.  The Authority held that the supplies clearly fit within the expression “pure services” used in Entry 3 of Notification 12/2017. It also accepted that the recipient institutions, medical colleges and government hospitals, form part of the State Government for the purposes of the exemption, satisfying the second statutory condition.

The AAR examined the constitutional framework under Articles 243G and 243W. It noted that the Eleventh Schedule includes “health and sanitation, including hospitals,” while the Twelfth Schedule lists “public health, sanitation, conservancy and solid waste management” as functions entrusted to local bodies. Security and sanitation services, the Authority observed, are indispensable support functions that enable hospitals to carry out their public-health mandate. The AAR therefore held that the Society’s services are fully exempt from GST.

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