Sub-Contractor Not Eligible for GST Exemption on Labour Services | AAR

Case Details: Webel Support Multipurpose Service Cooperate Society Ltd., In re - [2025] 177 taxmann.com 409 (AAR - WEST BENGAL)

Judiciary and Counsel Details

• Shafeeq S. & Jaydip Kumar Chakrabarti, Member
• Goutam Chakrabarty, Adv. for the Applicant.

The applicant, acting as a sub-contractor, was engaged in providing pure labour service in the nature of manpower supply to West Bengal State Government Company, Webel Technology Limited (WTL). WTL in turn provided labour supply services to New Town Kolkata Development Authority (NKDA), a local authority. The applicant submitted that the services were covered under ‘Pure Services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or local authority or a Governmental authority or a Government Entity’ as specified in Entry No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017, and therefore were exempt from GST. It was further contended that since the ultimate recipient was a local authority, the exemption condition was satisfied. The matter was accordingly placed before the Authority for Advance Ruling (AAR), West Bengal

The AAR, West Bengal held that the condition prescribed under Entry No. 3 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017, namely that the applicant must provide services to the Central Government, State Government, Union Territory, or a local authority, was not fulfilled in the present case. It observed that the applicant was providing manpower services to WTL, which was a Government Company, and not to NKDA directly. Referring to Section 11 of the CGST Act and the West Bengal GST Act, the authority concluded that the supply of manpower services by the applicant would not qualify for exemption and GST was required to be charged on the services supplied to WTL. It was thus held that the exemption was not available and the ruling was rendered in favour of revenue.