Security services rendered in relation to functions entrusted to municipality is exempt under GST: AAR

Categories: Advance Ruling
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Fact– M/s. National Security Services (“the applicant”) are providing Security services by way of providing security guards to the sites like water pump houses, purification plants and to Hospitals and Dispensaries run by Pimpri Chinchwad Municipal Corporation (PCMC). All these services are covered under Article 243W of the constitution and consequently Sl. No. 3 of the Notification No. 12/2017 – Central Tax (Rate) dated 28/06/2017 as amended squarely applies in the case of applicant and the Security Services provided to PCMC in relation to aforesaid functions entrusted to PCMC are exempt from GST.

Issue Involved– The applicant is seeking an advance ruling on the issue “Whether the Entry No. iii of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 is applicable to the Pure Services i.e. Security Services rendered to PCMC under Article 243W of the Constitution thereby exempting the applicant service provider from the whole of GST”?

Applicant’s Contention of Law-The applicant is of the view that the Security Services provided are exempt from GST vide Notification No. 2/2017 Central Tax (Rate) dated 28.06.2018, as the security services are being provided to the Municipal Corporation under Article 243W of the Constitution of India.

HeldThe Hon’ble AAR, Maharashtra vide Advance Ruling No.GST-ARA-58/2018-19/B-132 Dated 24.10.2018 held that the applicant is providing pure services (without the supply of goods), to PCMC and the said services are in relation to any functions entrusted to a Municipality under article 243W of the Constitution. The agreement between the applicant and PCMC very clearly states that the applicant shall provide assistants to the Security Guards of PCMC. The invoice raised by the applicant mentions services rendered as, “Being round the clock helper to security service”. Hence, the applicant is entitled to the benefit of Notification No. 12/2007-CT(Rate) dated 28.06.2017 and Security Services rendered to PCMC in relation to functions entrusted to Municipality under Article 243W of Constitution is exempt from the whole of GST.

Citation: [2018] 100 taxmann.com 126 (AAR – MAHARASHTRA)

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