Supply of manpower services to Govt. Dept. is covered under Heading No. 9985 and taxable at 18%

Case Details: Authority for Advance Rulings, Karnataka Sadanand Manpower Service, In re - [2021] 130 taxmann.com 395 (AAR - KARNATAKA)

Judiciary and Counsel Details

• • Dr. M.P. Ravi Prasad and Mashhood Ur Rehman Farooqui, Member
  • Mahantesh. K. Hospeth, CA for the Applicant.

Facts of the Case

The applicant was providing manpower services like drivers, peons, housekeeping, data entry operators and other clerical staff to various Government Departments. It filed an application for advance ruling to determine taxability of supply of manpower services provided to various Government Departments.

The Authority for Advance Ruling observed that pure services provided to Government, local authority, Government authority or Government entity are exempt as per the Notification No. 12/2017 – Central Tax (Rate), dated 28-6-2017. However, in order to claim exemption, two conditions should be satisfied. Firstly, pure services (excluding works contract service or other composite supplies involving any goods) should be provided and secondly, it should be provided by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.

AAR Held

However, in the present case, manpower services would not satisfy second condition as it would not be provided under any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Hence, the provision of such manpower services would liable to tax at 18 per cent and fall under Heading No. 9985.