WB GST AAR: Manpower Services Furnished to Webel Technology Ltd. not Allowed for Tax Exemption

The West Bengal Authority for Advance Ruling (WB AAR) has held that the Goods and Service Tax (GST) exemption is not available for the supply of manpower services to Webel Technology Limited.

The applicant, Webel Support Multipurpose Service Cooperate Society, is a cooperative society that is registered under the West Bengal Co-operative Societies Registration Act. It offers various services, including manpower support, to different government departments under M/s WTL (Webel Technology Limited). The petitioner has received a work order from Webel Technology Limited (WTL) to provide manpower services before the Public Health Engineering Directorate of the Government of West Bengal for a government project called the ‘JAL JEEVAN MISSION’ in West Bengal.

The applicant questioned if the services provided under the Jal Jeevan Mission could be treated as exempt from GST. And whether these services are exempted under Notification No. 12/2017 Central Tax (Rate) issued on 28th June 2017, which mentions certain exempt services.

Applicants seeking an advance ruling must submit an application through the common portal using FORM GST ARA-01 for the subject mentioned in sub-section (2) of section 97 of the GST Act. The questions raised for the advance ruling fall under clause (b) of sub-section (2) of section 97 of the GST Act.

The applicant mentioned that the questions they asked in their application have neither been determined before nor are due before any authority under any provision of the GST Act. The tax officer regarding the revenue also had no objection to the application being accepted.

The applicant shared that on 15th July 2024, they were notified by Webel Technology Limited (WTL) that the Public Health Engineering Directorate of the Government of West Bengal had sent a letter to WTL. This letter stated that, according to two government notifications, which include Notification No. 56/2017/25 dated 29th June 2017 and Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, the GST rate for the services provided for that specific project is NIL.

In that memo, the Public Health Engineering Directorate of the Government of West Bengal has instructed the Chief Executive Officer of WTL to refund the amount paid for GST, being an extra payment and therefore refundable.

The authorised advocate representing the dealer stated during the personal hearing and later by email that, as per the applicant, the mentioned supply of services will be imposed at a rate of 18%.

The applicant received a work order from Webel Technology Limited (WTL) to provide manpower services before the Public Health Engineering Directorate (PHED) of the Government of West Bengal for implementing their project named ‘JAL JEEVAN MISSION’ in West Bengal. The issue is to find out whether these supplies are eligible for the exemption under entry number 3 of Notification No. 12/2027 Central Tax (Rate) dated 28.06.2017, as revised.

The document confirmed that the PHED had originally assigned the work to WTL, instructing them to provide manpower services for the JJM project. This confirms that WTL received the work order from the PHED. After that, WTL hired the petitioner to offer the required manpower services for the project.

The term ‘Pure Services’ has not been defined directly under the GST Act. However, Entry No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017, as amended, specifies that pure services refer to the supply of services that do not involve any supply of goods.

The applicant mentioned that under the work order issued to them by WTL, they offered manpower services for the ‘JAL JEEVAN MISSION’ Project which had 513 Junior civil Engineers, 45 Junior Mechanical Engineers, 25 Junior Electrical Engineers and 99 Data Entry operators involved in the project.

Initially, it seems that the mentioned service does not involve any materials or goods being supplied. Therefore, it is stated that the services provided by the applicant can be considered as pure services.

The contract has been transferred to the applicant by WTL for which WTL is liable to pay the consideration to the applicant. Therefore, there could be no argument that the applicant is providing the services before WTL. The bench stated that the second condition, i.e., the applicant is providing the services to the Central Government, State Government, Union Territory, or local authority, does not get satisfied in the instant case.

A panel of two members- Dr. Tanisha Dutta (Joint Commissioner) and Joyjit Banik (Additional Commissioner), explained that to qualify for the GST exemption under Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, all three required conditions mentioned in paragraph 2.5 must be satisfied.

The bench found that the petitioner delivers services to Webel Technology Limited (WTL), not directly to the Public Health Engineering Department (PHED) of the Government of West Bengal. Therefore, the services do not qualify for the GST exemption under serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, as amended.